The CFO role is facing a turning point: driving year-over-year double-digit profit growth is getting tougher while technology is advancing at an unprecedented pace and staff expectations are rising.
Once upon a time, the CFO was charged with focusing purely on the bottom line. In a world increasingly guided by disruption and technology, CFOs are now in both the hot seat and the driver’s seat for redefining the role they play in a company.
Today’s CFOs are handling much more than finance. On average, five functions—other than finance—now report to the CFO.
More than half of CFOs said their companies’ risk, regulatory compliance and M&A transactions functions underscore the soaring demands CFOs face, according to research from McKinsey.
However, only 22% of CFOs were found to be personally effective, according to Gartner’s 2019 Research on CFO Personal Effectiveness Report. In the face of transformation, CFOs should keep a firm pulse on following emerging trends and strategies so they can help their company stay a beat ahead.
Embracing the CFO’s evolving, technology-centric role
The modern CFO recognizes the power of technology and harnesses it to gain better insights, spot financial trends, boost productivity and ensure compliance.
Technology, such as disruptive AI programs and software that automate finance functions, can provide deeper and wider perspective—and even uncover factors that CFOs didn’t realize could affect the bottom line.
By leveraging this technology, CFOs could allocate more time to develop strategy and take on a consultant role within an organization.
It is not surprising that the CFO is increasingly being charged with overseeing critical innovation functions for an organization.
According to data from McKinsey, 38% of CFOs also oversee IT and some are charged with 18% cybersecurity (18%) and digital departments (14%).
As digitalization continues, it’s likely that more CFOs will be charged with managing a company’s digital ecosystem.
Data-driven insights to facilitate CFO's future-proofing of the business
The emergence of data analytics is revolutionizing the finance function because it allows CFOs to draw from different sources of data to gather insights and offer sound advice.
This means replacing legacy systems with state-of-the-art tools with which data collection is more streamlined and efficient.
For example, an integrated sales performances management solution helps aggregate the sales function’s most critical data into place.
This could include sales capacity, quota planning, territory mapping, customer demography, compensation structure and performance analysis.
With the right analytics software in place, the CFO can accurately predict the future by analyzing current and past trends.
Analytics filter through the clutter of raw data—rather than the CFO manually sorting it—to identify the most useful fragments.
This might include the best-selling product in a certain market among certain demographics
These key insights can arm the sales teams with the proper tools to sell effectively and achieve goals.
Better understanding of global trade and regulatory dynamics
No matter which country or jurisdiction in which a company is located, it is critical for CFOs to have a comprehensive understanding of global trade and public policies—especially with the uncertainties looming over global economic performance as outlined in the UN’s 2019 World Investment Report.
Proficiency in global trade and public policy can also help guide a country’s expansion or investment strategy. For example, CFOs should be watching intently on the trade and regulatory environment in APAC as opportunities emerge in rapidly growing ASEAN, China’s Greater Bay Area and the Belt and Road Initiative.
Companies with profit-margin growth of 5.1–10% are more than twice as likely as less profitable companies to have their finance and global regulatory and compliance functions consistently collaborate, according to a survey by Oxford Economics.
By looking through a global business lens, the CFO can play a critical role in focusing a company’s expansion strategy. As millions of new internet users sign online each year for the first time, companies have an unprecedented opportunity to tap into new customer pools. However, successfully entering these new markets is only possible if the CFO can understand the trade and regulatory environment and advise an expansion strategy.
Digitalization is transforming the CFO role from reactive to proactive. Now more than ever, companies are relying on the CFO as a trusted consultant who leverages technology, data and a global viewpoint to deliver key business insights beyond financial figures.
These insights provide valuable information that inform strategic opportunities for growth, innovation and competitive advantage.
About the author
Wendy Wang is Group CFO and COO at Tricor.