It’s an exciting time to be a middle-market CFO, as the chief financial officer role is going through a major transformation. The CFO of the past was conservative and risk averse, spending most of their time crunching numbers and performing mundane (but important) tasks such as financial reporting, budgeting, cost control, cash flow management and risk management. While CFOs will continue performing these foundational tasks, it is no longer enough for the role of the CFO to be merely the financial steward of the organization.
Today’s CFO is a strategic leader who is central to critical decision making and planning. The modern CFO is expected to bring strategic ideas to the C-suite table, is heavily involved in developing and executing the company’s strategic agenda and is expected to effect change throughout the entire organization. This role of the future requires a new skillset for many financial professionals.
Technology is at the Forefront
The role of the CFO is being transformed by technological innovation and access to massive amounts of data, both inside and outside the organization.
The financial function needs to be at the forefront of the organization’s digitization efforts. They need to lead the charge in these new technologies and be the change agents controlling the pace of transformation throughout the company. CFOs that successfully leverage new technologies will become the key source for data-driven decision making and will be empowered to drive their organizations to be more agile, dynamic and successful.
The three key technologies leading this transformation include:
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Automation
Automation of the financial function is typically the first step. According to a study conducted by McKinsey Global Institute, 42% of a finance team’s processes can be fully automated and another 19% can be highly automated. Specific finance activities that lend well to automation include general accounting operations, accounts payable, accounts receivable, payroll, financial controlling and reporting, and the tax function. By automating these functions, the finance team frees up significant time and resources to focus on driving strategy and change throughout the company.
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Data Visualization
When the automation of financial and operational functions is paired with the use of data visualization tools, organizations gain access to valuable real-time data. Businesses often lack easy access to data because the critical information they need is located in different parts of the company or in systems that don’t easily communicate with each other. Data visualization software pulls this raw data from various sources, organizes the data and allows for the generation of clear, timely and actionable visuals that can be pushed to the appropriate end users to enhance decision making.
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Analytics
While automation helps streamline processes and data visualization provides real-time data, data analytics is the advanced analysis of the vast quantity of data available to make informed, tactical decisions and identify growth opportunities. Companies that can leverage data strategically will be tomorrow’s market leaders.
Cross-functional Leadership
The seismic shift of the finance function means the CFO must wear many different hats. With a keen focus on driving the strategic agenda throughout the organization, the CFO knows what areas need the greatest investment and where resources need to be allocated to drive the greatest value.
The CFO also must work hand in hand with the other critical members of the C-suite – beyond the CEO –to develop an integrated approach to the business and develop a broad understanding of the organization’s entire value chain. This means working with human resources to help drive the talent agenda; working with IT to drive technology transformation throughout the organization; working with operations to optimize efficiency in the supply chain, logistics, production and procurement functions; and working with sales and marketing to enhance visibility and target customers.
While the CEO remains the visionary leader of the company, the modern CFO helps pull all the different pieces together. This has resulted in a more forward-focused leader who is the chief executive’s most essential strategic partner, influencer and change agent.
Today’s CFO needs to efficiently leverage new technologies.
