The role of the CFO of the future: networker and data steward

In 2022, the CFO will step out of the famous ivory tower: the finance department will be more closely networked with the entire company to provide even better support for operational decisions as a strategic partner. Until now, one of the CFO's main tasks has been to present past figures in the company's annual report. But for a long time now, his position in the company has not just been about a status quo - today, it's about supporting future decisions - which sums up his new role. Today, a CFO must be able to provide management with the information needed to make directional decisions. In concrete terms, this means that the CFO of the future will become a strategic advisor and will influence the future development of the business. Information forms the basis for this - and not just from the financial area, but from other departments such as human resources or sales. Added to this is the issue of sustainability. Companies must position themselves accordingly in order to meet ESG (environmental, social, governance) criteria. In the future, this corresponding information will be included in the annual report and will be relevant for the CFO so that he can fulfill his new strategic role.

Data understanding is essential

What can be expected from the data and what analyses can be implemented with it? To answer these questions, the CFO will become even more involved with data. Thus, analytical thinking and a basic technical understanding will become essential. A CFO will need significantly more data understanding than before. In this context, the term "data steward" comes into play. This refers to someone who has an overview of all relevant information, is responsible for its quality and brings it together. The CFO is thus entering an area of work that has been dominated by the CIO to date. Both functions will cooperate more closely in the future. Practical experience shows that the most successful companies are those in which this cooperation works particularly well. In these companies, the CFO has understood how important good data management is.

In the best case, IT supports the finance department by providing systems that are easy to use and administer. This lowers the hurdles for business users to be able to perform data analyses themselves, for example. This setting speaks for the use of solutions from the cloud. They are preconfigured, do not require their own infrastructure in the data center, and are relatively easy for the business department to support and maintain. The issue of sustainability is also driving further interest in the cloud. It can be assumed that in the near future, companies will not only have to carry out ESG reporting, but also corresponding accounting.

Reaching the next level with Machine Learning

But the cloud has even more advantages: it provides the necessary computing power for solutions that work with artificial intelligence. Because these will also play a greater role in the work of CFOs in the future. They provide valuable support for maintaining an overview in the flood of data. After all, the more data that is available, the more difficult it becomes for individuals to identify patterns or trends. Machine learning (ML), on the other hand, can be used to automate the analysis of data. One example: when dealing with customer payment behavior, ML can be used to provide appropriate analyses, suggest actions, and even write to customers on its own. But here again, everything depends on the quality of the data. The algorithm only works as well as the data with which it has been trained allows. In other words, without data of sufficient quantity and quality, the smartest technology is useless.

CFO of the future works from person to person

The CFO of the future is a people manager who does not just rely on technology. It requires employees who are able to deal with the flood of data in order to derive insights from it quickly and in real time and, for example, to create forecasts based on it. It is a matter of selecting employees with the appropriate skills and competencies to match new job profiles such as that of a data scientist. For example, there are already companies that have assigned their Data Scientists to the finance department, but send them throughout the organization. As a CFO, who previously dealt primarily with accountants, the task now is to motivate and train team members. This would allow data experts to acquire the knowledge they need for their job. After all, it is crucial for them to understand the processes in the operational units in order to be able to develop a reasonable algorithm. In addition, the form of collaboration is becoming more important. Those who work in a home office are partially cut off from the flow of information from other departments. It is therefore crucial to be able to provide the team with comprehensive and continuous data.

Authors:
Frank Mens is Director for Financial Management DACH and Continental Europe at Workday, Alexander Rauchstaedt is Senior Manager Enterprise Performance at Deloitte Consulting.