The digital revolution has empowered small and midsize businesses (SMBs) to compete with the largest enterprises and grab their share of the market. At the same time, it has put a lot of pressure on Chief Financial Officers (CFOs), who now need to assume an active role in digital transformation efforts.
“The role of the CFO is continuously changing with digital innovation, the proliferation of data, volatile risks, new regulations, and increasingly demanding stakeholders acting as the driving forces behind this transformation,” writes Matt Evans.
Traditionally, CFOs have been responsible for managing the risks that the business faces and focusing on the bottom line. Their main objective was to guarantee continuous growth by ensuring that the right investments were being made. While the traditional role remains and will remain, relevant, it will expand to address the risks and the opportunities presented by modern digital technologies.
“CFOs can be instrumental in transitioning their companies to digitally-enabled businesses since their role has been expanding from focus on reporting, budgeting and control to a broader strategic role. As companies allocate more money to IT development, digital advertising and social media, the CFO should have a clear view on how the technological landscape is evolving and how digital spending drives value creation,” writes Regine Slagmulder, Professor of Accounting and Control at Vlerick Business School.
If we look at the current digital trends, we can see how data generated by the massive amounts of internet-connected devices is shaping how companies large and small are gathering valuable insights and making critical decisions. According to EY’s DNA of the CFO 2.0 study, 53 percent of global respondents and 61 percent of UK & Ireland respondents said delivery of data and analytics will be one of the most critical components for tomorrow’s CFOs.
In a global survey of finance professionals by CFO Research, 85 percent of respondents agreed that their companies’ success will increasingly depend on their ability to adapt to the rapid pace of change and greater business complexity. CFOs who lack the focus on digital innovation and don’t understand the latest digital trends and developments, such as big data, predictive analytics, blockchain technology, or machine learning, will find it virtually impossible to steer the course of the business in the direction of success.
What’s more, when Cisco surveyed selected CFOs, they discovered that most see cybersecurity as an area that deserves substantial investments. Modern businesses are required to have robust cybersecurity processes in place, be able to demonstrate them to investors, and regulate them when it’s appropriate, according to Steve Durbin, managing director of the Information and Security Forum. In other words, cyber security no longer concerns just IT departments but all stakeholders, including CFOs.
Modern CFOs operating in the digital era must seize the opportunities created by emerging digital technologies and use them to manage the risks that go hand-in-hand with these technologies as well as provide management with valuable insights to ensure long-term company growth.