Gearing up for transformation: A CFO’s perspective

Once considered a numbers-only role, the CFO is now balancing traditional responsibilities with growing demand for data-driven analysis and insights that support growth and strategy.

As a Group Chief Financial Officer, one question that I am often asked is about the future. What do you think will be the company’s future 5 years from now, or where will our industry be in the next decade? Being people who are adept at numbers, it is not very difficult to answer these. But that was until the pandemic happened. Simply put, 2020 was a curveball that no amount of data analysis or predictive calculation could have foreseen. Our lives changed overnight and for CFOs never has there been a more opportune time to create an impact and guide businesses to the next frontier. Once considered a numbers-only role, the CFO is now balancing traditional responsibilities with growing demand for data-driven analysis and insights that support growth and strategy.

Also shaping the landscape are globalization, an intense regulatory environment, and the rise of fast-growing emerging markets, creating greater complexity for the CFO as well as a new set of business priorities. All of these forces are redefining the role of the CFO. CFOs today are spending less time on operational finance activities and more time on strategy. The importance and breadth of the CFO’s role continues to grow, the CFO of the future is drastically different from that of the past and will need a whole gamut of skills and capabilities to help businesses navigate through challenges and uncertain times ahead.

Make technology an ally

Technology has changed so much in terms of the way we work and if we are under the impression that this speed of change will be constant, then we are mistaken. Finance transformation will only gather more rocket fuel in the next decade. While it is essential for CFOs to catch up with technology and master how to leverage it, it is as important to stay updated and open to new ways of working; because use of automation will also mean that several tasks which were carried out manually can now be done in a matter of minutes. CFOs will also have to arm themselves with ways of using AI and ML to make better decisions. Those forward-looking, data-driven metrics, while critical to the evolution of the role, will not, however, be the only way CFOs leverage technology to drive value creation. The future of the function will also be about understanding emerging technologies and identifying where, how, and when to invest in them (and when not to).

Scale up to strategic consulting

CFOs are working in a time of unparalleled disruption and along with their teams, will need to quickly adapt to change, whether it’s overseeing company expansion, adapting to new regulations, or creating a new business model.  As one of the leading supporters of innovation in their organisations, CFOs need to understand how disruption can impact business models, and be able to assess risk and financial results to determine where to investment in innovation. Providing data and insights that can help identify opportunities for innovation and inform strategies is also important.

According to KPMG’s The future of finance report, stakeholders increasingly expect finance to serve as a true business partner, not a back-office department focused on transactional processing and historical reporting. They want the finance function to provide predictive and prescriptive insights to drive optimal business performance and real-time decision-making.

Rely on data

Data is becoming increasingly important to business success and helping companies identify new market opportunities, improve customer experiences, drive business planning, and support change and innovation. CEOs are looking to CFOs and finance teams to deliver analytics and insights that support strategy and decision-making.

In fact, according to a report titled The Changing Role of the CFO by ACCA and IMA, the finance function and the CFO are expected to be at the heart of this data revolution. Looking ahead, the CFO and finance teams will increasingly use advanced analytics to run predictive models and develop better forecasts. Understanding technology and systems—and whether they are capable of enabling greater efficiencies, agility, and insights—will be critical.

More collaboration with business leaders

Future finance leaders should seek out opportunities in their organizations to work with different stakeholders. A big part of the future CFO’s role will be not only delivering data, but sharing data insights to with multiple stakeholders, many some of whom don’t come from finance backgrounds. By stronger collaboration, CFOs can provide meaningful context around financial and business performance to internal and external stakeholder groups. These skills will also be important for building strong relationships in the organization as the CFO takes on more leadership responsibility.

The author is S. Mukundhan, Group CFO, Fulcrum Digital