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From accountant to analyzer to strategic advisor – Creating an agile, forward looking and decision centric finance function.
According to a whitepaper report by TCS, big companies have spent immense sums this decade to digitally re-engineer their businesses—a projected $1.2 trillion this year alone.
These investments are expected to soar to an average $1.5 trillion annually over the next four years.
This spending has not only kept some CFOs alert; it has in fact turned many into key players in digital transformations —executives who must diligently weigh competing and sizable demands on corporate funds.
This recent evolution of the finance function is essentially characterized by three main themes.
• Digitizing finance and harnessing the power of data:
CFOs continue to automate routine accounting, control and compliance tasks. They are increasingly turning to value creation as technology empowers them to design strategy.
• Leading digitalization efforts:
The data capabilities CFOs develop can help them make decisions about investing in digital and technology across the enterprise, which in turn empowers them to generate and combine even more useful data.
• Developing future finance talent:
Current CFO and senior-level finance professionals are gaining expertise at a faster rate than the overall function, resulting in a skills gap.
The changing role of CFOs in 2021
Continuing to automate
According to Accenture’s report, eighty one percent of all CFOs see targeting areas of new value across the business as a main responsibility.
Seventy seven percent believe it is within their purview to drive business-wide transformation.
Using data to drive value
The ability to capture and make better use of data to increase the efficiency and effectiveness of their own department and departments across the organization is the CFO’s greatest potential strength.
Finance functions are already using powerful tools for better interpretation and impact of the base data.
Seventy six percent of CFOs agree that without “one version of the truth” across business units, their organization struggle with decision-making.
Taking charge of digitalization
CFOs are bringing in “digitalization” of the entire organizations.
One of the primary tasks include diffusion of technologies to change business models and open new revenue streams.
Guiding the enterprise
Finance expertise along with forecasting, investment evaluation, risk management and data stewardship qualify them for guiding through the significant new challenges around cyber-security, data aggregation and technology investment evaluation.
Challenges to the new role
The three hats of all modern CFOs must wear include – Accountant, business partner and strategic enabler.
CFOs have to find ways to free up time through automation and analytics.
And in doing so, they must also integrate and connect with other business departments and functions.
Even today, there are potential opportunities for CFOs who are still occupying a narrower role.
Mastering Data
There are valid concerns about information security.
Such concerns go beyond financial data as organizations combine both internal and external, structured as well as unstructured data for the most insightful reading of any given situation.
According to a report by Accenture, almost three in ten CFOs see the need to combine financial data with other sources of information as a challenge.
Research suggests that unexploited value from financial data alone is crucial, even before this information has been combined with other enterprise data sets.
Other concerns
– Employees across departments struggling to adopt emerging and evolving technologies.
– The emergence of new, cyber-related risks that make the investment expendable.
– The technology becoming obsolete before the return on investment is even realized.
– Combining different data sets proving to be very time-consuming.
– Investments not being suitably balanced between core and new business.
Overcoming these concerns
- Look across the enterprise to prioritize digital investments. Test cases with rapid paybacks can help self-fund the transformation.
- Find common ground with other business units on the scope of digitalization for finance and the pace at which to pursue it.
- Clearly connect the investments being made with the commercial returns the business expects to realize. This allows for immediate re-prioritization and increased confidence in the return on investment.
- Seek out the financial value that digital investments in the rest of the business can deliver. For example, can sensors on equipment serve as an input to capital planning and maintenance budgeting by providing predictive information on asset performance?
- Focus on how to innovate and scale at speed. Deploy agile methods and outcome-based design principles.
- Build stewardship and governance structures to measure performance and ensure accountability for outcomes.
- Constantly evaluate the portfolio of digital investments to ensure continued relevance and value.
- Encourage teams to pursue innovation and support them so they are not afraid of taking risks.
- Recognize that success is not linear and that change requires patience.
Looking into the future
Moving from “number-cruncher” to “visionary” will require CFOs to be a real-time analyst, who can take into consideration multiple touch points of immediate data to quickly determine the state of the P&L.
Tomorrow’s CFO should be able to harness copious amounts of raw data into accessible insight, predicting the direction of the business, uncovering hidden opportunities within progressive organisation that is both data and insights driven.
With the right technology in place, the finance function can navigate the unchartered waters of its evolving responsibilities, harnessing data and analytics and adding the financial lens to mission-critical decisions.
With that, there’s no doubt CFOs can play a leading role in harnessing the transformative opportunities that cloud technology provides to steer wider business transformation.
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