CFO 3.0 - The digital financial strategist

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CFO 3.0 - The digital financial strategist
More than any other leader, the CFO has the ability and insight to chart a course through the disruption...
Photo by Chengwei Hu on Unsplash

Despite the economic uncertainty in the wake of the pandemic, Australia’s financial sector is flourishing.

New data from Roy Morgan shows Australia’s financial services market grew by a record $1.27 trillion (+13.2%) in the last financial year, to a total of $10.9 trillion.

Optimism is justly ripe amongst executives, with Deloitte’s recent CFO Sentiment report indicating that 84% of CFOs are confident about their company’s financial growth as Australia’s economy works to bounce back from Covid-19. But this doesn’t come easy. With rapid advancements in technology, the explosion of data and the rise of the global economy, there’s been a seismic shift in the role of the CFO.

CFOs were once regarded as number crunchers, often limited to determining budgets and reporting financial results. Today’s CFOs are expected to be visionaries, business strategists and digital stewards of the business’ long-term success. They must move beyond their traditional roles of analysing past performance and lead organisations towards a new frontier of data and analytics, and come to grips with new complexities encroaching into their role such as managing a remote workforce, as well as expanding security and compliance directives, which are changing in the face of the pandemic.

With the new financial year in full swing, it is timely for CFOs to reflect on the past year; review what worked and didn’t, and consider how to improve processes by implementing the right technologies with a culture-first mindset.

A business analyst from the future

Good business decisions are powered by knowledge and data-driven insights. This may seem like a given, but a Sage report found 70% of CFOs are still making decisions based on gut feelings and past experience. While both are important to consider in making critical decisions, businesses also need access to the right technology to set themselves up for success

A CFO setting out to transform a business needs to prioritise the use of data and predictive analytics to forecast and chart a new direction, rather than stare in the rearview mirror. Utilising and analysing data will not only uncover fresh opportunities and close information gaps, but ensure the business continues to drive momentum and success.

Often the first investment organisations make to gain efficiencies – particularly in the mid-market segment – is in financial management. Deloitte reports that exploring digital opportunities is the second top priority for CFOs to recover from Covid-19, putting them firmly in the driver’s seat to spearhead technological change.

Ensuring the right data and predictive analytics tools are being used effectively is key, as is the responsibility of translating these insights into added value, which requires a deep knowledge of business as well as financial impact, so as to monetize each of the company’s actions to get a head start on the competition, and success  for the business as a whole.

A 360° view

Another aspect of being the organisation’s conscience is helping to digest rapidly changing assumptions about the business and understanding what that will mean. CFOs must be cognizant of the long-term repercussions of their decisions. As businesses continue to navigate these uncertain times, financial rigour is highly sought after. While CFOs are under great pressure to deal with countless issues, it is essential that they keep one step ahead of evolving business needs.

From scenario planning to analysis, CFOs will now be called upon to forecast business environments, devise strategy and plans and call upon company-wide collaboration to orchestrate strategic business transformation. As such, it’s vital for CFOs to have a complete view of where the organisation is and where it could be headed. With access to the right organisational data and financial management tools, CFOs are in an ideal position to gain a forward-looking, 360° view of their organisation, enabling them to make informed, data-led decisions.

Revolutionary means being a people person

Technology will never be a one-stop shop solution. In addition to leveraging tools and insights with the help of technology, CFOs require outstanding communication and people management skills. KPMG reported that 60% of CFOs and finance leaders said that since the start of the pandemic the health and wellbeing of their teams has been a top priority – and will remain so. This is why CFOs must also be cognizant of trends within the future ways of work, with remote working on the rise and manage risk management of ensuring compliance across a decentralized network, a scattered workforce, which means a possible larger attack surface.

Research from Macquarie Business School suggests the pandemic has heralded a new age of leadership in Australia, giving rise to the ‘avocado-leader’. Much like an avocado, these leaders have a soft, empathetic outer layer with a strong, commercially driven nut at the centre!

This phenomenon is especially relevant to CFOs, forced to make incredibly tough decisions and take decisive action to weather the impacts of the pandemic. CFOs across Australia have had to guide their organisations through a period of immense disruption while having to exercise empathy and leadership in balancing business outcomes and the personal impacts of the pandemic.

A CFO wears many hats

More than any other leader, the CFO has the ability and insight to chart a course through the disruption with positive, targeted investment, while preserving human kindness and corporate consciousness.

The modern CFOs are forecasters, data scientists, technology advocates proactive business continuity planner and risk mitigator and the glue that holds their team together, all the while driving the change required to adapt to the new business reality. It is not now uncommon to see CFOs transition into the top role of CEOs, given their varied background and industry-rich knowledge, such as was seen here at Sage, with the appointment of Sage’s former CFO, Steve Hare as our CEO in 2018. With responsibility comes a great source of power, and CFOs have a unique opportunity to leave their business in a better position than when they found it or even lead it, in future.

Carlene Baskerville is Director of Sales, ANZ at Sage.

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