The new normal requires the role of the CFO to change along with it
In the age of the coronavirus pandemic, we are hearing the term, “new normal” at every turn when it comes to how we operate personally and in business. It goes without saying that the pandemic has spurred the latest “new normal” – and a significant one at that. However, while these are certainly strange times, new normals are not a rarity. Often referred to as paradigm shifts, changes that affect the way we approach life—new technologies, economic highs and lows, cultural evolution, and world events, to name a few—also affect the way we do business.
As businesses face paradigm shifts, they must evaluate how those shifts are affecting or will affect their business and to what degree, and then determine what, if anything, about their business also needs to change to adapt successfully to the shift. Otherwise, those businesses will likely fail or be negatively impacted.
This holds true for positions within a company—especially the role of the CFO.
A recent report by Microsoft stated that “The role of the CFO can be summed up in two simple truths: 1) if something impacts the bottom line, it’s the CFO’s responsibility, and 2) everything impacts the bottom line.”
Those two truths are universal and unchanging, but how CFOs fulfill those responsibilities is what must often change as the result of a paradigm shift.
In decades past, CFOs were in more of a traditional accounting role—overseeing the Finance department, keeping an eye on the budget, and acting as historian, reporting on what had already happened. As technology advanced and the expectations of the business changed, CFOs evolved into analysts who, with access to real-time data, could identify issues and intercede.
Today, with the increasing complexity of doing business—the use of more technology, the demand for more detailed information, dealing with a global market, and more—CFOs have a much more strategic role as a visionary leader who understands how to use historical data to inform recommendations about moving forward. CFO’s are the glue that connects the organization, using ever-changing technology and data in the form of predictive analytics to determine strategy while protecting the organization against instability and risk. In short, today’s CFOs must be strategic advisors, strategists, and technologists—and of course, financial experts.
Embracing the Role of Technologist
As technology plays a larger and larger part in every facet of organizations, CFOs must be more educated about and involved with technology that will support critical efforts. CFOs aren’t just responsible for approving budgets for technology investments; they must also understand how to:
- Use technology like artificial intelligence (AI) for predictive analytics to help make strategic recommendations
- Understand technology at a level that will allow them to participate in evaluating to ensure the fastest and best return on investment while preventing risk
- Capitalize on technology to automate and improve efficiencies to save money and resources
- Use technology to research possible opportunities and partnerships
- Take advantage of technology like the cloud to ensure security and assess/mitigate risk
To evolve as a CFO, it is imperative to embrace technology, staying on top of an area that is constantly changing, always assessing where it can be implemented or improved throughout the organization.
Balancing the Roles of Visionary and Risk Manager
CFOs are in a somewhat unique position in that they must wear two hats, taking on two roles that often don’t play well together. But CFOs are in the ideal position to take on both these roles and execute them well:
- With better access to data and the ability to study it with the assistance of AI and other tools, CFOs can clearly see opportunities for growth and expansion while backing up their recommendations with the numbers.
- CFOs can look at historical information and project into the future to make better predictions in areas like sales and supply chain.
- CFOs have visibility into what’s in the pipeline to have a better understanding of the company’s financial position now and in the future.
As visionaries and risk managers, CFOs can use solid data to make strategic decisions while avoiding risk because they have the numbers to back them up. It’s the perfect complement.
Taking on the Role of Educator
This one might be a surprise, but it is a very critical role. Today’s smart CFOs understand the importance of educating employees. Empowering them with knowledge is valuable in two ways:
- It helps them understand how the organization makes money so they understand the contributions they make; and
- It gives them an understanding where the money goes and how the business operates. With this more holistic understanding of the business rather than being siloed in their job or departments, employees feel invested, are more likely to buy into change, and feel that they are valued and that their ideas and concerns will be heard and taken seriously.
ArcherPoint Can Help
Today, CFOs are expected to be more than number crunchers reporting quarterly returns. They are also taking on roles previously reserved for IT managers, COOs, and product development, being responsible for audits, regulatory compliance, and data security. But they still need to be able to crunch the numbers and report on quarterly returns.
As technology’s role in finance and across the organization expands, it is more important than ever to have a strategic partner you can count on to understand how to leverage technology in the right way—helping to bring on new technology that will automate processes, streamline operations, and give you the visibility and tools to take advantage of data and the power of predictive analytics for making smarter strategic decisions.
Contact ArcherPoint to learn how you can leverage technology to fulfill your many roles.