History has taught us that successful transformation does not come without challenges. Against a backdrop of economic volatility, shifting markets and growing digitisation, the role of chief financial officer has evolved from number cruncher to key strategic partner, responsible for driving business growth.
But while it is undoubtedly an exciting time to be a finance leader, CFOs face a delicate balancing act, juggling financial prudence with growth ambitions and evolving skills demands.
Long-term planning over short-term targets
For CFOs up against persistent economic uncertainty, the pressure to drive cost efficiencies and hit short-term targets is understandably high. Some organisations are responding by making cuts to long-term plans, including ESG and technology investments. However, doing so risks potentially stemming future growth.
It is a paradox that Kirsty Godfrey-Billy, chief financial officer at Xero, knows all too well.
“While it’s important to tackle short-term challenges and seize those quick wins, it’s equally important to ensure you have a sustainable business model with financial discipline in place,” she says.
Balancing the two will likely require CFOs to challenge the C-suite, using data, their deep knowledge of the business and an understanding of the broader macroeconomic environment to demonstrate the importance of long-term planning. After all, creating value is about more than maximising short-term profits. Taking a longer-term horizon will support future revenue streams and growth.
Godfrey-Billy believes that embracing technology-driven insights will enable CFOs to be “true strategic advisers” and place them in a strong position to help a business meet its long-term goals.
“I’m always looking for new data and insights to inform decisions that impact the business, both today and in five years’ time, from smaller investments to broader decisions that will affect the entire organisation,” says Godfrey-Billy.
Technology to transformation: leveraging AI and automation
Once the stuff of science fiction, AI is quickly reshaping the way the finance function operates. Gone are the days when collating figures was an endless, manual slog. Today, technology is helping to streamline operations, reduce human error and improve the accuracy of financial analysis and forecasting.
Steve Paul, deputy chief executive at Equals Money, says automation has enabled the finance team to focus on developing skills such as strategic thinking and consultative problem solving.
“As a result, finance teams become more efficient in their operations, providing deeper insights and more consultative support to drive business success,” he explains.
Ramyani Basu, global lead, AI and data at Kearney, echoes the sentiment: “AI has evolved from a nice-to-have to an essential driver of efficiency for CFOs. By automating tedious tasks like payroll processing and invoice reconciliation, finance teams are reclaiming hours for strategic, high-value work.”
However, its benefits extend far beyond automation, says Basu.
“AI-powered real time analytics shifts decision-making from reactive to proactive, enabling finance leaders to prioritise forward-looking planning and helping them to anticipate challenges and opportunities long before their competitors,” she explains.
But for all its bells and whistles, AI should not be viewed as a panacea. Organisations must have a deep understanding of what they’re aiming to achieve with AI and any investment in technology should be strategically aligned with the wider business objectives for it to be truly effective.
Mark Satchel, chief financial officer at Quilter, says: “Advancing digital transformation in finance requires a strategic approach that aligns with the broader organisational goals. At Quilter, we focus on fostering a culture of innovation and continuous improvement.
“This shift allows finance professionals to play a pivotal role in strategic decision-making, to drive business success in an increasingly data-driven world.”
For Basu, the secret of success is in building strong foundations, ensuring AI solutions are both scalable and sustainable.
“The most successful organisations get it right by strengthening their data quality, which eliminates siloes and supercharges decision-making. They also prioritise upskilling so that teams understand and trust AI outputs,” she says.
Overcoming organisational barriers to digital transformation
Adopting digital tech will be central to the CFO’s success. But they still must contend with legacy systems, cost barriers and resistance to change.
If finance leaders don’t have the support of their teams and the wider business, digital-transformation efforts will struggle to get off the ground, much less propel the business forward. To tackle this, CFOs should champion the benefits of technology across the organisation. This requires creating a culture of learning and development, equipping employees with the tools and the training required to succeed.
“Digital transformation often feels like an uphill battle,” admits Basu. “But CFOs are uniquely positioned to overcome these challenges by taking a step-by-step approach and laying out a clear vision to realise the immediate value of AI.”
Basu recommends starting with tangible wins, like automating forecasting and deploying predictive analytics. She says introducing cloud-based platforms for financial processes can deliver value quickly, building momentum and securing executive buy-in for larger, more-transformative projects. Collaboration between teams is equally important.
“Breaking down barriers between finance, IT and operations ensures that digital transformation efforts are driven by business needs, not just technology,” she explains. “Combine these efforts with a commitment to upskilling teams, and CFOs can turn digital transformation into a practical, achievable reality.”
For companies unsure about fully embracing the shift to AI, or concerned about cost, Paul recommends using financial tools to bridge the gap. This enables firms to gradually adopt automation.
“The key is to start small, take manageable steps towards innovation and choose the right partners to guide you on your journey,” he says.
Bridging data quality and the skills gap
In a digital economy, data is the new gold. However, poor-quality data can threaten to derail even the most well-meaning of strategies. And, it’s not just limited to financial processes; mistakes can have a knock-on effect on supply chain efficiency, shareholder trust and customer relationships.
As a first step, CFOs should look at how data is structured and ask themselves whether it is formatted in a consistent way, stored in a safe and accessible environment and, importantly, backed-up, with recovery procedures in place to prevent data loss. Regular and robust data audits will help the finance team to identify any quality issues and inaccuracies before they impact automated processes.
Equally important is the need for data skills and this requires a combination of upskilling and reskilling. CFOs must create an environment of continuous learning. This could involve establishing development programmes, encouraging knowledge sharing and arranging mentorships in the team, says Satchel.
Recognising the need for fresh skills and perspectives, the sector should actively explore and promote various entry points into finance, he says. “This includes not only traditional academic pathways but also apprenticeships and opportunities for early career changes,” he notes.
Satchel believes finance departments should also aim to attract individuals with relevant skills from similar disciplines at an early stage in their careers, which, he says, will enrich teams with a diversity of experiences and viewpoints.
Balance economic risk with sustainable growth
The modern CFO is walking the fine line between economic risk and sustainable growth. While managing cash flow has long been a staple of the CFO role, today’s strategically minded finance leader should focus on improving their cash flow by optimising, rather than cutting existing resources.
Godfrey-Billy stresses that a clear roadmap and strategy are vital for sustainable growth – and company culture and purpose play an integral part.
“Having this clear direction on where to play and how to win makes decision-making quicker, easier and more consistent,” she explains.
For Godfrey-Billy, investment decisions should have a strong link to the company strategy and take into account the macro environment to ensure financial discipline is embedded in the decision-making.
“Having your customer as the north star of your strategy and decision-making is critical for ensuring your business succeeds sustainably both today and in the long term,” she adds.
History has taught us that successful transformation does not come without challenges. Against a backdrop of economic volatility, shifting markets and growing digitisation, the role of chief financial officer has evolved from number cruncher to key strategic partner, responsible for driving business growth.
But while it is undoubtedly an exciting time to be a finance leader, CFOs face a delicate balancing act, juggling financial prudence with growth ambitions and evolving skills demands.
