The CFO of the Future: The Emerging Models Driving Innovation

With CEO’s citing growth as top priority for the coming years, CFOs are to be strongly impacted. Finance Monthly here benefits from an exclusive outlook on the future of CFOs by Mark Nittler, VP Enterprise Strategy at Workday, who discusses the changing role of finance and how CFOs can better prepare themselves for the future.

The role of the CFO is going through a period of significant change. It’s no longer just a numbers game, but CEOs are calling on the finance team to play a bigger role in decision-making, technology, and data governance.

CFOs need to ensure they’re ready for such major levels of change, which are only exacerbated further by an intensely competitive digital business landscape. And despite CFOs now needing a more strategic approach to decision making, recent research suggests that many still rely on gut feel rather than hard data. Many also admit they neglect innovation and process improvement, and have not mastered how to manage and analyse the volume and variety of business data available to them.

So what are the business priorities impacting the focus of the finance function? This article looks at how CFOs can best prepare themselves – and their teams – to become a more strategic partner able to meet the changing needs of a modern organisation.

Multiple growth strategies

It will come as no surprise that many CEOs cite growth as their top priority for the next three years, a move set to strongly impact the CFO. It’s now expected that CFOs will play a core part in driving growth strategies across the company, which makes good business sense given the insight they have into every part of the organisation.

This growth will be the result of numerous different approaches – from organic growth to geographic expansion and acquisition – so the CFO will need to drive multiple growth strategies. In today’s dynamic business environment this will be no easy task, but it’s vital CFOs embrace this new role, supporting the CEO in the pursuit of growth and becoming a strategic partner to the business.

Regulation, regulation, regulation

The CFO has an important part to play when it comes to the regulatory environment. This not only applies when considering how to adapt to new regulations but also to ascertain where the potential value lies for the business. CFOs have the ‘big picture’ view and should look at incoming regulation beyond the core issue of compliance – how these could potentially provide more insights into the business or streamline additional processes, for example.

One example here comes from the changing reporting requirements within financial services. These requirements led to more standardisation across the industry, and a new focus on building data-warehouse environments to meet these regulations. For many organisations, this actually presents an opportunity to better understand the company’s data and in turn grow the business.

CFO decision making

Modern businesses are under constant pressure to operate quickly and efficiently, and CEOs are demanding more real-time data from their CFOs in order to make the best possible decisions. In turn, they’re looking for analysis and insights from the finance function, as well as guidance on future strategy.

As a result, the finance organisation will need to spend more time on insights and analysis, and less time on processing transactions than it has done in the past. Looking at historical data alone is no longer enough. Finance now needs a holistic view of the business, combining various streams of live and historical data, if they’re to better understand the business as a whole. They will then be able to provide insights into how various parts of the business – such as HR and finance – impact each other, and advise on future strategies based on these insights.

Ongoing transformation

A recent KPMG report found that one in three CEOs see experience with transformation as one of the top attributes for a CFO. And with business leaders focused on beating the competition and ensuring their products or services stay ahead of the curve, the pressure is on for CFOs to support in business innovation and transformation efforts.

Organisations are being disrupted from all sides, whether it’s changing consumer demands, new regulation coming into effect, or innovative competitors coming onto the scene. This also comes largely from changes within specific industries – from the growth of omnichannel in retail to the evolution of connectivity in the automotive industry.

These changes often push businesses to innovate if they’re to remain competitive and continue to grow, and the CFO can support considerably on this journey. The CFO and finance team can identify growth opportunities and inform key business decisions by providing the relevant insights and data they have access to. The finance function should also be able to scale quickly – entering new markets, for example – in order to support certain areas of growth.

The current burden of transaction processing and audit and control tasks felt by many finance teams leaves little room for strategic partnership and the ability to influence decision-making. As such, it’s vital that organisations across the globe embrace new ways of thinking about the role of finance in today’s highly disruptive business landscape, and that CFOs keep these considerations front of mind if they are to be successful with new future growth strategies.