Knowing the unknowns – the role tech and the cloud can play

Johannesburg, 28 Sep 2020
Read time 4min 20sec
Jordaan Burger, Finance Director, Africa & Middle East, Sage
Jordaan Burger, Finance Director, Africa & Middle East, Sage

Some of life's great joys come from surprises. But this does not apply if you’re an organisation seeking to keep ahead of the changing trends in a volatile market. Knowing the unknowns, or at least getting a sense of them, is incredibly important. Thank goodness for data analytics.

The age of big data allows enterprises to move behind forecasting models based on limited, historical datasets. Instead, large volumes of current and historical data can be churned through cloud-powered engines to produce instant or nearly instant insights. CFOs have been warming up to how this technology can help them make better, more forward-looking decisions.

According to new research from Sage and World Wide Worx, CFO 3.0 , 86% of senior financial decision-makers use financial management technologies to discover new opportunities and risks. Senior financial decision-makers are using technologies to know the unknowns.

CFOs read the cards

CFO roles are evolving in step with the demands of modern organisations in a data-first world. If we roll the clock back to the start of the millennium, the typical CFO was mainly concerned with balancing the books and reconciling accounts. Step to 2010 and CFO 2.0 emerges – a leader used modern financial management tools to automate finance processes. They also started using real-time data and dashboards. But the role remained mostly reactive and backward-looking – until digital technologies such as big data analytics became more accessible and pliable, and CFOs expanded their understanding of what these tools could do. The ease with which services proliferate through the cloud has accelerated this trend, said Jordaan Burger, Finance Director for Africa & Middle East at Sage.

"Nobody is still debating whether new digital technologies are important for businesses, and the only real resistance is from people who don't want to change. The rest are looking at these opportunities and for ways to fit them into businesses. Software as a service and other cloud products make it easier to close that understanding gap, because it's faster, more agile and more affordable to tackle specific use cases and take some chances."

This brought about the rise of CFO 3.0, a role that builds a vision for the future using artificial intelligence (AI). Though generally applied to financial tasks, the CFO's increasing responsibilities in risk management and compliance have prompted wider uses of technology to gain business insights and even make predictions about the future.

The report reflects this trend: 21% of CFOs said they are driving business strategy and objectives, and over 80% using financial management technologies to optimise operations and expedite compliance reporting. A substantial portion of CFOs want features such as continuous accounting and automated audits and reporting – all processes that serve to tell them what is going on and what might be happening next.

Building capacity for the unknowns

Most senior financial leaders were originally drawn into the technology sphere through budgets. Over time they grew more familiar with the potential of these investments and other examples of financial technology services, such as online banking systems and automated taxation.

CFOs began adopting a more proactive technology attitude, particularly around automation. Nearly none of those surveyed expressed a fear that automation would cost their jobs. Sixty-seven percent of South African CFOs already spend more time analysing data than collecting it, leveraging automation to do the hard work.

They also want this capability for their teams. It's interesting that, since the pandemic, managing and supporting remote working teams has become a big responsibility for senior financial leaders. This relates partly to the increased compliance and risk-related burdens, but also speaks to the value that digital tools bring to the table.

"The majority of senior finance decision makers see the value of digital technology, or rather, they know where to look if they want to find that value," Burger explained. "They can see how modern analytics and automation help them, and our research shows they are applying that knowledge to help steer digital agendas. Part of that is enabling their teams and streamlining finance functions. But they also really care about accessing and analysing data. The quicker, the better."

Cloud platforms and software form the foundation for knowing the unknowns. Through the dual purposes of reducing workloads through automation and increasing tangible access to relevant information, there is more room for critical analysis and applying minds to strategy.

CFO roles have expanded from the CFO 1.0 paradigm to eventually merge accounting, analytics, business management, and strategic thinking. Knowing the unknowns through digital transformation is now a winning strategy. But the majority of organisations haven't begun seriously investing in these capabilities. As the CFO asserts technology to make their jobs more effective, that picture is going to change drastically. 

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