The changing role of the CFO as an innovator and strategist

The role of the CFO has changed dramatically in the past few years and is likely to continue to do so. With that change has come a significant increase in scope and responsibility.

According to Forbes, three-quarters of CEOs from high-performing companies believe the CFO’s role will grow in importance more than any other C-suite role1. Furthermore, there is an emerging trend that more CFOs are stepping up to the role of CEO.

The changes to the CFO’s role include a greater focus on strategy and whole-of-business leadership. According to Deloitte, CFOs are being asked to play four diverse roles: steward (preserving the assets of the organisation by minimising risk and getting the books right); operator  (running a tight operation that’s efficient and effective); strategist (helping to shape overall strategy and direction); and catalyst (instilling a financial approach and mindset throughout the organisation to help other parts of the business perform better2).

This broader scope puts more pressure on CFOs to understand every aspect of the business much more.

For example, most organisations are, to some extent, sales-driven so it’s essential for the CFO to understand the sales process, including target markets, internal systems and processes, and barriers to success. Only with this granular understanding can CFOs act as a partner in finding
solutions to propel the sales function forward. To enable CFOs to manage all the additional responsibilities which come with the new scope of their role, they need to free up some time. They can only do this if they can automate certain repetitive or mechanical tasks, which will then leave them with more time to focus on strategic goals.

Undoubtedly, the technology with the biggest impact for CFOs to date is the cloud. The new consumption-based payment models alone have altered the way CFOs look at IT budgets. Add to this the breadth and functionality of apps available more easily via the cloud, and it becomes clear that cloud services are a game changer for CFOs.

Cloud-based systems that make it easier to manage and automate financial operations are exceptionally attractive to CFOs looking to add more value to the business. Because these systems are automated, they remove many of the barriers to compliance; users have no choice but to comply in order to receive expense reimbursements, for example. These systems can also help reduce the risk of fraud by setting up policies and rules that can’t be circumvented. When integrated on a single platform, these tools provide a whole new dimension of data, which can be easily analysed to show spend patterns and potentially fraudulent activity faster, enabling CFOs to take action earlier.

CFOs are looking for ways to forecast cash flow accurately, improve working capital, gain deeper visibility into finances, integrate data into systems that are easy to use and intuitive, analyse data, and, most importantly, improve productivity. Advancements in technology is allowing them to achieve these goals. CFOs that can successfully adapt to and adopt emerging technology can gain greater business insight and more efficient financial management.

CFOs are also now required to put considerable effort into staying on top of IT-related issues and manage risk for the organisation. To do so effectively, they need to embrace systems with automation and compliance features.

One of the essential skills that CFOs must demonstrate in this changing business environment is the ability to find information, as opposed to data. They then need to be able to understand and present the information in ways that help the business make smarter decisions, faster. This focus on information is an evolution from the CFO’s traditional focus on accounting, control, and compliance.

They also face the challenge of connecting technology and bringing people along for the journey. They need to find ways to bridge the inevitable skills gap, whether that includes building in-house capabilities or strategically outsourcing to IT providers that can deliver help desk and administration functionality.

The finance team is usually the technology guinea pig, rolling out new systems and applications before the rest of the business. This puts an onus on the CFO to understand and deploy solutions while leaving no room for error. By automating other aspects of the IT function CFOs can take a more hands-on approach to this aspect of the business.

Different pathways to the role of CFO will contribute to a further evolution of the role itself. Smart CFOs will leverage existing and emerging technologies to automate as much of the accounting and compliance process as possible, freeing them up to focus on strategy and innovation.

This makes sense, given the changing nature of business, where technology is becoming integral to all aspects of operations. Successful CFOs will therefore make it a priority to put skilled team members in place to maximise the value of technology investments while focusing on risk minimisation and corporate growth.

The CFO’s role, and the world in which they must execute this role, will continue to change and evolve. CFOs are unlikely to go back to being simple number-crunchers. Instead, their sphere of influence will continue to expand and, consequently, they will need to demonstrate a new set of skills and capabilities.

To remain relevant, today’s CFOs must understand the drivers of change as well as how to remain relevant in the changing world. Tomorrow’s CFOs are likely to have a vastly different background and experience to today’s CFOs, having in common only the ability to work with big data and analytics, and to solve problems creatively.

CFOs should make it a priority to know every aspect of the business so they can be a useful partner in solving business challenges. They should stay well-informed regarding emerging technology, and be ready to adopt solutions that align with business goals. They can only do this if they are free from manual, time-intensive accounting tasks.

Matthew Goss is the ANZ Managing Director at Concur. Matthew is a management executive with extensive experience in establishing and managing operations for cloud-based technology companies.

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www.concur.com.au

1http://www.forbes.com/sites/forbesinsights/2015/01/05/the-future-of-the-cfo/#40fff5973cdf
2http://www2.deloitte.com/us/en/pages/finance/articles/gx-cfo-role-responsibilities-organization-steward-operator-catalyst-strategist.html