The future CFO: Is a tech-savvy executive the new normal?

8/30/19 11:10 AM / by Eric Liebross

Eric Liebross

A CFO in a meeting

A few months ago, KPMG studied the backgrounds and experience of the CFOs at 100 global technology and communications companies, as well as individuals who had previously been finance chiefs at 75 companies for which such information was available.  And this is what they concluded: the job/role of today’s CFO has never been more difficult and it isn’t getting any easier.

The sectors that KPMG chose to look at were at the forefront of digital disruption, where continuous change, constant market adaptation, and rapid innovation are now part of everyday life.

Some notable differences between the current and former CFOs, all of which speak to companies’ wish to have more broadly experienced executives in the role, were that:

  • Nearly eight in ten of the sitting finance chiefs were external hires, versus six in ten of the prior ones.
  • Less than half of the existing CFOs had “strategy experience” prior to taking the job, and it was even less for the former ones.
  • Whereas nearly 40% of current CFO’s had prior operating experience, only 20% of former CFO’s could say the same.

 

So let’s come to some hard and fast conclusions: What a CFO brings to the table from their previous companies and roles, matters.  

Strategy matters and just “keeping the lights on” won’t get it done any longer. It’s become painfully obvious that operations experience is critical and that CFOs are now expected to help deliver on growth initiatives.

It’s probably safe to say that today’s CFO has now reached a tipping point.  They all, whether they choose to or not, are straddling the spectrum of readiness to drive business value for their companies, while still needing to ensure that “trains are kept running”.  At one end, some are still challenged to develop needed basic operational capabilities and thus are hamstrung to do anything that might push the organization forward; while still others have taken or are taking full advantage of digital and other new emerging technologies like RPA, to drive process improvements and efficiencies.

Even still, there are also those that have elevated the role of the CFO in their organizations by improving finance processes on a global scale, i.e., by leveraging enterprise resource planning capabilities and/or shared services.

Two coworkers with their laptops

These advances allow the finance department to be fully integrated with other business functions such as procurement, supply chain, HR and operations. Thus, it’s imperative that today’s CFO have that operational experience coupled with a strategic mindset.  It’s not just about closing the books any longer.

Consider the emergence of Robotics Process Automation (RPA).  As digital and other new technologies help CFOs identify and pursue entirely new ways of working, RPA has the potential to be that one true “thing” that helps facilitate a value orientation.

For CFO’s looking to get ahead of the technology curve, RPA can be that “thing” that significantly reduces the potential for human error in certain process orientated, low level accounting functions.  It can also help improve compliance and quality.  In fact, digital assistants could reduce operating costs by as much as 80 percent in certain circumstances.  Additionally, “bots” may be able to automate or eliminate up to 40 percent of transactional accounting work.  This shift means that finance staffs can spend more time on decision support, predictive analytics and performance management type responsibilities.

CFOs are now expected to own not only the financial sphere but also to help build an intelligent enterprise with technical fluency

So what do emerging technologies like RPA or AI do for the day in a life of today’s CFO?  Beyond the fact that they now get a functional seat and voice at the technology table, they are now required to be more technology savvy and engaged. While CFO’s will always control the purse strings and the technology budget, more are beginning to help companies take a more strategic approach to technology investments in order to better position the business to realize returns, not only at the speed of now, but also in the future.  The role of innovation leader is an unexpected one for many CFOs who have long been the gatekeepers and occasional “party poopers” for tech spending, but now, because of the rapid onslaught of advanced digital technologies, CFOs and their teams are having to raise their games as the “sowers of growth.”  This is a far cry from the “old model” CFO who still has a calculator sitting on his or her desktop.

We know that the life of the CFO isn’t getting any easier.  With the speed and demands of modern business, there are very few solutions that will be able to provide the results and impact that are needed for Finance to move at or even beyond the pace of business.  To be most effective, building that strategic and operational experience prior to pursuing a CFO role could be imperative to success.

There’s no question that CFOs are indeed finding their defined roles and responsibilities more difficult and increasingly blurred.  CFOs are now expected to own not only the financial sphere but also to help build an intelligent enterprise with technical fluency.  In order to do that, finance leaders will be tasked with challenging their businesses’ core propositions and competencies and identifying new opportunities to disrupt traditional lines of business.  CFO’s and finance executives now have a major opportunity to transform their finance organizations.  

The question remains, what leadership role does a modern CFO want to take in leading the enterprise in 2020?

 

 

 

 

Eric Liebross

Written by

Eric Liebross

Eric Liebross leads Auxis’ Back Office Optimization practice, helping organizations design and implement innovative operating models, processes and technologies to achieve optimal performance within Finance, Customer Service and HR Operations. Eric’s areas of expertise include Shared Services Strategy, Nearshore Outsourcing and RPA.