Agile, strategic and proactive: the new skills of the CFO

In an increas­ing­ly dig­i­tal work­place, chief finan­cial offi­cers (CFOs) must under­stand under­ly­ing tech­nol­o­gy to effec­tive­ly guide their busi­ness. 

Bring­ing automa­tion into the finance func­tion can give CFOs new and unique insights; the chal­lenge is to use the data for the ben­e­fit of the busi­ness now and in the future. Some 87 per cent of busi­ness lead­ers count this as a top pri­or­i­ty, accord­ing to Gart­ner, which means CFOs need a greater under­stand­ing of tech­nol­o­gy.

“CFOs should have an under­stand­ing of what tech­nolo­gies are com­ing down the track, what com­peti­tors may be lever­ag­ing to their advan­tage and where their own tech stack may be lack­ing,” says Sea­mus Hen­nessy, CFO at online edu­ca­tion com­pa­ny Udac­i­ty.

This requires a 360-degree under­stand­ing of the tech­nolo­gies in their sec­tor, some­thing that even 20 years ago sim­ply wasn’t nec­es­sary, but is now an increas­ing­ly essen­tial part of the CFO toolk­it.

“CFOs in larg­er busi­ness­es will find data insights guide many key busi­ness deci­sions. The growth of machine learn­ing has seen data sci­en­tists and data engi­neers work­ing hand in hand with the senior finance team. This can help free up CFOs to con­cen­trate on the more strate­gic side of the role, but hav­ing an under­stand­ing of how data is used and inter­pret­ed at the gran­u­lar lev­el is essen­tial,” says Hen­nessy.

Bri­an Mont­gomery, finance direc­tor at Work­day, says that in the wake of an unsta­ble econ­o­my and con­stant­ly shift­ing con­sumer behav­iour, CFOs need to pro­vide data-led insights in real time to help the busi­ness piv­ot quick­ly. 

“Agili­ty has become the num­ber one pri­or­i­ty and that’s what the CFOs of the future are aim­ing to achieve,” he says. “This is why technology’s poten­tial to trans­form finance func­tions has become one of the most excit­ing parts of a CFO’s job. The reliance on data and move to cloud-based solu­tions has caused a fun­da­men­tal shift in how the finance func­tion works.” 

CFOs can set their own met­rics and pull togeth­er fore­casts instant­ly. They are becom­ing hands on with the data and start­ing to own every­thing from basic con­fig­u­ra­tions to report­ing. How­ev­er, this will ulti­mate­ly require a new skillset. This doesn’t mean finance lead­ers need to start learn­ing how to code, but going for­ward CFOs must col­lab­o­rate with oth­er depart­ments, from human resources to sales and IT, to help dri­ve more agile deci­sions across the organ­i­sa­tion. 

As the leader who is pro­vid­ing real-time data insights such as fore­casts, the CFO has a strate­gic role to play in lead­ing a com­pa­ny-wide trans­for­ma­tion towards agili­ty. To achieve this, hav­ing inter­per­son­al skills to sup­port and empow­er lead­ers in their deci­sion-mak­ing will be key. 

Anticipating and addressing emerging scenarios

Anoth­er key advan­tage of auto­mat­ed data insight is its role in enabling CFOs to mod­el dif­fer­ent out­comes and take a more strate­gic approach.

“A strong appre­ci­a­tion of enter­prise tech­nol­o­gy is essen­tial with data and secu­ri­ty con­sid­er­a­tions being the crit­i­cal basics ahead of arti­fi­cial intel­li­gence and machine learn­ing, which are very much in the fore­front of future think­ing,” says Ian McLaren, CFO at Govia Thames­link Rail­way. 

“As we move from hav­ing dig­i­talised the basics, we are now see­ing a lot more pull towards exper­i­ment­ing with ‘what if’ chal­lenges and ques­tions being giv­en to our data team to address emerg­ing sce­nar­ios.”

While the finance direc­tors of the past were large­ly reac­tive, with the major­i­ty of time spent reflect­ing on his­toric data, the role is now much more for­ward look­ing, accord­ing to James Roberts, CFO at Time Finance.

