Home The C-SuiteChief Financial Officer (CFO) Technology and the Evolving Role of the CFO

Technology and the Evolving Role of the CFO

by internationaldirector

By: Morgan Jones, Columnist, International Director

Over the past several years, the role of the chief financial officer (CFO) has changed dramatically. This is due to many factors, including the global financial crisis of the last decade, the emergence of big data, the changing technological landscape and the ubiquitous influence of social media.

From the traditional roles of supervising and controlling the flow of finances, the CFO role has shifted dramatically. From the basic finance functions and traditional roles of managing investments, managing and analyzing expenses, and ensuring regulatory compliance, CFOsof today need a range of other skills that go beyond just computing for the bottom line.

Today, CFOs are expected not only to master the foundations of their finance functions but also to provide valuable insights, guidance andadvice to the chief executive officer and the board of directors on a range of other issues that may affect financial performance. CFOs are now expected to not only provide wise and prudent monetary management but to also be involved in strategy, technology andsocial media, insight and innovation, recruiting the right talent, and communication—areas in which technology is vital.

The shift to strategy

More than juggling books and figures, the role of the CFO or financial director is now relied on to provide valuable insights, advice and guidance to the CEO and board on a range of issues that go beyond business finance. This shift to becoming a strategic business adviser involves a new set of skills as well as tools. This is because CFOs must now look at non-financial factors and other forces that could potentially affect the future performance and profits of the business.

This means CFOs must consider, for example, customer satisfaction in projecting sales volumes. They must be able to effectively harness data to take their businesses to greater heights. In fact, the most highly valued CFOs of today are those who can take hard financial data and develop insights that may, in turn, become dynamic corporate strategy.

With the help of technology, CFOs can have a better handle on data that was once unnoticed or overlooked. Technology, such as pioneering and disruptive programs and software, provide deeper and wider perspective, even uncovering factors that CFOs didn’t realize could affect the bottom line. Leveraging on technology can allow them to better develop strategy and take on a consultant/strategist role.

The impact of technology and social media

CFOs, as well as other business leaders, recognize the power and impact of technology. They must change along with it to stay relevant and successful. Furthermore, technology can play a crucial role in providing solutions that help them perform better and get results faster.

For example, automation technology, such as finance-management or expense-report apps, can greatly help in their finance function. Using technology to gain insight, spot financial trends, boost productivity and ensure compliance can also influence financial performance.

Meanwhile, social media opens doors for CFOs to serve as thought leaders as well as advocate for the brand. How the organization and its role is portrayed on social channels such as Facebook and Twitter can have a direct and huge impact on future business expansion, product development and many other factors. Having insight on social trends and layering this over the business’s financial plans, performance and projections can also add significant value to the organization.

The best CFOs must learn how to harness the power of technology as well as social media in order to succeed, especially since their role now lies in the crucial intersection of finance, technology andstrategy.

Developing insight and driving innovation

CFOs today are expected to take non-financial information and forces to glean better insights, which they can use to offer sound business advice. This is where the emergence of big data can become useful. So, for today’s CFOs to deliver their role more effectively, they have to turn to different sources of data.

For example, an assembly line’s production could be matched against multiple sources of information, such as turnover, ambient temperature, employee motivation and so on. CFOs must keep an eye on these things, which may have been previously overlooked, so they can suggest opportunities and even drive innovation.

It’s also important to develop insight from outside the organization, such as demographic trends, consumer behaviourandcurrent events. However, these can’t be done efficiently and in a timely manner without the help of technology. Linking different datasets from a massive pool of sources can be done by thinking outside the box. With this, the use of emerging technology may come in handy, and CFOs can be at the forefront. Doing so may entail replacing legacy systems with state-of-the-art ones wherein data collection can be more streamlined and efficient. While this poses another set of challenges, today’s evolving CFOs must be prepared to take this on if they are to bring sound business strategies to the table.

Getting the right people

Because of the evolving role of the CFO and changing finance operating models that come with it, there will be an increased need for CFOs to look for skill-sets that go beyond accounting and finance. They will need to get people who can provide advanced data analysis, information technology and other specializations that go beyond financial.

Instead of focusing on financial data and presenting reports, finance staff must also know how to look ahead and make projections derived from hard data. This requires that they be involved in data collection and analysis, as well as cover cybersecurity, logistics, customer service and even branding. This is because now, more than ever, they have to not only report on the past but also deliver sound recommendations for the future.

Therefore, today’s CFO must source people from diverse backgrounds. This is another hurdle that needs to be faced, as recruitment has become less straightforward than it was traditionally. All these new demands require looking for and investing in the right talent, while closely working with the Human Resources department in the process. That said, even Human Resources will turn to technology to find the right person for each post. For CFOs, this is where technology can also come in, allowing them to collaborate with HR and within their own departments for recruitment, training and mentoring.

This also takes the CFOs’ role outside the confines of the desk and the finance department. Instead, they must now engage in regular meetings with other departments and even take on a grassroots approach. This means they must visit company facilities, check on stores, and interact with employees and customers to gain a better perspective. However, even when confined to the office, CFOs can take a more active role in interacting outside their departments and organizations through technology, such as web conferences, video calls, collaboration and cloud technology, to name a few.

Mastering the art of communication

Because of the CFOs’ more complex, wide-ranging and far-reaching role today, it’s important that they communicate more effectively across the various facets of their role—and this goes beyond speaking through figures and spreadsheets. With today’s technology, all these can be done with just a few clicks of a button.

CFOs must know how to communicate not just the results of their financial reports but also how they impact the company in general. They must also use their communication skills to interact not only within their departments or organizations but also externally. In as much as they should be able to present complex financial data and results, as well as business performance, they must also clearly articulate their recommendations, plans andstrategies. Presentation technology, as well as data-visualization apps, are just a few examples of tools that today’s CFOs can use.

Last words on the CFO’s changing role

From having a reactive role to a more proactive one, the CFO’s role has definitely evolved. More than ever, CEOs rely on their relationships with their CFOs as trusted consultants who deliver key business insights beyond mere financial figures. That said, technology plays a crucial role not just in helping the role of CFOs evolve but also in equipping them with the right tools to undertake these changes.

 

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