CFOs today are expected to embrace technology to strategize and help drive the business.
Digital disruption has been identified as one of the defining trends of the 21st century, creating new norms in the way we live and work. In an era of unprecedented access to technology and data, our 2016 Global CEO Outlook has shown that more than 80% of ASEAN business leaders believe that the coming 3 years are more critical to success than the last 50 years have been.
Previously, finance was purely regarded as an accounting function. Typical expectations of CFOs are that they were mere financial custodians, a reactive advisor focusing on specialty finance, and technology was their hindrance.
In today’s digital age, CFOs must look beyond their traditional roles to become an enterprise-wide strategist, an innovation and change leader and a proactive decision maker, utilizing technology to look at the bigger picture.
CFOs now play a unique role in helping CEOs with the issues that keep them up at night. It is the perfect time for CFOs to look into their company’s value chain and question where the profit pools that are right for disruption are.
In short, we are now in the era of the digital CFO.
Supporting the digital CFO are a myriad of financial analytics and other technological tools. However leveraging new technologies is just one aspect of becoming a digital CFO.
Beyond just being tech-savvy, there are five dimensions to a digital CFO: strategic leadership, data-driven value creation, digital labor, cross-functional collaboration and cyber security.
Our global CEO survey shows that CEOs demand a lot more from their CFOs. They are expecting CFOs to be more strategic in the way that they conduct business, to be more thoughtful about what are the possible changes that are coming. Two-thirds of the CEOs believe that the CFO role will increase in importance over the next few years. Yet, one out of three CEOs felt that their CFOs is not up to the challenge.
CFOs have such deep insights into the economics of the business. They can exploit that understanding and leverage their expertise to enable proactive and agile decisions, and help drive enterprise-wide growth. In doing so, they become a strategic partner to the CEOs.
Data-driven value creation
In today’s digital age, the sheer volume of data available is increasing exponentially. A digital CFO is one who can go beyond this to turn data from insights into value. New data management technologies are giving CFOs access to real-time insights, allowing for better and more efficient decision-making, one that is based on data as opposed to intuition. Leveraging these capabilities to extract insights can help elevate CFOs’ involvement in strategic investment choices and business partnering.
Rapid progress in robotic process automation (RPA), machine learning and cognitive technology holds the promise of transforming business services and creating a new category of digital labor. A digital CFO will be able to optimize these opportunities, leapfrogging the necessity for labor arbitrage and RPA. Utilizing this intelligence revolution can help achieve unparalleled gains in efficiency and cost effectiveness.
As companies expand geographically, managing diverse teams becomes a business challenge. For CFOs to be effective, they also need to collaborate across functions and teams to respond to specific strategic challenges impacting the business. Increased connectivity and new technologies are enabling real-time collaboration between virtual teams across physical borders. With these, the digital CFO is no longer solely a gatekeeper but a business advisor and business value architect.
As caretakers of sensitive commercial data, CFOs need to find the balance between data protection and accessibility. With cyber threats being more of a business risk than just an IT risk, digital CFOs must go beyond digital walls, helping their organization stay one step ahead by integrating and embedding cyber security in their key decision making processes.
Overall, there is no doubt that the role of the CFO is shifting rapidly. These five dimensions demonstrate the increased expectations placed on CFOs to value-add and drive business development in a technologically changing environment. CFOs must not only have financial capabilities but must be able to think strategically and focus on growth. The key question to ask now is whether your CFO is ready to become a digital CFO?