The Digital CFO Skill Shift – Evolution of the CFO Suite

If you could start by sketching your team on a blank piece of paper, would it resemble in any way the structure you have today? Would the design you come up with still be relevant considering the rapid changes brought about by the ongoing pandemic? Digitization has become a realistic goal for CFOs and their teams to remain highly relevant, especially when there is an ever more pressing need to react quickly.

‘The revolution will not be brought to you by Xerox in four parts without commercial interruptions’ | Gil Scott-Heron

To reach their true potential, CFOs should fully embrace technology and welcome newer possibilities. An average finance team spends about 70 percent of their time trying to do their job right, whether in collecting, assembling, recording data, or creating spreadsheets. The application of ERP systems, automated analytics, and artificial intelligence (AI) will liberate finance professionals from monotonous and manual tasks, enabling them to make impactful decisions that could add value across the organization.

Evolution of the finance function

Digitalization challenges are creating a need for CFOs to restructure finance processes and drive the business through big data and analytics. As the environment has become complex, top finance leaders will need to polish their digital leadership and analytical skills. The evolving technology has put more pressure on CFOs to transform from a passive advisers to proactive strategic partners.

There has been a growing realization that technology will change the skills the accountants need and their future roles will differ from what we see today. This requires the top finance leaders to rethink and invest in its talent pipeline and gear up their team to achieve the aim.

“What’s really difficult is for people to picture what this digital environment looks like and the roles and terminologies that are coming with this new phase,” as said by one of the speakers in a Generation CFO Meet Up webinar.

Watch this video presented at The Analytics Academy on how data analytics is finding its way into the CFO suite as a key driver of value. (this is a presentation I did for Jesper Sorenson – when its available we will add this section to the article)

Will COVID-19 increase the need for a Digital First CFO?

The COVID-19 has taken a tragic toll on the operational and financial side of businesses around the world. And for all the uncertainty about the future, it’s clear already that the pandemic has significantly accelerated the shift to a digital world.

The speed at which things are changing raises a question – are finance professionals willing to embrace the rate of digital transformation change required in today’s world? Most finance professionals approach emerging technologies with a level of conservatism and risk-aversion.. As put rather bluntly by one a Generation CFO community member, “Accountants, traditionally, haven’t always been brilliant at technical innovation.”

The meet up webinar continued to explain the different reactions using Yin and Yang’s theory. The finance business partner who moves finance up the information value chain using insightful analysis and participates in effective business decision making are seen as the ‘Yin’ of the finance function.

Those same business partners can sometimes see data and digital skills as the darker side of the information ecosystem, the yang, as data and digital skills are something they have not been taught in their accountancy education or trained in their careers. But it looks like COVID-19 has given businesses the opportunity to push their finance professionals in both areas, to deliver more value to the business, and capitalize on this situation.

Finance holds a unique position in every organization which enables it deliver the insights required to make decisions. Despite the immense challenges companies are facing today, now is the time for finance to act and develop themselves in digital leadership, analytical skills, communication, and digital tools. “Finance professionals with analytical DNA should be the center of digital transformation and CFO innovation” as quoted by one participant at the GEN CFO talk.

Are digital skills core to the CFO or will another CXO lead this change?

A question that keeps getting asked is how finance departments can make the most out of digital change and in particular, data science? Data science is fast developing with great potential to strengthen business decision making. The time is now for accountants to work out how they can benefit from this growing field. Does it mean accountants need to acquire further qualifications in machine learning, mathematics and stats? We don’t believe so. But it does mean they need data and digital literacy and must be able to manage the digital finance function transformation.

For instance, an HR leader recently said, “Finance professionals should be able to work with high volumes of data, that doesn’t mean becoming a data scientist1, but professionals should be comfortable working with big data.”

To achieve a step-change in how accountants perceive and use data, organizations need a digital finance strategy, and should partner with tech savvy employees to impact analytics, automation, and any priority business goals.

For example, when finance professionals partner with data scientists, both professionals will learn new skills and adopt new perspectives on how businesses run. Moreover, finance professionals possess commercial and analytical skills that will provide a bridge between data science and the organization. Business understanding, and operational context is critical knowledge held in finance.

Organizations need data scientists to manage, model and implement data analytics, but at the same time, accountants should develop project management knowledge to keep these project on track and learn advanced data analytics capabilities to stay valued and relevant in the business while helping the business to remain competitive.

How are you adding finance capabilities to your team?

According to the Harvard Business Review study, digital transformation was the #1 concern of top leaders, directors, and senior executives in 2019. But after being hit by COVID-19 this year, the financial condition of businesses have been impacted massively. I know what you’re thinking, do organizations have enough budget to allocate to digital developments now?

Given the rapidly changing business trends, companies are undoubtedly stepping forward to transform their traditional finance function, which can no longer operate effectively in today’s fast-paced world. In our recent research, the majority of participants saw an increase in the need to transformation finance. Some organizations are taking baby steps while some are dedicating huge resources to digitize and digitalize.

Digital technologies will certainly change the accountants and finance leader’s roles. The addition of a digital finance strategy and new resources like data scientists will help finance reach its true potential.

Here is how members of the ICAEW (Institute of Chartered Accountants in England and Wales) addressed this question in a recent ICAEW’s workshop

What initiatives have you and your company taken to enhance your finance capabilities?

1. Data Scientist, a person employed to analyze and interpret complex digital data in order to assist a business in its decision-making. (Oxford Languages)

Chris Argent is the founder of Generation CFO, a boutique consultancy helping CFOs, accounting and finance teams discover and benefit from digital transformation.