Why the CFO needs to be a chief collaborator

Tech­no­log­i­cal advances and pan­dem­ic-dri­ven busi­ness pres­sures have accel­er­at­ed the evo­lu­tion of the CFO, trans­form­ing them from finan­cial man­agers to strate­gic C‑suite mas­ter­minds.

While the role his­tor­i­cal­ly focused on com­pli­ance, report­ing and man­ag­ing finan­cial oper­a­tions, CFOs must now be con­sul­tants and com­mu­ni­ca­tors. Using data and ana­lyt­ics, a CFO pro­vides real-time insights into busi­ness oper­a­tions, impact­ing com­pa­ny pol­i­cy and direc­tion.

“The biggest change in the role of CFO over the last five years is that it’s gone from tac­ti­cal finan­cial man­ag­er to strate­gic part­ner to the CEO,” says Mike Beach, CFO of Charge­bee, a rev­enue man­age­ment plat­form. “Since the onset of the pan­dem­ic there has been an even greater focus on data. Com­pa­nies are real­ly drilling down into the dif­fer­ent parts of their busi­ness, try­ing to under­stand the num­bers and iden­ti­fy oppor­tu­ni­ties and effi­cien­cies.”

Han­dled effec­tive­ly, data can give crit­i­cal insights not just into an organisation’s finances, but its ESG cre­den­tials, its progress on diver­si­ty and inclu­sion, and its long-term road map.

The CFO brings a gran­u­lar grasp of fig­ures, along with an under­stand­ing of the company’s long-term strat­e­gy and live infor­ma­tion about mar­ket con­di­tions. These fac­tors mean they’re well placed to act as the cus­to­di­an and inter­preter of the wealth of data that’s gen­er­at­ed with­in an organ­i­sa­tion.

“CFOs now serve as val­ued advis­ers and con­sul­tants to the entire exec­u­tive team,” Beach says. “They are respon­si­ble for plan­ning years ahead, antic­i­pat­ing mar­kets and build­ing roadmaps for long-term suc­cess.”

Out of the silo

CFOs today play a cru­cial role in deci­sion-mak­ing. They’re the first in the room to dis­sect the impact of a par­tic­u­lar chal­lenge, mit­i­gat­ing risk and deter­min­ing the best next step, says Chi­tra Bal­a­sub­ra­man­ian, CFO at Cir­cle­CI. 

“CFOs have huge val­ue bridg­ing teams with­in a busi­ness as well as com­mu­ni­cat­ing to exter­nal audi­ences,” she says. “They are vital in fundrais­ing, in sup­port­ing the busi­ness, and under­stand­ing how cus­tomers will react to chang­ing busi­ness mod­els. They go beyond the num­bers and under­stand all aspects of their busi­ness.”

Gone are the days of the siloed CFO. Instead, the role is shift­ing from ‘chief accoun­tant’ to ‘chief insights offi­cer’, becom­ing much more oper­a­tional. 

“CFOs today have greater vis­i­bil­i­ty across their busi­ness­es and a more holis­tic lens than per­haps any oth­er role,” says Will John­son, CFO at cross-chan­nel mar­ket­ing plat­form Iter­able. 

With this vis­i­bil­i­ty, they’re in a unique posi­tion to observe and nav­i­gate the bound­aries between dif­fer­ent depart­ments and look for­ward, rather than back. “It’s more impor­tant than ever for CFOs to look down the road, help avoid pot­holes and exe­cute lane changes, rather than star­ing in the rear-view mir­ror,” he says.

Data-led decisions

Mohit Daswani is CFO of ThoughtSpot, a uni­corn ana­lyt­ics busi­ness, and a for­mer CFO of the pay­ments, risk and tech­nol­o­gy busi­ness­es at Pay­Pal. He thinks the new breed of CFO needs to be objec­tive about per­for­mance mea­sures, ground­ed in data and col­lab­o­ra­tive in their approach.

“Data is pow­er,” Daswani explains. “CFOs must be pre­pared to dive into the detail by depart­ment and cus­tomer to under­stand the real trends at play. Armed with the right data, CFOs help stake­hold­ers through­out the busi­ness col­lab­o­rate and suc­ceed.”