As the new-look CFO emerges, the top finance roles quick­ly change to being proac­tive and act­ing as a gen­uine right hand to the chief exec­u­tive, chal­leng­ing the num­ber-crunch­ing, back-office stereo­type. 

“Whether it’s as a sound­ing board or insti­ga­tor of inno­va­tion across the busi­ness, the mod­ern CFO is not only focused on pro­jec­tions and sales fore­cast­ing, they’ll act as a stand-in to the CEO when need­ed,” says Roberts. 

“This expand­ed job role works per­fect­ly when the CFO and CEO have a shared vision of com­pa­ny val­ues and stops a tru­ly effec­tive CFO from being com­modi­tised in future since they become unique to each busi­ness with their role being less one dimen­sion­al.” 

When prop­er­ly applied, automa­tion of the finance func­tion is key to improv­ing mar­gins, reduc­ing human error and rais­ing effi­cien­cies. CFOs should be doing all they can to upskill in this area if they aren’t already, he says.

“Automa­tion should ide­al­ly be part­nered with growth. When repet­i­tive parts of roles are hand­ed over to auto­mat­ed func­tions, employ­ees can focus on more excit­ing and valu­able areas, not sim­ply be replaced. If used thought­ful­ly, automa­tion will undoubt­ed­ly pro­vide ben­e­fits for us all,” Roberts adds.

Data insights help drive business decisions

Jaco Ver­meulen, chief tech­nol­o­gy offi­cer of dig­i­tal trans­for­ma­tion experts BML, says it is impor­tant to avoid infor­ma­tion over­load and get the right data, at the right time, accu­rate­ly and pre­sent­ed in a mean­ing­ful way. 

“Most CFOs’ con­sid­er­a­tion when indi­cat­ing automa­tion is in dri­ving effi­cien­cy and accu­ra­cy for finance func­tions,” he says. “CFOs require skills not only in finan­cial indi­ca­tors, but impor­tant­ly busi­ness-deci­sion ana­lyt­ics.”

Dr Alan Parkin­son, pro­fes­sor of finan­cial edu­ca­tion at Uni­ver­si­ty Col­lege Lon­don School of Man­age­ment, stress­es the impor­tance of dig­i­tal skills, which will require con­tin­u­al invest­ment. 

“Giv­en the pace of change and the com­pet­i­tive poten­tial of good data insights, lead­ers of any kind have to be able to under­stand what their data is telling them,” he says. 

“From a finan­cial man­age­ment per­spec­tive, there are no defin­i­tive set mea­sure­ments or stan­dard para­me­ters for data analy­sis that you can teach which will apply to all busi­ness­es uni­ver­sal­ly. It is incum­bent on the CFO or finan­cial leader to under­stand the busi­ness well enough to set up their own met­rics, with the data they have avail­able, and to know enough to ask for the right data to be made avail­able if it is not already.”

How the CFO role is evolving

Rus­sell Gam­mon, chief inno­va­tion offi­cer at Tax Sys­tems, says it is no longer just about automat­ing man­u­al tasks as now the CFO has to ensure sys­tems are in place that can talk to one anoth­er. 

“The imper­a­tive for the CFO is to ensure any dig­i­tal trans­for­ma­tion is now blend­ed across the organ­i­sa­tion as a whole,” he says.

CFOs have seen the num­ber of func­tions report­ing to them increase by 20 per cent over the past two years, accord­ing to a recent McK­in­sey sur­vey.

“CFOs now have to wor­ry about their tra­di­tion­al areas of work, but also man­age their com­pa­nies’ new areas of focus such as dig­i­tal trans­for­ma­tion,” says Lau­rent Descout, founder and chief exec­u­tive of trea­sury fin­tech Neo.

Todd McEl­hat­ton, CFO at Zuo­ra, adds: “Tra­di­tion­al finance as we know it is a thing of the past and is giv­ing way to new flex­i­ble busi­ness mod­els and advanced tech­nol­o­gy. The future of finance relies on auto­mat­ed tech­nol­o­gy to free teams up to focus on more strate­gic efforts to dri­ve sus­tain­able growth, com­pli­ance and accu­ra­cy.”