CFO 3.0: Revolutionising the finance function

Business is advancing. We already saw a shift in the CFO’s responsibilities prior to the outbreak of the Coronavirus. Senior financial decision-makers were beginning to see the value of modern financial management solutions at a time when everything seemed to be changing: the nature of business, end-users, employees, customer expectations, and digital tools.

And then the pandemic hit, accelerating digital transformation and amplifying the associated challenges – especially those around governance, remote working, and cybersecurity.

CFOs are now getting to grips with new complexities, such as managing a remote workforce, as well as expanding security and compliance directives. Consequently, we are now observing the third significant evolution in the role of the CFO and other senior financial decision-makers.

The CFO of old, or CFO 1.0, was the historian. Then came CFO 2.0 – the real-time analyst who picked up on issues with real-time dashboards. However, now is the time to become CFO 3.0, a leader who uses data and predictive analytics to look to the future.

The evolving role of the CFO

To manage the new demands resulting from the pandemic, your business needs the right technology foundation to undergo digital transformation, where tech is integrated and co-ordinated 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 centre when it comes to leading change through digital transformation.

This puts you 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.

While today you’re focused on the past and present, tomorrow you’ll need to make use of vast amounts of data. This will help you predict the future of your business, uncover hidden opportunities, and close information gaps.

According to new research by Sage, where 311 senior in-house financial decision-makers from South Africa were surveyed, that shift is already happening.

The report, CFO 3.0: Digital transformation beyond financial management, revealed that, post-COVID, 9 out of 10 (87%) CFOs now play a role in digital transformation, with 15% fully responsible for the shift.

With nearly all finance leaders actively involved in digital transformation, a more versatile role is emerging: one that merges skills such as accounting, analytics, business management, and strategic-thinking. And, since budgetary approval is a key element of digital strategy, the finance function, too, has moved to the core of business strategy.

Digitally transforming the finance function

In handing over the number-crunching to automation tools, our research found that South African CFOs are gifted with the time and opportunity for creative and strategic thinking. There’s more room for critical analysis and innovation to augment business strategy. They also benefit from accurate forecasting, planning, and efficiency, as well as enhanced data governance.

To achieve top-level visibility of business performance, your finance teams must have the right digital tools and flexibility to use them. Only then can you dovetail with the other sides of business and collaborate for growth.

Digitisation means advanced analytics can improve decision-making and track metrics for real-time financial information, delivering the insight you need to uncover growth opportunities.

However, many senior financial decision-makers are still swamped with data since it’s streaming in from everywhere, including digital financial systems. They must also comply with ever-evolving data protection and management legislation, as well as increasing reporting demands.

 Managing uncertainty

 Of course, owning the digitisation journey is a big responsibility. This means the role of the CFO role is expanding.

Before the Coronavirus, complying with ever-changing finance legislation might have been the primary concern keeping CFOs awake. However, they now have the added task of ensuring compliance across a decentralised network, a scattered workforce, and a larger attack surface.

As the gatekeepers of data, fraud, cyber misuse, and data privacy, senior financial decision-makers that were already using the cloud and financial management solutions before the pandemic have found it easier to navigate this new landscape.

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.

Success through automation

New technology can drive improvements in efficiency.

It’s here where automation can cut the hours you spend each week on collecting and preparing data. In fact, 64% of South African CFOs spend more time analysing data than they do gathering and processing it, compared to 50% of financial managers in the UK.

The survey also discovered that predictive analytics-based technologies will change the way CFOs operate at board level. Two-thirds expect emerging technology to audit results continuously and to automate period-end reporting, subsequently reducing time to close. This will become increasingly important as businesses interface more and more with open banking systems and automated taxation processes.

Automation shifts the burden of dealing with onerous, repetitive and simple 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.

 The final word on CFO 3.0

Technology can help you develop a finance function that’ll stand firm against future obstacles. South Africa’s economy and outlook have taken a knock from COVID-19. However, almost half (44%) of businesses already undergoing digital transformation reported that the pandemic created higher demand for their services, while 78% saw revenue growth in recent months.

As CFO, you’ll need to guide your finance department through a data-saturated world, so turn your attention to honing your management processes through data flow and governance, and analytical insight.

Although digital transformation has its challenges, your company has a bright future because you’re open to new tech and the changes needed – 73% of South African CFOs say their organisations are ready for more automation.

Thanks to next-generation and emerging technology, you have the freedom to become a CFO 3.0 – a leader who can expose hidden prospects and plug gaps using data and insights.

Embrace the part you play in delivering and shaping your business strategy through digital transformation. It’s far more gratifying than being considered as merely the person holding the company’s financial reins.