For a long time, the Chief Financial Officer (CFO) was seen as merely a cost-cutter, staying behind the scenes with a role focused on bookkeeping and sending financial reports. However, their scope of responsibility has significantly expanded in recent years. The CFO is now at the forefront.
Here’s a closer look at how this role has evolved into a truly strategic position, regardless of the type of company.
How digitalization has revolutionized the CFO role
A few decades ago, the CFO was fully dedicated to daily management tasks: preparing financial statements, overseeing accounting, producing financial reports, cost control, and managing regulatory compliance.
At the time, the CFO was often referred to as the “Directeur Administratif et Financier” (DAF) in French, which emphasized the administrative aspect of the role and involved very operational tasks.
But the emergence of digital tools, accelerated in recent years by the pandemic, has dramatically changed the landscape. Many of these tasks have been simplified, if not fully automated, by adopting digital solutions, particularly with the deployment of ERPs. These systems centralize all the tools necessary for business management: accounting, inventory tracking, HR management, procurement, and more.
Many operational tasks that once required hours of manual entry can now be completed with just a few clicks.
As a result, CFOs have gained productivity, and the time saved can now be devoted to higher-value tasks. This has led to a significant evolution in their role within the company.
The CFO as a business partner, focused on data analysis and forecasting
According to the CFO Digital Barometer published in 2021 by Itesoft, 55% of CFOs consider the top priority to be strengthening their ability to obtain quality data to meet urgent management needs and aid in strategic decision-making.
Today, more than ever, CFOs must rely on data. They need to be able to access the right information at the right time and use it to guide both operational and strategic decisions for their companies.
While their traditional tasks related to accounting, reporting, and cost control haven’t disappeared, these recurring activities are now supplemented with high-value strategic projects. Beyond financial statements, the CFO must focus on analysis and provide concrete solutions and advice across the business.
CFO responsibilities are increasingly tied to forecasting; for example, cash flow management is becoming more complex and strategic. To excel, CFOs must rely on analytics tools, business intelligence, and data visualization to deliver key insights, optimize decision-making, and become true business partners.
They must support changes across the company, including investment strategies, operational models, supply chains, recruitment challenges, risk management, cost control, and even Corporate Social Responsibility (CSR) initiatives.
What is the future role of the CFO?
The digitalization of the CFO role is far from complete. Emerging technologies are already beginning to impact finance departments.
For instance, 56% of CFOs have adopted or are working to integrate Robotic Process Automation (RPA) into their methods, according to the CFO 4.0 study published by BearingPoint in 2021. RPA, along with AI, machine learning, and blockchain, will undoubtedly continue to shape the CFO role in the coming years.
How? By further simplifying operational tasks and enabling even more advanced predictive analysis.
The CFO’s role will continue to grow in importance. It will evolve into a truly strategic position, requiring vision and creativity. The CFO will need to set a clear direction for the company and provide a framework for all decision-making.
Key skills for today’s and tomorrow’s CFOs
With this evolving role comes a demand for new skills. Among the traits and abilities that will make a difference are:
- Ability to Keep Up with Technological Advances: CFOs must keep pace and, for example, acquire basic knowledge of data science or business intelligence to leverage the benefits these fields bring to their role.
- Leadership and Communication Skills: The CFO must now be a visible, influential figure within the company, demonstrating strong communication skills to rally teams around their vision.
- Understanding Operations and Business Models: While adopting a strategic and global perspective, CFOs must remain close to their company’s operational reality. Understanding the product or service, the customer profile, and the sales cycle is critical because they need to provide actionable financial insights for business functions.
- Management Skills: While not new, CFOs must be capable of surrounding themselves with top talent to make a real impact. They need to know how to structure and retain an increasingly multidisciplinary team.
Conclusion
In summary, the CFO role has undergone a revolution. Digitalization and the introduction of tools have significantly reduced operational tasks. The transformation of the CFO role is far from complete, and it will continue to evolve alongside technological and organizational advancements!