Business is evolving. Technology, customer expectations, the roles your employees play, and the workplace tools you use have all transformed. For a CFO like you, there’s no turning back.
Your finance department is no exception. Today’s financial departments have technology that allows you to make them into highly-tuned time machines, which can streak forward and back through a wealth of data at a moment’s notice.
With the evolution of accounting and finance has come the development of you – the CFO. We trace how your responsibilities have changed over the years and decades, and look at how you need to become visionaries and strategists on top of your financial management responsibilities.
The evolution of the CFO
The early CFO, or CFO 1.0, was the historian. As CFO 1.0, you had to look back into the rear-view mirror – running processes and making use of financial reporting tools that traditionally show what happened yesterday (or last week, or the previous month…).
Next came CFO 2.0 – where you became the real-time analyst who could catch issues with real-time dashboards. Cloud-enabled financial management and business intelligence tools, and a host of new user-friendly finance apps, enables accounting teams to run professional, up-to-date operations. Your finance teams could increase efficiency by analyzing data in the present time.
In our latest research, CFO 3.0: Digital transformation beyond financial management, we surveyed 500 US-based CFOs. It revealed that virtually all (98%) of financial decision-makers believe financial management tools can benefit their business.
The visionary CFO 3.0
Now is the opportunity for you to become CFO 3.0 – a leader who can see into the future.
You will be familiar with using a rear-view mirror to provide business information – looking backward while attempting to steer forward. With data and predictive analytics, you can understand data to look ahead.
Finance leaders have traditionally relied on intuition to guide their business decisions – based on experience, habits, luck – name which one you will. The point is, there was no empirical science to guide you. You were so focused on day-to-day tasks and decision making that you hardly had the time to look at the bigger picture and make logical decisions on the company’s future.
Today, you and your fellow CFOs have all the data you need at your fingertips to make instant decisions about the company. You can become strategists, who base their outcomes on empirical data. There is no room left for intuition, guesswork, or chance. There are solid data-led reasons behind every business decision.
The role of digital transformation
Driven by new technology such as the cloud and automation, combined with increasing customer expectations, your business needs the right technology foundation to undergo digital transformation, where tech is integrated and coordinated across the entire business ecosystem.
In growing businesses, the first investments are often made in financial management, building out the technology you as a CFO will need for success.
However, this also means the business requires you to be front and center when it comes to leading change through digital transformation. Nearly all (98%) of CFOs believed their job has changed in the past five years.
You are in the ideal position to evolve from CFO 1.0 and CFO 2.0 to CFO 3.0.
You can put what you need in place to move beyond your traditional role and lead your business to new heights – you may end up driving business transformation beyond finance boundaries.
CFO 3.0 means you’re the visionary.
How is the finance function changing?
Although millennials have often led the older generation when it comes to adoption and the use of technology, there has been significant growth in tech adoption since 2012 among the older generation – such as Generation Xers and baby boomers.
93% of millennials between the ages of 26 and 40 in 2020 own smartphones, but this is almost identical to the 90% of generation Xers having a smartphone.
These statistics show the world is digital for the young and old, so to achieve superior visibility of business performance, your finance teams must have the right digital tools and flexibility to use them. Digitalization impacts work; it transforms how customers and customers engage, supporting you in creating new revenue streams.
Only then can you dovetail with the other sides of your company and collaborate for growth. You need to create an environment for digital business, with digital information flowing at its core.
Digitization means you can access advanced analytics to improve decision-making, metrics for real-time financial information, and the insight you need into your operations to uncover growth opportunities.
Challenges that CFOs and finance leaders face
Of course, owning the digitization journey and becoming the data gatekeeper is a big responsibility. The role of the CFO is expanding. Around three-quarters (76%) of financial decision-makers drive digital transformation in their businesses.
As well as data and technology, you need to manage employee and stakeholder expectations.
Embrace this responsibility, and you can boost the whole business. A failure to grasp the opportunity leaves you at risk of being overtaken by competitors.
As the gatekeeper of data, fraud, cybersecurity, and data privacy are increasingly falling under your remit, and that of the finance department.
While this sounds like more work, remember that emerging technology can decrease the risk of data breaches – the cloud, for example, can enhance levels of verification and secure data in a more comprehensive way.
You should look at skills training, whether it’s for you or other members of your team.
The changing dynamics of your job mean you need to keep learning to have the business, analytical, and data skills you and your team require.
How automation is making an impact
When it comes to how the finance department functions, it’s administration that hampers productivity. Most CFOs (89%) agree that the amount of time spent on financial administration hurts team productivity
Of those CFOs who say their organizations are already employing automation, nearly all (92%) say it has improved productivity. Almost the same number (93%) are comfortable with technology performing more of the day-to-day accounting tasks in the future.
New technology can drive efficiency improvements. And naturally, in the process of leading digital change, you will need to invest in the right financial management platform to move money and data within your business.
It’s here where automation can cut the hours you spend each week on collecting and preparing data.
It shifts the burden of dealing with tedious, repetitive, and dull tasks from you and your finance team to machines, which will help to ensure increased efficiency and quality.
Beyond benefiting your finance department, it can also lay a foundation for the better use of critical data and insights across the business.
Conclusion on CFO 3.0
Technology can help you build a finance function that can withstand future challenges. It can support you with the changing legislative environment.
You’ll need to lead your finance department in a world awash with data, so focus on honing management processes though data flow, data governance, and analytical insight.
There’s no getting away from the challenges.
With technology to support your endeavors, you have the space to become a CFO 3.0 – a visionary who can uncover the hidden opportunities and close gaps through data and insights.
With that in mind, you can embrace your role in delivering and shaping the strategy of your business through digital transformation, something that’s much more rewarding than being seen as the person pulling the company’s numbers together.
CFO 3.0 – Digital transformation beyond financial management
CFOs are playing a key role in digital transformation. Learn how you can move from a 'historian' to a 'visionary' within your business.