A recent article by CGMA Magazine titled, “What Makes a CFO Great” outlined four main challenges that every CFO faces. These four key areas are:
As these four areas have grown in importance, the role of the CFO has increased as well. According to a recent survey by EY of more than 750 finance leaders:
“Taking on the additional responsibilities is crucial to help develop and enable an overall strategy for the business, provide insights and analysis to the company’s executive management, ensure that business decisions are grounded in sound financial criteria, and represent progress on financial goals to external stakeholders.”
In addition, it’s no longer sufficient for the CFO to be a glorified accountant or bookkeeper. More than ever, the skillset required to be a true business partner to the CEO is multi-dimensional:
“The days of the CFO sitting in the corner office counting beans are long gone,” said Pip Spibey, ACMA, CGMA, the CFO at Travelport Locomote, an Australian company that offers a business travel platform. “A CFO is required to be a strategic business partner above all else, with an appreciation for all the moving parts in the business. That’s probably the most significant shift in recent years.”
In particular, companies are swimming in data of all parts of the business, which can be extremely powerful in both strategic and operational decisions. CFOs are needed to lead in the analysis of the data and to make sure that senior management understands the data trends.
Here are some more key points from the article:
The adoption of new digital technologies and data analytics is accelerating rapidly. Understanding and carefully harnessing new technologies is a huge responsibility for the CFO.
“Digital savvy is a priority across industry sectors, because it offers opportunities for growth – in new markets, through new products and delivery models, or by transforming existing products. Financial leaders who understand how their company can deliver on its digital strategy can co-ordinate and focus investments accordingly….
“A good digital strategy helps a company figure out which technology provides the best return on investment and possibly other intangible benefits.”
Data is becoming the key to building and sustaining a company’s long-term competitive advantage. CFOs are now on the front-line of efforts to understand not only traditional financial data, but also leading indicators related to customers, suppliers, and partners.
“For companies to turn these efforts into a long-term competitive advantage, data must become integral to the business strategy, and analytics delivery must match business requirements. To gain more value from analytics, business leaders should focus on training, easy-to-use tools for data users, and aligning incentives, rewards, and measurements.”
Risk management is often talked about and, yet, often not implemented fully enough. CFOs need to move beyond just thinking about prevention, but, also need to outline larger, strategic risks during the business planning process.
CFOs need to have extremely good communication skills in order to work effectively and in real-time with boards of directors, shareholders, investors, employees, as well as regulators.
Read the full article