It’s a new day for middle-market CFOs, who have traditionally been viewed primarily as number crunchers and financial risk managers. The role is going through a major transformation as organizations are relying on their CFOs as strategic leaders who are central to corporate planning and decision making.
While CFOs will continue performing foundational tasks like budgeting, financial reporting and cash flow management, it’s no longer enough for the CFO to just be the financial steward of the organization. The modern CFO is expected to bring strategic ideas to the C-suite table while developing and executing the company’s strategic agenda and helping effect change throughout the organization. This new strategic role requires a new skillset for many financial professionals.
Transformed by Technology
The role of the modern CFO is being transformed by technological innovation and access to massive amounts of data, both inside and outside the organization. Today’s CFO needs to efficiently leverage new technologies and the financial function needs to be at the forefront of the organization’s digitization efforts.
CFOs need to lead the charge in these new technologies and be the change agents controlling the pace of transformation throughout the company. Those who are able to successfully leverage new technologies will become the key source for data-driven decision making and be empowered to drive their organizations to be more agile, dynamic and successful.
There are three key technologies leading this transformation:
1. Automation — Automation of the financial function is typically the first step in the technology transformation. According to a study conducted by McKinsey Global Institute, 42% of a finance team’s processes can be fully automated while another 19% can be highly automated.
Specific finance activities that lend themselves 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.
2. 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 and organizes it. This allows for the generation of clear, timely and actionable visuals that can be pushed to the appropriate end users to enhance decision making.
3. 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. The companies that can leverage data strategically will be tomorrow’s market leaders.
Wearing Lots of Hats
This seismic shift of the finance function means that CFOs 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.
Today’s CFO also must work hand in hand with the other members of the C-suite to develop an integrated approach to the business and a broad understanding of the organization’s entire value chain. This means working with:
- Human resources to help drive the talent agenda.
- IT to drive technology transformation throughout the organization.
- Operations to optimize efficiency in the supply chain, logistics, production and procurement functions.
- Sales and marketing to enhance visibility and target customers.
Becoming a Forward-Focused Leader
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.
Talk to an advisor to learn how we can help you harness the power of data and digital solutions to overcome barriers and transform your role as a financial leader.