CFOs show resilience in a time of massive disruption

Covid-19 has amplified the challenges around governance, remote working and cyber security.

Pieter Bench, executive vice president at Sage Africa and Middle East, believes that Covid-19 has ignited the single biggest shift in the CFO role in the past decade.

“At the beginning of the Covid-19 outbreak, CFOs provided a steady hand and helped steer their businesses through severe disruption. As we settle into a new uncertain world, CFOs are now looking at the financial, operational and technology levers they can pull to ensure their businesses are sustainable and resilient in volatile times, and positioned for growth after the worst of the pandemic,” says Pieter.

For Pieter, Covid-19 has meant a shift in priorities. “Many of the priorities CFOs faced before the pandemic are still very much in play, but the pandemic has made them even more urgent. These include managing rising regulatory complexity and curbing costs to ensure the business is sustainable in a struggling economy.”

Sage’s annual CFO survey, CFO 3.0 – Digital Transformation Beyond Financial Management, found that CFOs face new complexities due to Covid-19, including managing a remote workforce. Today, nearly a third (27 percent) of senior financial decision-makers have taken on the responsibility of remote worker management since lockdown began.

Despite these challenges, the research revealed promising findings, especially when considering the local economic climate. Although senior financial decision-makers are dealing with a major role change, South African businesses have shown resilience in a time of massive disruption.

Most (87 percent) of senior financial leaders surveyed said that, thanks to their use of advanced and emerging financial management technology, they have more time and freedom to focus on digitisation and to help shape business strategy and drive growth – a role that more CFOs are taking on – and driving.

CFOs are also focused on building close partnerships with other stakeholders in the business, particularly members of the C-suite. No longer do CFOs take a back seat when it comes to strategy – they stand right next to the CEO as trusted advisors.

Technology adoption boosted
Covid-19 has moved digital transformation up the agenda, which means that CFOs are looking to support digital projects to drive revenue growth and business efficiencies. According to Sage research, nine out of 10 businesses have adopted emerging technologies in some form, and over half of these businesses are implementing advanced or cutting-edge techniques.

Pieter says that while finance has previously been slower to embrace digital transformation, the pandemic has been both a catalyst and imperative for change. CFOs have focused closely on boosting efficiency, productivity and speed.

They are evaluating tools such as cloud, software-as-a-service (SaaS), and data analytics as tools to automate their workload, gain better visibility into real-time performance, and extend more control over business processes.

Yvonne Dias, the CFO of Mint, says:

“Embracing technology is no longer a luxury but a must-have, and the rate of automation will increase in the next few years. From audit work being part automated, to facial recognition being the norm to increased insights with machine learning, the next few years will see massive jumps in technology.”

Analytics is also top of mind, with CFOs facing increased demand to provide overall business counselling and pressure to anticipate what will happen in the future rather than simply recording and reflecting past performance. The right business tools enable them to analyse the data for improved decision-making, and get better and quicker insight into revenue, costs and productivity.

While finance technology is readily available, new skillsets are needed in the finance department and this talent is scarce. “There is a global shortage of tech savvy staff. It is no longer just about the technical knowledge. Hybrid talent is needed, where creativity, EQ and agility form part of their skillset too,” says Faye Tessendorf, managing director of executive search firm, Homecoming Revolution.

Leadership traits to cultivate
Pieter points to three “Cs” that are essential traits for CFOs to cultivate. The first is complex problem-solving, the ability to solve novel ill-defined problems in a complex, real-world setting. The second is for critical thinking or being able to use logic and reasoning to interrogate a problem and consider alternative solutions to the issue. Finally, there’s creativity, or being able to connect the dots of seemingly disconnected information and coming up with something new.

As technology becomes more pervasive, the importance of human traits will increase. Pieter explains that the CFO’s mandate is to move beyond the traditional role where they measure past performance to leading the business as a gatekeeper of data and analytics. Proficiency in new technologies will be only part of the new skills equation. Just as important will be those skills deemed to be ‘soft’ or ‘human’ skills.

Predictions for 2021
Pieter believes that the road ahead is difficult to anticipate. “Scenario planning and forecasting are difficult when historical data doesn’t provide the insights required to make critical business decisions. We still face so many unknowns – will there be further big waves of infection? Will there be more lockdowns? How soon can the vaccines make a difference?”

Covid-19 has affected sectors and subsectors in different ways. For example, in the retail industry, the grocery subsector is faring well, while clothing and furniture is struggling. Common to all business is the need for cash management and cost control amid ongoing, unprecedented uncertainty. Companies wanting to conserve cash will turn to an increased use of automation as a cost-cutting tool.

However, the need to conserve cash may hurt a company’s longer-term prospects. According to research by McKinsey, companies who invested during and post the 2008 global financial crisis outperformed their peer group by a minimum of 20 percent for a sustained period of four to five years. “CFOs need to juggle the imperatives of investing strategically for future growth, while managing risks to company assets. They are called upon to provide strategic advice to the business, while also constantly looking for opportunities for operational optimisation,” comments Pieter.

For Pieter, the CFO’s future looks promising. “The finance leader will emerge as a provider of a multidisciplinary function spanning accounting, analytics, business management, and strategic thinking. They will incorporate what they have learned from Covid-19 to optimise workflows, procedures, technologies, and business models. One of the big lessons is how fast we can achieve great things when the pressure is on,” concludes Pieter.