Modernizing the role of CFO
- Iter Advisors
Contents
For a long time, the Chief Financial Officer (CFO ) was seen as a mere cost-killer, remaining behind the scenes and whose role was limited to keeping the accounts and sending out financial reports, but his scope of intervention has expanded considerably in recent years. He is now at the center of the game.
A closer look at the evolution of this function, which has become resolutely strategic, whatever the type of company.
How digitalization has revolutionized the role of the CFO
A few decades ago, the CFO was 100% dedicated to day-to-day management activities: company financial statements, accounting monitoring, financial reporting, cost control and regulatory compliance management.
In fact, we used to speak less of the CFO than of the DAF(Directeur Administratif et Financier). A French appellation that put more emphasis on the administrative aspect of the job, and referred to highly operational tasks.
But the emergence ofdigital tools, accelerated in recent years by the pandemic, has profoundly changed the situation. Indeed, many of these tasks have been simplified, if not automated, by the adoption of digital solutions. This is particularly the case with the deployment of ERPs, which centralize all the tools needed to manage a business: accounting, inventory tracking, HR management, purchasing, etc.
Many operational tasks, which used to require hours of manual input, can now be done with just a few clicks.
As a result, CFOs have become more productive, and the associated time savings can now be devoted to higher value-added missions. As a result, their role within the company has evolved significantly.
The CFO, a Business Partner now focused on data analysis and prediction
According to the CFO Digital barometer published in 2021 by Itesoft, 55% of CFOs consider that the area they need to strengthen most is their ability to obtain quality data to meet their urgent management needs and help them make strategic decisions.
Now more than ever, the CFO must rely on data. He must be able to access the right data, at the right time, and use it to guide his company's operational and strategic decisions.
The old tasks of accounts preparation, reporting, cost control, etc., have not disappeared. But these recurring activities have now been joined by strategic projects with high added value for the company. The CFO must do more than simply balance the books; he or she must concentrate onanalysis and provide concrete solutions and advice to the business units.
The CFO 's challenges are closely linked to forecasting; cash management, for example, is becoming increasingly complex and strategic, and he or she must rely on analytical tools, business intelligence and data visualization to be able to provide key information, optimize decision-making and become a true Business Partner.
It must support change at all levels of the company: investment strategy, operational models, supply chain, recruitment issues, risk management, cost control, and even CSR(corporate social responsibility).
What role will the CFO play in the future?
The digitalization of the CFO profession is far from over. For example, emerging technologies are already having an impact on corporate finance departments.
According to the CFO 4.0 published in 2021 by BearingPoint, 56% of CFOs have already adopted or are currently working on integratingRobotic Process Automation (RPA) into their methods. RPA, along withAI, machine learning and blockchain, will undoubtedly continue to evolve the role of the CFO in the coming years.
How? By further simplifying operational tasks and enabling even more advanced predictive analyses.
The role of tomorrow's CFO will become even more important. He or she will evolve into a true strategist, capable of vision and creativity. He or she will have to set a course for the company and provide a useful framework for all decision-making.
Key skills for today's and tomorrow's CFO
A new role means new skills for the CFO. Among the skills and personality traits that will really make a difference are :
- The ability to keep pace with technological developments: CFOs need to be able to keep up with the times and learn, for example, the basics of data science or business intelligence to take advantage of the benefits these disciplines bring to their function.
- Leadership and communication skills: The CFO must now be an influential figure, working to raise his or her profile within the company. He or she must be able to educate and rally teams around his or her vision.
- Understanding operations and the business model: While adopting a global, strategic perspective, the CFO has everything to gain by staying very close to the operational reality of his company: a good understanding of the product or service, the customer profile, the challenges of the sales cycle, etc., as he must provide financial insights that can be activated by the business units.
- Managerial skills: It's nothing new, but the CFO must be able to surround himself with the best talent to have a real impact on the company. This means knowing how to structure and retain an increasingly multidisciplinary team.
Conclusion
In short, the role of CFO experienced a revolution. The digitization and tooling of the function have made it possible to reduction of operational tasks. The transformation of the CFO's job is far from complete: the function will continue to evolve. transformation as the technological advances and organizational !Find all the content produced by our CFOs: articles, theme sheets, testimonials, downloadable templates, etc.