The business environment of the past decade or so, has positioned the CFO to be in the box-seat for the next business revolution.
Conditions relating to post-GFC era and the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services, have challenged the CFO. They’ve adapted to higher levels of governance, reporting, systems and processes. Which, in turn has equipped them to be the custodians of organisations and guide them through rapid paces of change – with the least amount of failure.
In the last decade, we’ve seen the CFO needing to be across more items than just finance and numbers. But also, demonstrate leadership and be a people manager.
They’ve had to work hard to gain the trust of Boards, investors and regulators.
For the Board, their interaction has become more intense with Board’s adamant on there being ‘no surprises’. They’ve been required to spend more time on investor relations to familiarise investors with the company’s strategy, business model and navigate volatile and fast-paced markets. In terms of regulations, there’s been sweeping changes and more stringent financial reporting. In my role as an auditor, post GFC, Audit Committees often require more frequent and comprehensive updates/position papers and education. The Royal Commission has placed a focus on governance, complying with policies and procedures (the things that businesses should have been doing already).
It’s this that has made the CFO more versatile, more resilient and ready for the next era – giving them ‘20-20 vision’ for the 2020 agenda.
So, what’s next for the CFO and what can we count on being on their 2020 agenda?
Changing customer expectations and increasing competition from current and new competitors means organisations need to continue to evolve in order to succeed.
The biggest game changer for a CFO over the next decade will be their ability to think strategically, as well as the mobilisation of Artificial Intelligence (AI) through organisations and of course, data analytics. For a CFO, embracing technology and determining the ways it can help in business is critical. While a CFO is less and less removed from the daily number crunching, they need to be agile in aspects such as legal and IT. You still need the CFO to talk to the customers, clients and the Board.
The implementation of digital technologies opens opportunities to improve the finance function. Automation increases efficiency, precision and streamlines activities and Blockchain can enhance security – all adding value and reducing costs in the long-term. It also gives the ability of data insights into how and why we do business, enabling organisations to work smarter and with more strategic awareness.
In saying that, implementing technology is difficult – very rarely do we hear of anyone who has had an IT project delivered on time and on budget. However, overall, it’s my belief that people will embrace this evolution. Despite external risks and uncertainty, CFOs are optimistic about what the future holds. When it comes to change, it’s how you train people and go through that change process with them – tone of the top is important.
With tech, comes risk.
For a CFO, cybersecurity is imperative to their role. It’s a common misconception that cyber-security is just an IT issue, because problems arise at the end user.
Managing risks over the last decade has meant the CFO is ready to embark on the systems, processes and governance that’s needed to protect organisations.
For businesses, they need to be asking themselves – what are we doing to prevent risk?
A robust process is now a mandate for all CFOs and their organisations. Therefore, the answer lies in how strict the systems and processes are to advance the organisation, which involves conducting internal audits to minimise the inherent risks that technology brings.
A CFO does not need to have all the answers, but they do need to surround themselves with good people – that’s the way of the future.
This factor in itself, not only changes the shape of a CFOs role, but also the way we view teams. Gone are the days of working in siloed functions. The organisations that gain competitive advantage in the age of disruption are those that are multi-disciplinary and cross-functional; not just internally, but across organisations too.
This makes project management critical to a CFOs arsenal. They must scope out the requirements of an organisation, such as risk management software and ensure the service provider confirms that they can deliver what they’ve asked for. Technical expertise is still essential. Presently, there’s still a need for people with those skills, particularly with the introduction of new accounting standards. However, for CFOs, future emphasis will be on creating synergies between the back office and the front office.
Overall, the 2020 agenda for a CFO is a great place to be. The ability to capture their hindsight from the past decade gives them 20-20 vision for the future of all organisations.