The CFO role (and finance function at large) is changing at a very rapid pace. More and more, there is an imperative for the CFO to be a steward of the long term. What does that mean?
It means that they’re leading digital transformation efforts, becoming more cross-functional in their roles, and playing an important role in talent management. The shift from driving performance to being change agents requires finance leaders to flex very different muscles.
A recent article by McKinsey & Co and a research study conducted by Black Book highlights this trend. McKinsey notes that more than half of CFO or finance functions are at the forefront of digitization, whether it is automation, analytics, robotics, or data visualization. To prepare for this, financial managers must have a strong technical background, including data science and business analytics skills that have traditionally resided with other functions, such as the CIO or CTO.
Automation, for example, can move finance functions from manual transactional systems to automated ones that can save time and money. Other digital technologies, such as data visualization and analytics, can be leveraged by FP&A (financial planning & analysis) and forecasting teams to get different views of data and insights that may result in better decision making. And finally, data and systems integration – or the ability to integrate finance with other functions across the company, such as ERP, pricing, supply chain management, operations, and CRM – can help finance play a more proactive role in influencing change in the company.
Another significant shift with CFOs is leading the charge on talent and driving the talent agenda. What does this mean? It means working closely with the CEO and HR leadership to attract, retain, and drive talent. It means building up the talent within the finance function, but also embedding finance capabilities throughout the organization. And a little goes a long way. When done purposefully, things like job rotations and special projects that encourage people to learn new and different skills and get out of their comfort zones can have tremendous outcomes. Additionally, a big opportunity for the finance function is making non-finance functions self-sufficient by equipping them with the right financial skills and tools. This reduces “ad hoc” work and frees up time for the finance team to work on longer-term, more strategic work.
With CFOs having more cross-functional responsibilities, exposing the finance function to newer technologies, newer ways of working, and collaboration tools can be invaluable.
Sources:
Brown, S., Agrawal, A., and Prakash, P. McKinsey & Company. June 2019. “The evolution of the CFO role.” Retrieved from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-evolution-of-the-cfo?cid=other-eml-alt-mip-mck&hlkid=566473ff51dc4a379e17847ee5acfc84&hctky=10115817&hdpid=7cd18d63-2307-4455-b5bd-e821124db867
Black Book Research. “2019 Black Book CFO & Financial Leadership Survey.” Retrieved from https://blackbookmarketresearch.com/uploads/pdf/2019%20Black%20Book%20CFO%20&%20Financial%20Leadership%20Survey%20Report.pdf