The new CFO – from numbers person to strategic adviser
Who are the Chief Financial Officers (CFOs) of tomorrow? Financials-focused managers? Or multi-skilled finance, HR, law and IT professionals? There’s no question about it: the CFO profile is changing as digitalisation drives demand for a more strategic skillset.
“The CFO of the future will increasingly serve as strategic adviser to the CEO. One of the CFO’s roles is to initiate their company’s digital transformation,” says Martin Nay, Member of the Executive Committee, Head of Audit and Partner at BDO. CFOs enjoy a broad overview of the entire organisation and have touchpoints with many different projects. It means they’re perfect to lead the finance function of the future.
Two become three
The modern CFO should be a thinker. Someone who reflects, thinks ahead. Someone who thinks outside of the box. But CFOs are increasingly also key users of growing data pools. Their big task is to instigate change and see transformation through. It means putting those trusted analytical strengths to good use, of course. But communication capabilities are also vital as CFOs are increasingly required to present, explain and persuade.
These high expectations – from reserved accountant to visionary leader – are closely linked to digitalisation and automation in the financial sector.
These days, financial knowledge needs to be paired with IT expertise. Digital solutions are behind an increase in data-driven strategic decision making. It’s not unusual to see the CIO/CTO complementing the traditional duo of CEO and CFO, especially given the role of digital ethics, data protection and general strategy in corporate responsibility.
Automating the finance function – the path to paperless accounting
“Finance functions of the future will want their processes to be as secure and simple as possible. In other words, automated, accurate and with built-in controls,” points out Martin Nay. Data and documents need to be accessed from anywhere. The trend towards paperless finance and accounting continues. Central enablers are automated and integrated processes as well as modern tools and technologies. It’s also important to safeguard correct, compliant accounting at all times. Electronic documents need to be authentic and tamper-proof so that they cannot be changed without amendments being logged (data integrity). Only so will they stand up to a tax audit. Digitalisation makes monitoring easier, even though data volumes are growing. Data sets can be analysed and irregularities quickly flagged. Big data will facilitate benchmarking, enabling companies to compare values internally and with their peers to help secure strategic and competitive advantages.
Challenges for groups
Groups with branches abroad face the challenge of automating their finance functions and standardising data structures and financial analyses. ERP systems need to be implemented across all business units within a group. Streamlining and standardisation enable consistent processes, which in turn supports centralisation and better monitoring. Intelligent automation helps reduce redundancy and bring down the error rate – a clear efficiency advantage. Ultimately, carefully considered and consistent investment in new technologies cuts costs thanks to efficiency gains.
The CFO career path
Budding CFOs often study business administration at a university or in a dual-track program at a university of applied sciences. Another route is further professional training after completion of a traineeship. In our changing world of work, skills such as communication, teamwork, conflict management, sustainability awareness and lateral thinking are of central importance alongside general cognitive abilities. Women are currently in the minority, accounting for around 15 to 17 percent of CFOs according to various surveys. In reality, the figure may be as low as 10 percent.
We ask Martin Nay, Member of the Executive Committee, Head of Audit and Partner at BDO, three questions on the future of the CFO
What is the CFO role you observe most often at your clients?
The role of the CFO has definitely become more challenging in recent years. Where we used to see straightforward accountants, we’ve now got strategic thinkers in leadership roles. It’s a development I welcome. Today, the CFO is also a sounding board for the CEO and sets the financial “tone from the top”. As the roles and responsibilities of today’s CFOs extend beyond the realms of finance and accounting, they are enjoying a better standing and position within their organisations.
What needs to happen for the traditional CFO role to transform successfully into a new CFO generation?
Tomorrow’s CFOs will need to be open and interested in new ideas. They need to be one step ahead of emerging structural changes in various corporate areas so they can seek appropriate solutions. The new CFO is an important pioneer as organisations progress along their digital transformation journey. They need to set a positive example for the rest of the company and truly embody change management. A successful transformation relies on a new understanding of the role - away from that “numbers guy” and towards a respected supplier of varied information and services.
What do you consider to be the biggest challenge of digitalisation and automation in the finance function?
Costs for digitalisation projects can quickly mount up and there is no guarantee of success. It’s important to have innovative ideas but also knowledge of the technology already out there on the market for a given digital solution. A sense of what’s feasible is also helpful. Working towards a goal in smaller sub-steps often yields results more quickly than trying to leap ahead. Analytical skills are an important prerequisite, as complex business processes are broken down into simple workflows and steps for digital transformation. Complicated and labour-intensive procedures should be challenged, while favouring simple, largely automated and integrated solutions.
Member of the Executive Committee,
Head of Audit and Partner at BDO