Johannesburg, 09 Sep 2020
A few things are striking about Sage and World Wide Worx's new report, CFO 3.0 – Digital transformation beyond financial management. Perhaps the most interesting is that chief financial officers (CFOs) are not nearly as hands-off with technological change as was previously thought. Quite the opposite – almost a fifth are even leading their organisation’s transformation agenda.
For Pieter Bensch, Executive Vice-President of Sage South Africa, it's noteworthy that we're not talking exclusively about new generations of CFOs. A significant portion of those interviewed are over the age of 40. At the report's launch, Sage Intacct CFO Marc Linden joked that he was well past 40, and yet the results didn't surprise him. CFOs have not moved closer to technology because of youthful vigour, but due to a deep appreciation for change.
Why CFOs care about tech
The need to be informed is at the heart of most CFOs' interest in technology. Sophisticated analytics tools, especially, are advantageous to financial leaders as their roles become more expansive and complicated. For example, CFOs have long had a role in risk management, but this responsibility is growing as uncertainty increases. This, as Bench said, requires the right information at the right time – and that, in turn, requires the right digital tools.
So, are CFOs now doing the CIO's job? Or the CEO's, for that matter? That is not the case. Rather, the three C-suite leaders each bring something to the digital transformation agenda. The CEO still leads the vision and the CIO still picks the best technology for the requirements. But the CFO is playing an expanded role in stipulating the requirements.
"A lot of the CFOs are now getting involved in digital transformation. So instead of waiting for the CIO to provide information, CFOs are now spearheading it and saying: 'This is what I need, can you provide it?'" said Bensch.
One reason for this is the incredible flexibility of the software and platform as a service choices (SaaS and PaaS) in the market. These products offer clear paths towards specific outcomes, such as adding predictive analytics to a business, and can be deployed with minimal fuss or upfront investment. Perhaps such opex-based, clear-value horizon services have warmed the CFO's calculating heart. The gap between what a CFO wants and what they can see technology provides has narrowed substantially.
How to leverage tech for information
So, what should CFOs look for when evaluating technology for their purposes?
"It starts with deciding which information the CFO needs to drive better decisions," Bensch said. "Much of that information already sits in your business data. You should ask: can you extract information from your business? Have you put in place analytical tools, scripts and AI to provide you with information based on the data you have?"
What information does a CFO need? That depends on the business and the CFO’s role in it, but there are baseline categories such as customer data, historical transaction data, supply chain data and so on. Portions of compliance and risk management are also being dished onto the CFO's plate, again best handled with digital software and platforms in the market.
CFOs can walk their challenges backwards and see how technologies answer them. This speaks to another important tactic: get close to the CIO. CFOs should work closely with CIOs to identify a modular platform that meets their needs, including capabilities for their vertical industry.
"CFOs have started to get more involved in accelerating technology adoption, because in some cases, CIOs were not as aggressive as they should have been or were held back by the burden of managing legacy systems. The CFO can answer the 'why', the CIO can answer the 'how', and between them, they can answer the 'what'. The two roles have a lot of synergy they can exploit."
A revolution in the making
Yet the results of the survey indicate that a substantial number of CFOs are still not part of this trend. Bensch said it is due to a reluctance to change. Specifically, many CFOs already sit with a lot of information and don't readily see the advantage of new digital technologies to help inform them.
But this picture is going to change. Responsibilities mentioned above, such as compliance, risk and uncertainty, and new pressures such as managing remote workforces, are pushing CFOs into a corner – except those who are discovering the time-saving and nuanced controls offered by SaaS and PaaS solutions. This trend will expand as CFOs seek to address today's uncertainties.
"The penny has dropped for many CFOs," Bensch said. "They can drive and have a better idea of how to define what they need to run the business. CFOs have realised that if they start taking control and say what they want, it happens a lot quicker rather than for them to wait to see what the CIO will provide."
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