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CFOs through the ages – from technocrat to strategic visionary


Johannesburg, 04 Sep 2020

The days when the chief financial officer’s role and responsibilities were focused solely on three largely technocratic tasks – managing the books and financial records of an organisation; ensuring the financial reports were prepared accurately and timeously; and dealing with statutory compliance – have long gone. Or have they?

PostMatric, a popular South African careers magazine, still defines the CFO as the individual in an organisation who is responsible for the “day-to-day financial operation. CFOs coordinate the actions of the accounting and finance departments and ensure the entire organisation meets its fiscal responsibilities according to established objectives.”

However, the role of the CFO is evolving. The International Federation of Accountants (IFAC), which represents 170 professional accountancy organisations across 130 countries including South Africa, points out that while the key emphasis of the CFO’s role is to act as “the guardian of the financial health of an organisation, overseeing and implementing adequate financial control and infrastructure”, this started to change in the 1990s as the digital era truly started to take hold and transform every aspect of our lives.

The pre-1990s CFO was what Sage in its recent research report CFO 3.0: Digital transformation beyond financial management, categorised as an “historian”: an individual with high financial acumen who is always looking backwards to the organisation’s financial data and past performance. The historian CFO – or CFO 1.0 – has a traditional view on data and past performance and is barely impacted by technological advances other than to have some aspects of the role automated.

And yet, according to the research, which spoke to over 300 South Africa-based senior financial decision-makers, for many respondents, modern financial tools had significantly transformed their roles by giving them access to the accurate, timely, and often real-time data their predecessors never dreamed possible.

In fact, 64% of CFOs – dubbed CFO 2.0 – spend more time analysing data than they do gathering and processing it.

As advanced financial tools now automate many of the CFO 1.0 tasks, most survey respondents agreed that one of the main benefits of automation was direct productivity benefits, including automated compliance reporting and the ability to make real-time decisions around risks and opportunities.

In addition, with automated reporting and analytics allowing more time to be dedicated to forecasting and predictive analysis. the CFO 2.0 is able to provide the support and analysis needed to help a business improve its operational and management performance, and even – by drawing insights from real-time data – to help the business strategically.

This does not mean the CFO’s older, 1.0 tasks are no longer important. Indeed, they are still critical, but are now regarded as no more than the minimum requirement or entry-level KPI for a CFO in the 21st century.

However, the world – and technology – has moved on. According to the survey, most local CFOs are comfortable with the fact that technology is carrying the weight of their daily accounting tasks. Three-quarters (75%) are not worried about automation’s impact on their own job security or whether they’ll be made redundant.

Rather, they are using data and predictive analytics to look ahead (a change from their historical role) and to create a vision of the future of the business, and they are starting to play a key role in the transformation of their organisations.

This is the CFO of the future – the visionary. This is CFO 3.0.

The survey was perfectly timed, especially for South Africa, surveying CFOs and other senior financial decision-makers about the impact of COVID-19 on their business operations. It indicates that the changes wrought by the COVID-19 lockdown have accelerated the transition from CFO 2.0 to 3.0. The CFO’s responsibilities have shifted, accelerated digital transformation, and amplified challenges around compliance, cyber security and remote working.

South African CFOs have stepped up to the plate and are embracing these challenges with confidence. More than ever, they recognise the value of the latest financial management and emerging AI and machine learning technologies, and how these can take them to a new phase of finance. Ninety percent of the South African respondents state they are already playing a key role in their organisation’s digital strategy, with 15% fully responsible for its digital transformation.

South African CFOs, it appears, are focused firmly on the future and their changed roles within it. The age of the visionary CFO 3.0 has arrived.

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