Four Challenges Facing CFOs
Chief Financial Officer’s functions have changed radically in the last few decades.
The old model for financial leadership was focused on manual reconciliation and data movements. Today’s finance executives have harnessed digital technology to go far beyond their traditional wheelhouse of annual budget cycles and month-end calculations. By analyzing information delivered by digital technology, financial experts are able to focus with greater detail and accuracy on costs, risks, data migration and more.
As a result, the financial element of a company has earned the role of full-fledged business partner and valued advisor. Time previously spent balancing books is now directed to analysis, interpretation and advice.
With any new opportunity comes a new set of challenges. Here are four challenges facing the new generation of CFOs.
Emerging skills gap in the financial realm
New business models and processes are evolving, thanks to increased data and computing speed. Incredible opportunities are uncovered, but these opportunities demand rapid learning on the part of financial leadership. The role of finance is changing, as are the contributions finance makes to an organization. Anyone who thinks they can get by on traditional accounting skills and reporting will quickly be left behind. Such cores skills are still critical, but businesses demand greater contributions from their finance department.
Consider the example of David Knopf, who is making the news for being appointed CFO of Kraft Heinz at age 29–a prime example of how being exposed to big data and sophisticated financial tools puts executives at an advantage.
Millennial talent retention is crucial
Millennials prioritize work-life balance and lifestyle, and their digital skills are of great value. Additionally, they’ve come of age in an environment of digital disruption and general disruption, so they often have the agility to adapt, change and grow in a dynamic organization. Tailoring the work environment to find and retain talented Millennials pays off.
Disruption is the new normal
Computing speed has been accelerating at lightning speed; new apps and technologies appear daily; and the political, social and economic global landscape is perpetually in flux. Strategic planning is both harder and more important than ever.
The good news is that tools are adapting to this disruptive environment. Increased automation, robotics, big data, and feedback from the internet of things all enable increased automation of many core processes, freeing up time for analysis, strategy and optimizing business performance.
Data overload can overwhelm
More and improved data is a blessing, but it can feel like a curse.
Finance executives have traditionally been detail-oriented, harvesting nuggets of data to build a big picture. The source data was often limited by their own time and initiative. Now, data pours in at the rate of a fire hose, and the savvy CFO has to discern which elements matter.
CFOs have greater influence than ever
These challenges all result from this happy circumstance: CFOs get more respect than ever. The combination of the traditional reach of the finance department into every function of a business, combined with the huge increase in volume and accuracy of data, means that CFOs are uniquely positioned to review and advise on operational and business performance; to offer guidance on investment; and to mitigate risk.