Data and technology are transforming the chief financial officer into the chief collaboration officer
Technological advances and pandemic-driven business pressures have accelerated the evolution of the CFO, transforming them from financial managers to strategic C-suite masterminds.
While the role historically focused on compliance, reporting and managing financial operations, CFOs must now be consultants and communicators. Using data and analytics, a CFO provides real-time insights into business operations, impacting company policy and direction.
“The biggest change in the role of CFO over the last five years is that it’s gone from tactical financial manager to strategic partner to the CEO,” says Mike Beach, CFO of Chargebee, a revenue management platform. “Since the onset of the pandemic there has been an even greater focus on data. Companies are really drilling down into the different parts of their business, trying to understand the numbers and identify opportunities and efficiencies.”
Handled effectively, data can give critical insights not just into an organisation’s finances, but its ESG credentials, its progress on diversity and inclusion, and its long-term road map.
The CFO brings a granular grasp of figures, along with an understanding of the company’s long-term strategy and live information about market conditions. These factors mean they’re well placed to act as the custodian and interpreter of the wealth of data that’s generated within an organisation.
“CFOs now serve as valued advisers and consultants to the entire executive team,” Beach says. “They are responsible for planning years ahead, anticipating markets and building roadmaps for long-term success.”
Out of the silo
CFOs today play a crucial role in decision-making. They’re the first in the room to dissect the impact of a particular challenge, mitigating risk and determining the best next step, says Chitra Balasubramanian, CFO at CircleCI.
“CFOs have huge value bridging teams within a business as well as communicating to external audiences,” she says. “They are vital in fundraising, in supporting the business, and understanding how customers will react to changing business models. They go beyond the numbers and understand all aspects of their business.”
Gone are the days of the siloed CFO. Instead, the role is shifting from ‘chief accountant’ to ‘chief insights officer’, becoming much more operational.
“CFOs today have greater visibility across their businesses and a more holistic lens than perhaps any other role,” says Will Johnson, CFO at cross-channel marketing platform Iterable.
With this visibility, they’re in a unique position to observe and navigate the boundaries between different departments and look forward, rather than back. “It’s more important than ever for CFOs to look down the road, help avoid potholes and execute lane changes, rather than staring in the rear-view mirror,” he says.
Mohit Daswani is CFO of ThoughtSpot, a unicorn analytics business, and a former CFO of the payments, risk and technology businesses at PayPal. He thinks the new breed of CFO needs to be objective about performance measures, grounded in data and collaborative in their approach.
“Data is power,” Daswani explains. “CFOs must be prepared to dive into the detail by department and customer to understand the real trends at play. Armed with the right data, CFOs help stakeholders throughout the business collaborate and succeed.”
To this end, CFOs should be at the cutting edge of technology. This means making full use of business intelligence, data analytics, and machine learning and AI. These technologies yield far greater insights than the spreadsheets of yesteryear, but they also require human interpretation to use the information to plan effectively for the future.
“CFOs can help upskill all colleagues to become data-led decision makers,” Daswani says. This will enable the business to weather volatile times and take timely actions which will have a real business impact.
In their new role, CFOs need to take the information gleaned from AI and machine intelligence and interpret this for the rest of the organisation, providing deeper commercial understanding to help other departments make key strategic decisions.
It isn’t enough to keep those data functions solely within the finance department, says Susy Roberts, executive coach and founder of people development consultancy Hunter Roberts.
“CFOs need to be much more aware of trends within their own organisation, their sector and globally so they can advise on the reality behind the reports,” she says. “Helping people to understand why decisions need to be made is a skill every successful leader needs. CFOs with the ability to make finance meaningful to those without a financial background are indispensable.”
New skills in demand
The CFO role isn’t changing, but broadening, says Sarah Spoja, CFO at Tipalti, an accounts payable (AP) and procurement automation software company. On top of budgeting, forecasting, and strategic planning, they’re participating in projects that will transform their companies. This means collaborating with departments that previously were seen as non-financial responsibilities: sales and marketing, for example, as well as the wider C-suite.
CFOs are also grappling with huge changes that have occurred in organisations over the last two years. They are dealing with a more dispersed workforce, handling compliance, tax and fraud, and incorporating ESG into their business and its operations.
Time-consuming manual financial tasks can now be handled by automation, which has increased their freedom to operate outside the finance silo. As a result, the CFO can take a more strategic role.
“The role of technology in modernising financial processes is absolutely crucial in enabling the CFO to break out of the ‘finance only’ bubble,” Spoja says. “This enables them to focus on high-impact initiatives and lead on wider business strategy.”
Driving digital transformation
The global economy is being driven by technology and rapid digital transformation, pressuring leaders and teams to change and adapt. The new breed of CFO is in a unique position to help navigate this path. They can become a role model within the company for adopting digital transformation and all the tools that go along with it.
“The CFO is a strong, central role, and is critical in stabilising and accelerating the business,” says Thomas Seifert, CFO at internet security and infrastructure company Cloudflare.
“Digital transformation is putting a lot of pressure on companies to change and adapt their business models and CFOs are at the centre of this.”
CFOs are in a unique position because they can navigate a path forward for their organisation by analysing data to understand company and industry trends. They are pivotal in product innovation because they can report on live customer behaviour or buying trends.
“Controlling and reporting numbers isn’t all that’s important to the CFO anymore,” Seifert says. “The CFO is the guardian of a company’s most valuable asset: data. Data science and analytics is as important for the CFO as traditional accounting has always been to finance roles.”