The CFO: from A to Better

The CFO from accountant to business advisor – it’s been on the agenda for a while. That may no longer be enough. The impact of digital disruption is increasing the pressure to actually make it happen. Many CFOs remain embedded in traditional processes though, unable to create the room to increase their strategic contribution to the business. In an effort to realize the change, they’d be well served by considering a common success factor between those who have moved on – a curiosity towards new technology. For the CFO looking to realize change, it’s likely that IT is the accelerator they’re looking for.

We‘re seeing them appear rapidly across all sectors: start-ups that use new technology to address the (latent) needs of their (potential) customers. And in a way that’s better – faster – than the competition. If you don’t embrace this change as a traditional business, there‘s an increasing likelihood of missing the boat altogether. It’s that risk that makes the presence of digital innovation essential on the management agenda. How do we (re) position our products and services? How do we react to the new competitors that are appearing? Which are the tech trends that we absolutely cannot afford to miss? A strategic agenda is needed, with the CFO required to play a key role in its creation and roll out. Difficult, if they themselves are yet to get to grips with the difference tech innovation can make to their role.

The changing role of the CFO

If we look at the speed of digital disruption and where it’s likely to have the most impact, the traditional financial functions are certainly under pressure. We’ve already reached the point where large, standardized areas of financial administration can be managed by automated ‘robotic accounting’. While this does put administrative jobs under threat, this should be seen as a major opportunity for the total business. CFO’s that are still busy with operational financial procedures, rather than strategic value creation, can leverage these technological advances to create more time and space. The CFO can move his or her focus from reporting and audit, using smart digital tools to reduce their workload, facilitate delegation and support the gathering of game-changing financial insights. The insights that take the CFO from accountant to leading strategic advisor to the board.

The need to have the CFO play a greater strategic role in the business is growing, evidenced by the results of the Exact SMB Barometer 2016*. At present, the CFO spends just 34% of their time on strategic advice work.

Tech curious businesses are winning

The impact of innovative technology was also evidenced in the SMB Barometer results. Looking specifically at fast growing businesses, the overriding commonality was a commitment to continually exploring the potential of new technology. On average, the businesses that state a commitment to ‘always making use of the latest technology’ (22%) realize more than double the growth of businesses who only ‘replace technology when it has become out of date’ (33%) or rather ‘focus on the optimization of processes over technology’ (38%). The results seem to suggest that when it comes to tech and innovation, the early adopters are realizing an advantage*.

That’s at the business level, but how does that relate to what we’re seeing with the average CFO’s tech curiosity? How many CFOs continually follow the latest digital trends and developments? How many really understand that robotic software, predictive analytics, block chain and machine learning will determine the future of the finance profile? In reality, it’s likely that many senior financial professionals do not yet have the necessary insight into and understanding of these technologies. And that will hinder them in creating an effective IT plan for the future.

It is of course understandable that those born before 1970 can feel uncomfortable discussing the very latest technological innovation. They are not the generation that grew up with Facebook, or watch more YouTube than TV. Their experience is still invaluable, but it needs to be complemented by those that look at the world in a different way. Recruitment and succession planning need focus on the ‘digital natives’, young talent that seriously sends up the business’ average digital IQ. The millennials expert in business data analytics and digital process design. The new colleagues who generally understand what tech is making possible and how to go about initiating it.

CFO - focus on more than finance

In addition to integrating new technology and expertise in the finance department, the strategic CFO also has a role to play in driving continuous innovation throughout the rest of the business. They can do this through the provision of real-time management information to their colleagues. This empowers the business to understand what’s happening, what’s possible, and how resources can best be employed to realize innovation that differentiates the company and creates distance from the competition. The CFO that has the finance division streamlined and able to report quickly and accurately can create speed in the operation- in both the delivery of new projects, and in reacting to unforeseen changes in the market.

As CFO, the choice is on you. Do you ride the innovation wave as the digital leader- both in terms of your finance division and in the further development of products and services, or do you remain in the traditional role, watching what the competition do first with the risk of quickly being too far behind to ever catch up again?

*Exact Barometer 2016 is a survey carried out by Exact throughout the European SMB segment at more than 2000 companies.