By Nick Swarbrick, Finance Director at Datel
There was a time when finance was seen as a functional necessity to a business rather than a hub of innovation and driver of transformation. However, as businesses of all sizes and sectors continue to be shaped by advancing technologies, budget restraints and increasing expectations from the public, it is increasingly recognised that CFOs and finance leaders can provide a more forward-thinking role alongside other chief executives in transforming their organisations.
Whereas the operational focuses for CFOs and finance leaders would traditionally be heavily financially-oriented, new demands from customers, advancing technology and competitors have since shifted the traditional focuses for the finance industry into these four core areas – technology, insight, growth and risk management. These new focuses have made it essential for CFOs and finance leaders to adopt a more strategic role in the business, as they support other executives and leaders with the direction of the organisation.
Due to the constant evolution of technology in today’s society, customers are becoming more demanding for technical solutions that can perform faster, better and more efficiently. The development of certain technologies like voice recognition and blockchain have created smarter ways for customers to interact with their systems, and now CFOs are required to leverage these capabilities in order to enhance the value for customers.
Research found that 58% of finance leaders identify ‘technology’ as one of the key attributes changing the role of the CFO. Blockchain is one of those technologies and is one of the most impactful digital disruptions shaking up the finance industry. CFOs using blockchain can keep valuable information secure right through their supply chain and manage important contracts all whilst still keeping costs down. It has the ability to impact and redefine the financial industry as well as the traditional CFO role.
AI and Machine Learning have also evolved to the point that they have become indispensable additions to the finance toolkit. Helping to automate processes and generate accurate data in record time, CFOs and finance leaders have been able to take a more strategic approach at the forefront of the business.
Although new technologies coming to the market are positively affecting the role of a CFO, the risk of potential cyber attacks increases. The 2018 Cyber Security Breaches Survey found that 43% of businesses had reported cyber security breaches or attacks in the last 12 months. With this, ensuring that businesses have contingency plans in place is crucial.
In today’s society we are consumed by an increasing amount of data. Whilst CFOs and finance leaders have been working with numbers for decades, the current data revolution has changed the game by turning them into proactive strategic decision makers. For CFOs, the ability to process data, and transform it into a reliable source of intelligence is essential.
Such insight can create new business opportunities, spot previously-hidden inefficiencies and provide better internal control. In order to manage it effectively, Artificial Intelligence (AI) has been introduced as humans alone are unable to manage the sheer volume that is being generated. AI provides businesses with a way to enhance performance and productivity, while improving overall efficiency. It will enable skilled office workers to spend more time focusing on value-added activities, rather than the mechanics of maintaining data.
CFOs are working in a time of unparalleled business change and disruption. The CFO and finance leader of the future will need to adapt quickly to change, whether it’s supporting their company’s ability to move into a new market, adapt to new regulations, or create a new business model.
The majority of CFOs and fellow c-level executives are looking to drive growth within the next few years. Whilst growth is a successful business trait, CFOs and finance leaders have to strike a careful balance – making sure that growth strategies dovetail with the company’s beliefs, values and core competences, and so don’t lead to any erosion of the organisation’s USP.
More traditionally, CFOs and finance leaders had been responsible for analysing budgets and looking at investments that can potentially affect the way the company grows and is operated. Now, the requirements have changed, and CFOs need to spend even more time looking externally. They should be working closely with other c-level members of the business to predict future impacts within the industry to futureproof the organisation.
As one of the leading supporters of innovation in their organisations, CFOs and finance leaders need to understand how disruption can impact business models, and be able to assess risk and financial results to determine where to put investment into innovation.
CFOs are under pressure to effectively oversee risk management and they are being recognised more widely as being responsible for this. In a recent EY survey of 769 financial leaders, it was found that 57% of them recognise that risk is a major factor to consider in the future. With risks able to emerge from a number of different business sectors, like technology, being agile and reactive to change is really important as a CFO, in order to create value whilst also maintaining control.
It is essential that CFOs monitor and analyse the business to ensure that challenges and risks can be dealt and managed appropriately.
Evidently, the role of a CFO is changing and becoming more strategically focussed. These officers are now working more closely than ever with their CEO and executives to support them in the future direction of the business, rather than purely focusing on the financial side.
New technology is emerging, creating new opportunities and generating the capacity for growth. CFOs and their teams will need to develop and transform in order to sustain the evolving financial industry over the coming years and beyond.
In the future, CFOs will need to acquire a broader business knowledge to help deal with the more strategic role they will be taking on. Additionally, enhancing skills, becoming innovative leaders and embracing new technologies are all aspects that CFOs will need to take into account in order for their business to remain competitive.