The New World of Finance and how the CFO’s role has evolved.
The CFO’s evolving role has been the focus of conversations since 1985 when accounting bodies and the media started to predict that CFOs would start to take more of a strategic role within their companies.
Both Financial and Management accounting remain at the core of the CFOs role, their role as strategic advisor and business partner now makes up a large chunk of what they do. It has become apparent over the last 2 years that CFOs have the ability to drive value through their commercial and business understanding.
We predict that over the next three years, CFOs will take on even more responsibility within a company, and will become pivotal in producing the company’s strategic plans. CFOs will become jointly responsible with the CEO for achieving the targets set out within the strategic plan and will likely find their bonuses impacted by the success or failure of these strategic plans.
Today CFOs are often responsible for a hugely diverse team of specialists, including Investor relations, procurement, and data analytics. This diversity has become ever more apparent over the last five years and has had a huge impact on how a CFOs role has grown to include softer skills and emotional intelligence. This “Soft” side of their leadership role has allowed them to understand and engage with such a diverse team and helped them to influence and collaborate across the whole c-suite.
A CFOs role in the company’s strategic plan, was historically to drive short-term financial results, opposed to being instrumental in the development of the plan. However, we have seen a big shift over the last five years or so, that has meant that CFOs are now instrumental in identifying and delivering long-term value to a wider group of stakeholders.
The evolution of the Digital CFO has meant that they are now the steward of not only financial performance, but also responsible for value delivery across a range of areas, which has only become possible due to the shift to CFOs being responsible for the hugely diverse team of specialists we mentioned earlier. As little as five years ago it was likely that the majority of CFO’s hadn’t interacted with these emerging technologies, however today CFOs realise that tech-enabled transformation is one of the biggest priorities in companies of all sizes.
It is increasingly clear that the days of producing a strategic plan that was in place for a year or more have gone, and that technology is now allowing us to re-analyse data and adjust strategic plans on a much more frequent basis. CFOs are increasingly being called upon to evaluate and evolve strategies in order to drive growth. CFOs must change with the digital times and embrace the new roles they are finding themselves in. The key to being a successful CFO is no longer, just being good with numbers, but having the flexibility and a good mind for strategy in this ever-evolving digital world, that businesses find themselves in.
Unfortunately, it is no longer is it just a numbers game, it’s an endurance race, that means CFOs are going to need to focus on the future and incorporate more forecasting into their world and become forward focused rather than focused on historical facts.
We truly believe that transformative technology will be a key enabler in the changes we see within the role of CFO over the next three years, and beyond. This is why our Digital CFOs are consistently reviewing and learning about new technology, so that they remain at the cutting edge, and can provide support to our clients.