The role of the CFO is continuously evolving and so are the demands placed on finance leaders. This is according to results shared by McKinsey from their recent survey.
Here are the key points from Mastering change: The new CFO mandate:
- CFOs are increasingly playing a pivotal role determining how their businesses adapt to myriad changes and transform the way work gets done.
- Across the entire finance function, digital adoption is on the rise – especially the use of robotics and AI tools, advanced analytics, and real-time dashboards for key measures of business performance.
- Almost 60% of respondents reported either a positive or very positive ROI from IT and digital investments made in the past year.
- Increasing technology adoption in finance could have lasting effects on a company’s overall resilience.
- Despite digital technology’s promise, high up-front costs, a lack of skills or capabilities needed to build and implement the technologies, and cultural and organizational resistance to changing existing processes are the most common obstacles to adopting new technologies.
- CFOs have a meaningful role to play in their companies’ ESG programs—especially now, as investor interest in these issues has increased dramatically during the pandemic.
- CFOs are uniquely qualified to drive changes in how their companies experiment with new technologies, evaluate ESG risks and opportunities, and execute transformations.
While the survey results confirm the ever-changing demands on finance, I have a somewhat different view. Mastering change is not the new CFO mandate. For years, finance leaders have significantly been involved in driving organizational change and transformation.
The COVID-19 pandemic is not the only turbulent change CFOs have had to deal with. In the past, they have played an integral role leading their companies navigate through financial crises, economic recessions, and business restructuring.
Additionally, CFOs are heavily involved in the adoption of new financial reporting and regulatory standards (for example IFRS and SOX compliance) besides new systems implementation and integration.
It is a fact there is increased scrutiny on environmental, social and governance (ESG) metrics from investors, regulators, and the public hence ESG is gaining rigor. Should CFOs take the back seat on these issues? No.
Finance leaders are already the owners of company performance reporting therefore are uniquely positioned to embed new reporting metrics across the company that demonstrate their business practices are more sustainable, more socially responsible, and ethical.
It’s encouraging to see that investments in IT and digital technologies are not going down the drain. For those CFOs still deciding where to start, McKinsey recommends looking at those activities where increased use of digital technologies would add the most value. For example, cashflow forecasting and scenario analysis.
Additionally, I suggest looking beyond narrow adoption and taking a holistic and integrated approach to ensure seamless integration with the greater potential of unlocking value.
With the future of work leaning more towards a hybrid model, the right technology investments will help tackle any product and service delivery challenges for your business and become a source of innovation, competitive advantage, growth, and resilience.
Overall, I highly recommend reading the survey report.