The role of the CFO is in hyper-drive. The forward thinking headlines are leading CFOs to unchartered territories in an economy that is unstable and uncertain. How will CFOs deliver tomorrow’s company today? Where will growth come from in 2017? Will it be through revenues or increase in operational profitability?
Gone are the days of the CFOs traditional bookkeeping and monitoring from the isolated depths of a dark office. The Chief Financial Officer’s position and experience makes him a prime candidate to play an active role in the advancement of any organization. If anything is to be learned from the rise of the CIO – a position that saw significant changes in the last two decades or so – it is that only possessing a specialty skillset simply isn’t enough anymore. Ever-increasing competitiveness, expanding expectations, increased scrutiny, and a plethora of other abrasive factors have disrupted old ways to force the CFO to evolve. And just as in nature, only the strongest may thrive.
Why has the role of CFOs shifted so dramatically, though? The answer is more or less the same as for their CIO colleagues: the ubiquitous evolution of technologies and globalization. Although determining which one came first would be akin to playing a futile game of chicken-or-the-egg, what matters is that they are now fully and irreversibly intertwined, and that CFOs are to be part of it all.
Expectations of New and Old
Paradigm shifts – whether big or small – are never without challenges. A report released by McKinseyshowed that while a staggering 88% of newly appointed CFOs surveyed were expected to become more active as a strategy partner and advisor to CEOs, 59% of them found themselves stuck performing basic financial tasks that could have been handled by a typical accountant. This clash between expectations and reality makes it difficult to truly find an equilibrium between the traditional “gatekeeper” CFO and the forward-thinking “analytical advisor” type.
1. Embracing Evolution
Although we just used “shift” to qualify the changing role of CFOs, it may be more accurate to go with something like “evolution” going forward. There’s no denying that CFOs have been and will always remain at the heart of financial compliance, investments, and related opportunities within their respective organization. However, there is a widespread trend of role-blurring – a diversification of tasks, if we may – that makes versatility one of the most important quality to have for any high standing leader. Assignments that would generally involve only CFOs need to be widened so as to include other team members from an informational aspect. This means becoming able to analyze, break down, and evaluate data for relevancy on top of effectively communicating everything to the uninitiated.
2. Sharing Information
Furthermore, more and more businesses nowadays find value in sharing more information to their entire employee pool so as to promote interdepartmental collaboration; a culture of cost transparency lined up with global goals and expectations. Digesting information that required years of studying to interpret and even more years of experience to put to good use for broad understanding is extremely demanding. Organizational leadership is a prime example a function that has emerged for all senior managers.
3. Contributing to the Company’s Strategy
And then, there’s the strategy aspect. Long-term, CFOs are always looking to meet their end goal of generating as much funds as reasonably possible through ROIs. This requires a deep understanding of capital markets and current business and economic conditions. However, boards have an increasingly growing awareness that CFOs have the knowledge to contribute to the very strategic plans that enable investments. As it turns out, being able to communicate precise financial information and understanding risks are major contributions to strategic plans. Why is it, then, that only 52% of CEOs (still from the McKinsey report) have come to expect their CFO to challenge the company’s strategy? It is difficult to judge whether it is CEOs that needs to better understand the width of their CFO’s skillset, or CFOs that need to better expose their potential for contributions, but it is clear that businesses around the world are missing out.
4. Using Big Data, Not Gut Feeling
CFOs and CIOs should see to collaborate on the management of technology. After all, IT expenses easily make the top 5 list of any given business’ expenses, and sometimes score higher depending on the type of business. CFOs rely more and more on technology to effectively do their job; tools exist to simplify the plethora of processes that define the very role of CFOs, from interpreting results to controlling costs to acquiring capital to processing raw financial information. And yet, a very recent report by the FSN Modern Finance Forum found that one third of interviewed CFOs relied on gut feelings over cold hard business data… while 81% of the interviewees also believed CFOs would be responsible for business data. What gives? These CFOs admitted to struggling with the mastery of data, volume and variety-wise. The same report shows that new CFOs show “little propensity to make fundamental staffing changes” early on. Perhaps, then, that displaying more drive in hiring accountants and other support staff for proper work delegation would allow CFOs to focus on the emerging “Big Data side” of the job.
The right tools are needed to become that big-picture thinker, outspoken, what-gets-done type of CFO, and especially when it comes to technology. Some tools can help your CFO understand where their organization’s budget stands from an IT perspective, whereas other tools will turn large amounts of raw data into actionable data. These two examples are a great way of getting a head start when it comes to making the IT jump. If you’re looking to get serious right away, however, you should consider checking out our technology expense management Cimpl platform. Whether you seek to improve IT-related data management, transparency, or efficiency, Cimpl will get you started on the right foot – and make it easy to keep on going.