The era of automation has led to a plethora of new technologies including advanced analytics, predictive modelling, and robotic process automation becoming the preferred “Go To” tools for the modern CFO to dabble with.
Geo-political tensions, including the prolonged war in Ukraine, rapid currency fluctuations, runaway global inflation, and the impact of a hybrid work model are some of the major trends shaping the present global economic and financial landscape. Businesses worldwide have no choice but to operate in this dynamic landscape, while continuing to be profitable and sustainable. It is therefore understandable that enterprises may be treading with extra caution as they navigate the many twists and turns of the post-pandemic era.
The role of the CFO has become even more critical than before in this environment, with business leaders increasingly looking to them for answers to some of the key challenges, for instance, the impact of rapid currency fluctuations on revenue outlook.
Gone are the days when a CFO’s corner office would have overflowing stacks of papers, files, and documents. Today, the CFO is more akin to a ‘digital warrior’, transforming the organization through a deft mix of new-age digital technologies, cutting-edge knowledge, and deep financial engineering expertise.
The era of automation has led to a plethora of new technologies including advanced analytics, predictive modelling, and robotic process automation becoming the preferred “Go To” tools for the modern CFO to dabble with.
The Future Facing Finance Organization
A key skillset of the modern CFO that often goes unnoticed, is an ability to crystal gaze and predict future trends. CFOs today need to consider not only current business challenges but must also cater to the future. As the world is embracing digitalization, the role of finance has grown to leverage predictive and prescriptive analytics, drive a mobile-first approach, ensure cybersecurity, improve sustainability, and develop diverse skillsets to unlock potential value.
We are witnessing the emergence of the CFO organization as a strategic partner capable of addressing future challenges and hurdles using digitalization. The new role represents an irreversible expansion in addition to traditional activities like accounting, reporting, forecasting, controlling, tax, treasury, and compliance.
This scenario can be summed as in the table below:
The CFOs Weapon of Choice: Digital Technologies
As CFO organizations evolve to meet emerging demand patterns, the need for digital catalysts comes to the fore. Digital technologies today play an important role in helping drive innovation across advanced analytics, secure and reliable access to data and insights, and new payment paradigms (blockchain-based ledgers). They also free up the CFO organization’s bandwidth by automating finance processes and transaction processing, enabling the finance function to spend more time on providing insights and moving up the value chain.
As the current technology spectrum evolves, some of the trends that we should watch out for, include:
Digital Transformation Journey: Change Management
While attaining the milestones of the future state of finance, we also need to focus on certain change management aspects, in addition to the investments in digital technologies: This includes:
- Shared vision amongst stakeholders: Wholehearted adoption of digital technologies is vital for modern businesses to scale and derive key insights for making strategic decisions towards sustainable and profitable growth. In the absence of a common vision amongst stakeholders, automating processes would only help realize a portion of the intended value.
- Leveraging data, in-depth: Even after making significant investments in digital technologies, many organizations today fail to realize the true value of their data streams. This stems from an inability to include data layer benefits while making the business case for these investments in digital technologies. Evidence suggests that maximum value can only be realized when data is leveraged for driving predictive analytics and insights.
- Digital-first mindset: Adopting digital technologies is the way forward. However, the absence of a digital-first mindset, combined with delays in inculcating such an outlook among the workforce, can prove to be a hurdle for the organization. What we need, therefore, is a shift in cultural paradigms. Hence the vision, mission, and value charter of an organization need to be oriented toward a transformative culture hinged on embracing digital.
- Digital Skillsets: As the finance function evolves, the need for digital skills at the intersection of finance and technology also increases. These capabilities include knowledge and skills around data science, cybersecurity, and agile operational frameworks. These skills must be acquired and nurtured for ensuring the success of the overall transformation journey.
Conclusion
The CFO organization today has evolved beyond the role of bookkeepers and treasury managers. We are looking at a scenario where the team is in focus as the strategic nerve center of the organization, helping redefine, revitalize, and revolutionize operational paradigms.
Hence, it does not come as a surprise that CFOs today are sometimes informally referred to as Chief Future Officers, due to their growing central role in mapping the success of the organization. The next 10 years will be a definitive watershed as the digital and the physical worlds coalesce.
The article has been authored by Rajeev Gupta, CFO at L&T Technology Services (LTTS)
