Thefianceweekly:  
 

Digitalisation, more data and ESG creating much broader role for CFOs



CFOs now focused on setting direction of a business.


Long before the pandemic turned things upside down, the chief financial officer role had begun to change. Led primarily by the digitalisation of the finance function and the rise of tech savvy young finance professionals up the corporate ladder, CFOs were moving beyond keeping the purse strings and assuming a much broader role in the execution of digital strategies within their organisations. In many cases, CFOs have become the architects of and catalysts for technological transformation.

“The CFO’s role has evolved beyond the finance lead to become the ‘digital steward’ of their organisation and CFOs are increasingly focused on enabling strategy beyond the finance function,” says Aoife Donnelly, who leads Accenture’s CFO and enterprise value practice in Ireland.

“Some of their initiatives outside finance include setting the cloud agenda and reconstructing business models to reflect the shift from the ‘product’ to the ‘service’ economy. CFOs now have a golden opportunity to lead, but doing so involves greater collaboration across the enterprise. Moving collectively will continue to be a key part of the CFOs’ work as they focus more on setting the future direction of the business. To enable this shift, CFOs are looking to redesign how people work and change the finance culture, focusing on building new skills in the finance workforce such as data fluency, innovation and storytelling.”

Financial reporting is what will effectively drive the strategy and achieving this means getting everything aligned as finance is at the end of every process

When Michael Rice joined Glenveagh Properties four years ago as CFO he asked for responsibility for IT. “I wanted it within my remit because, from my previous experience of working in a global business with Kingspan, I knew the importance of good IT systems and speedy financial reporting from a strategic point of view, particularly if the intention is to scale a business,” he says.

“Financial reporting is what will effectively drive the strategy and achieving this means getting everything aligned as finance is at the end of every process. So, if we can influence as much as possible within those processes it means we’re getting better information to work with. For Glenveagh this meant moving everything into the cloud and putting in new enterprise resource planning (ERP) to allow us to share information across the business.”

The organisational disruption caused by the pandemic may have accelerated the broadening of the CFO’s role. However, Rice says it was happening anyway not least because those assuming senior finance positions over the last decade have grown up with technology.

In Rice’s case, he had his first taste of working with a digital platform around 2009 when he was an associated director with KPMG. “It was very early tech but the younger people fully embraced it,” he says. “What I think we’re seeing now is an evolution rather than a transformation of the CFO role following on from that. Covid didn’t flick the switch, but it has created more urgency around putting systems and digital infrastructures in place and the CFO is increasingly central to this process.”

Brice Evin is Vodafone Ireland’s CFO. He shares Rice’s view that Covid has accelerated the changes to the CFOs job description. “We have become much more strategically and future focused,” he says.

“We are no longer only responsible for the numbers. We now also play an important part in defining a company’s expansion strategy and protecting and driving the value of an enterprise. Before this our focus was the P&L [profit and loss statement] and balance sheet, which was kind of reactive. Today, our role is proactive and we are dealing with highly complex technology platforms generating more and more data feeds. Before, the data was segmented in the business units and siloed even more within them. Now, it is all combined in one. Operating models are becoming more complex and expectations in relation to the CFOs role are rising with the emergence of new tech and the challenges around the management of data.

“CFOs are at the heart of driving data strategy,” he adds. “How you manage these huge amounts of data is one side of the coin. How you filter the data to inform your decision-making and forecasting is the other. We have to understand the landscape of technology platforms and to exploit technology to gain insights in a smart and automated way to boost productivity.”

According to the Accenture research, CFOs who, “use technology to unleash breakthrough speed,” could almost double the compound annual growth rate of their organisations. However, Donnelly says it’s not just about using technology to move faster. “It’s about using digital transformation to get better data-driven insights and predictive forecasting and, while the ambition is there most CFOs have not yet harnessed the possibilities,” she says.

“Our research shows that less than half of the CFOs surveyed have used advanced financial modelling in the past two years to identify future risks and opportunities, only 23 per cent are using the cloud to provide new insights and only 16 per cent are using the cloud to identify new value sources.”