The Evolving Role of the CFO
Jim Perry — October 6, 2017 — October 6, 2017
geralt / Pixabay
Digital disruption is transforming the way we work. From entry-level personnel on-the-ground to C-level executives, nearly every function in the modern workplace is drastically different from what it was 10 years ago – and perhaps no position has shifted more than that of the CFO.
The role of the CFO has fundamentally changed in the epoch of digital transformation. Leading finance executives have become more strategically-focused, value-focused, and future-focused. In turn, the evolution of the CFO role has created a blueprint for a smarter, more forward-looking finance organization focused on putting the best talent in key roles while better equipping them for challenges of the new digital economy.
As CFOs focus on adapting to their evolving roles, they also need to understand that this pivot point is taking place amidst an era of fiscal challenge and organizational transformation. Digital transformation has brought CFOs center-stage as senior leadership teams try to drive forward transformation within a dynamic financial environment. This shift has required finance practitioners to develop skills that are not traditionally associated with finance professions — including but not limited to business planning, risk management, negotiations, relationship management, and strategic thinking.
With this in mind, the modern CFO must recognize that they should approach strategy formulation and performance monitoring in an integrated way. CFOs must go beyond management and regulatory reporting in order to offer value-added decision support that aligns operational strategy with business execution. As strategic partners to their businesses, CFOs and their finance teams are expected to leverage software solutions to strategize, plan, analyze, optimize, and close and disclose financial results in a scalable framework.
According to a 2016 report from McKinsey & Company, only two out of three CFOs say their companies have the capabilities for agile decision-making, scenario planning, and/or decentralized decision-making, which are all required to remain competitive in months and years to come. Analysts agree that better partnerships (ranging from other leaders in an organization, like the CEO and Board of Directors, to external stakeholders like investors and opinion leaders), as well as softer skills like strong communication, will be required to successfully align finance efforts with the business. This comes as organizations around the world work to become more nimble and innovative, and are focused on adapting to increasing customer demands of the digital age. It is crucial that finance aligns with the business and uses this knowledge to optimize processes and develop strategies that create value not only for the business, but also for the customer – and the customers’ customer.
At the end of the day, the CFO and their team must transition from custodians of corporate assets and financial data to core business stewards, tasked with helping the business measure and focus on the right indicators of performance across the enterprise. Intellectual curiosity and the ability to ask the right commercial and operational questions will be fundamental attributes of a great financial business partner in the future. The end result of this paradigm shift in financial operations and the role of the CFO is a sustained digital investment that will drive significant increases in customer satisfaction and engagement.
Unless action is taken to define a bold reporting strategy and vision for advancing the traditional reporting process, finance leaders and their teams will fall behind the pace of technology. The CFO of tomorrow will be increasingly involved in business strategy and planning as a key influencer in the C-suite to drive profit and growth.
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