To this end, CFOs should be at the cut­ting edge of tech­nol­o­gy. This means mak­ing full use of busi­ness intel­li­gence, data ana­lyt­ics, and machine learn­ing and AI. These tech­nolo­gies yield far greater insights than the spread­sheets of yes­ter­year, but they also require human inter­pre­ta­tion to use the infor­ma­tion to plan effec­tive­ly for the future. 

“CFOs can help upskill all col­leagues to become data-led deci­sion mak­ers,” Daswani says. This will enable the busi­ness to weath­er volatile times and take time­ly actions which will have a real busi­ness impact.

In their new role, CFOs need to take the infor­ma­tion gleaned from AI and machine intel­li­gence and inter­pret this for the rest of the organ­i­sa­tion, pro­vid­ing deep­er com­mer­cial under­stand­ing to help oth­er depart­ments make key strate­gic deci­sions.

It isn’t enough to keep those data func­tions sole­ly with­in the finance depart­ment, says Susy Roberts, exec­u­tive coach and founder of peo­ple devel­op­ment con­sul­tan­cy Hunter Roberts.

“CFOs need to be much more aware of trends with­in their own organ­i­sa­tion, their sec­tor and glob­al­ly so they can advise on the real­i­ty behind the reports,” she says. “Help­ing peo­ple to under­stand why deci­sions need to be made is a skill every suc­cess­ful leader needs. CFOs with the abil­i­ty to make finance mean­ing­ful to those with­out a finan­cial back­ground are indis­pens­able.”

New skills in demand

The CFO role isn’t chang­ing, but broad­en­ing, says Sarah Spo­ja, CFO at Tipalti, an accounts payable (AP) and pro­cure­ment automa­tion soft­ware com­pa­ny. On top of bud­get­ing, fore­cast­ing, and strate­gic plan­ning, they’re par­tic­i­pat­ing in projects that will trans­form their com­pa­nies. This means col­lab­o­rat­ing with depart­ments that pre­vi­ous­ly were seen as non-finan­cial respon­si­bil­i­ties:  sales and mar­ket­ing, for exam­ple, as well as the wider C‑suite. 

CFOs are also grap­pling with huge changes that have occurred in organ­i­sa­tions over the last two years. They are deal­ing with a more dis­persed work­force, han­dling com­pli­ance, tax and fraud, and incor­po­rat­ing ESG into their busi­ness and its oper­a­tions.

Time-con­sum­ing man­u­al finan­cial tasks can now be han­dled by automa­tion, which has increased their free­dom to oper­ate out­side the finance silo. As a result, the CFO can take a more strate­gic role.

“The role of tech­nol­o­gy in mod­ernising finan­cial process­es is absolute­ly cru­cial in enabling the CFO to break out of the ‘finance only’ bub­ble,” Spo­ja says. “This enables them to focus on high-impact ini­tia­tives and lead on wider busi­ness strat­e­gy.”

Driving digital transformation

The glob­al econ­o­my is being dri­ven by tech­nol­o­gy and rapid dig­i­tal trans­for­ma­tion, pres­sur­ing lead­ers and teams to change and adapt. The new breed of CFO is in a unique posi­tion to help nav­i­gate this path. They can become a role mod­el with­in the com­pa­ny for adopt­ing dig­i­tal trans­for­ma­tion and all the tools that go along with it.

“The CFO is a strong, cen­tral role, and is crit­i­cal in sta­bil­is­ing and accel­er­at­ing the busi­ness,” says Thomas Seifert, CFO at inter­net secu­ri­ty and infra­struc­ture com­pa­ny Cloud­flare.

“Dig­i­tal trans­for­ma­tion is putting a lot of pres­sure on com­pa­nies to change and adapt their busi­ness mod­els and CFOs are at the cen­tre of this.”

CFOs are in a unique posi­tion because they can nav­i­gate a path for­ward for their organ­i­sa­tion by analysing data to under­stand com­pa­ny and indus­try trends. They are piv­otal in prod­uct inno­va­tion because they can report on live cus­tomer behav­iour or buy­ing trends. 
“Con­trol­ling and report­ing num­bers isn’t all that’s impor­tant to the CFO any­more,” Seifert says. “The CFO is the guardian of a com­pa­ny’s most valu­able asset: data. Data sci­ence and ana­lyt­ics is as impor­tant for the CFO as tra­di­tion­al account­ing has always been to finance roles.”