4 Key Challenges Facing a Digital Age CFO

In The Digital Age, The Chief Financial Officer role in an organisation has evolved to become vastly more complex than number crunching and presenting figures to the board.

In today’s constantly shifting world, a Digital Age CFO must have a broad understanding of, and involvement in, all areas of the business.

This article takes a look at four crucial areas that challenge a modern CFO in this age of business change, digital transformation, emerging technologies and globalisation.

#1 Technology

The technology in all types of organisation is changing rapidly, and this speed of development means an evolution in the role of a CFO and their team.

The CFO is now a driving force in recognising emerging technologies, such as artificial intelligence, blockchain, internet of things, and cloud-based systems, and in establishing how they can best benefit the business.

The CFO must lead the Finance team to a higher level of proficiency in all matters technology and digital, and ensure there is a close working relationship with IT management to develop strategies for keeping up with emerging technology and analysing how it affects the company’s bottom line.

Such a partnership needs to be aware when the senior management team may not be as knowledgeable as them about the latest technology developments and create cohesive plans to transform any disruptive technology into a game-changing company innovation.

The resulting insights can become an invaluable element in crucial business decisions which could lead to a more streamlined business model and efficient operations, thanks to new systems and devices.

#2 Big Data

Data analysis is as critical as traditional accounting in the finance department. The CFO need not only analyse and monitor financial data but also embrace business intelligence to discover patterns and trends in customer behaviour.

The results of big data analysis can offer an insightful and accurate overview of an organisation’s processes and systems, and how they are performing.

In-depth business intelligence can go even further to investigate the impact of those processes and systems on other areas such as employee satisfaction, sales and marketing results and overall company performance.

Again, advances in technology are a huge benefit; there are numerous tools available that help to make sense of the wealth of data being generated, preventing possible overload and the chance of missing something important. A CFO needs to understand and use these tools.

Real-time data means that trends can be spotted quickly and communicated to those that need to know ever more rapidly, leading to faster decision-making and more efficient planning and forecasting.

The observations produced by data analysis are not only relevant to a firm’s current situation: they can also predict future performance.

Understanding the commercial implications of both financial and business intelligence data and being able to make it relevant and meaningful to senior management, are vital skills that facilitate company-wide changes and long-term strategies.

#3 Cybersecurity

The increased interaction of people, data and technological innovations means that cyber risks are also on the rise.

Managing investment in the web, email and data security is a crucial consideration for any CFO.

All organisations need to protect their data from hacking, phishing and other external attacks; what’s more, the protection has to extend to the actions of employees within the company.

Getting data security right also helps with regulatory and compliance issues. A CFO these days needs to be on top of all current and upcoming regulations and compliance laws, whether they’re specific to accounting practices or more wide-ranging such as GDPR.

Additions or modifications to these laws can often have a significant effect on a company’s long-term strategies, while not being aware of impending regulatory change can put a firm at risk.

The CFO has to be ahead of the curve to eliminate any uncertainty at an early stage and protect the organisation’s profits, and even increase them if taking the right opportunities.

#4 Talent

Attracting, nurturing and keeping the right employees can significantly improve business performance.

The real challenge for a CFO is to find that top talent and then make sure they continue to develop their professional, technology and digital skills while keeping the team focused, relevant, and above all productive.

Having high standards and a rigorous recruitment process – and, crucially, keeping to them – will significantly help a CFO hire the best people for their team.

Successful candidates must not only enhance the team but must also fit in with the culture of the company.

It’s not just about the financial, technical and data analysis skills mentioned elsewhere in this article; a CFO also needs to look for excellent relationship management, communication, critical thinking and problem-solving abilities.

The flip side of a rigorous process is that it can be hard to find potential employees with the required skills, but sticking to the process and persistence will reap the rewards.

Once a CFO has on-boarded a great team, they can’t become complacent; they have to put in the work to retain them, which means fostering an inclusive environment that factors in the importance of employee wellbeing and encourages a sensible work/life balance, but still emphasises the importance of getting the job done.

Another challenge is dealing with the outlook and expectations of different generations of staff, which could range from a team member with 30 years’ experience to a Generation Z employee in their first role.

A successful CFO knows how to lead and how to get the best out of the team regardless of age and experience.

In Summary

While the skills required to meet all the above challenges are varied, today’s CFO still needs to keep an eye on the figures and how they align with company plans, strategies, including encouraging growth, controlling costs and mitigating against outside factors in the global economy.

Ultimately, the challenge for a CFO is to be expert in managing the bigger picture. It just so happens that the bigger picture in today’s digital world has many more moving parts than in the past, and a CFO must obtain the combination of skills and experience to meet and embrace that complexity.

Photo credit: cartoon by Nick Maher. Any resemblance to real persons, living or dead, is purely coincidental.