Digital transformation: the biggest shift in the CFO’s role

Digital transformation in finance is reshaping the role of the CFO like never before.

According to Sage’s recently commissioned CFO 3.0 research, based on a survey of more than 300 South African financial decision-makers and CFOs, the role of the CFO has changed dramatically in recent years. Almost all the respondents (90 percent) said their role involved far more than the “number crunching” and compliance issues of the past. Much of this role shift is due to adoption of finance technology.

Embracing technology is no longer a luxury but a must-have, and the rate of digital transformation will accelerate over the next few years. “Today, we know that digital transformation is no longer a nice-to-have but a requirement in terms of long-term business success,” says Gerhard Hartman, vice president: medium business for Sage in Africa and the Middle East.

Finance digital transformation is the implementation and use of digital technologies – the cloud, machine learning, and augmented analytics – for finance processes, to improve efficacy, insight and agility. “We are entering the age of CFO 3.0, an era where the amalgamation of robotic process automation (RPA), AI, and machine learning has created a new breed of trailblazing senior financial decision-makers who use data and emerging technology to create a vision for the future. These technologies equip CFOs to respond with speed and agility to a fast-changing market,” says Gerhard.

CFO 3.0: Beyond finance
According to the research, some 90 percent of businesses have adopted emerging technologies in some form, and over half of these businesses are implementing advanced techniques. “The CFOs we surveyed were almost unanimous in agreeing that next-generation technology has been critical to their success. It is interesting to note that almost all have adopted technology to master a challenging market or to gain an edge,” says Gerhard.

The research highlights how the role of the CFO has evolved from managing compliance and accounting activities to providing strategic leadership and championing digital transformation. CFOs have taken on new job responsibilities including driving business strategy and objectives, managing government affairs and relations, and leading digital transformation-related activities.

CFOs have shown remarkable adaptability, with only 12 percent saying they struggle to adapt to these new roles. “As finance enters the CFO 3.0 era, CFOs need tools that enable them to deliver on their core competencies and be confident in driving the digital agenda throughout their organisation,” adds Gerhard.

Leading for growth
Yvonne Dias, CFO of Mint Group, says her role is evolving to include value-added services and not transactional processing. She is involved with adding input at a strategic level, driving growth and aiding with establishing a competitive advantage.
She believes that data and analytics must integrate into the DNA of a business to ensure transformative strategies that foster competitiveness and increased profitability. “CFOs have progressed from serving as a financial guide to the board to a strategic guide, providing guidance on new revenue streams and models, driving strategic initiatives, and serving as the ultimate driving force behind growth,” she says.

Senele Mbatha (pictured), CFO at Discovery Vitality, is a strong advocate for the rich, complex data and trends that technology enables. These have become core to the company’s business decisions and leave little room for interventions driven by subjectivity or a “warm and fuzzy” feeling. “Our customers, both internal and external, are not interested in how many journals or IFRS compliance processes we execute each day. They want to consume financial information that will enable them to navigate their respective operating environments. This is the ‘true north’ for the CFO of the future and only possible if technology is fully and proactively embraced,” says Senele.

The impact of Covid-19
The Sage research reveals how COVID-19 creates new challenges for South African CFOs, including ensuring compliance across a decentralised network, and a scattered workforce. With one in four senior financial decision-makers involved with remote worker management, compliance has risen to the top of the agenda. “CFOs face new complexities due to the Covid-19 pandemic. This includes managing a remote workforce as well as an expanding security and compliance mandate,” says Gerhard.

Despite the new pressures Covid-19 has brought to bear, many respondents who were already in the cloud and using financial management solutions are optimistic about the future. In fact, 49 percent of these companies have seen moderate to strong growth in organisational performance over the past year, despite the recession. And 78 percent of these businesses expect even further growth. “Regardless of the negative impact of the coronavirus on South Africa’s economy, most senior financial decision-makers in the survey have a positive outlook for growth,” comments Gerhard.

In many industries, Covid-19 has spurred on new investment in digital transformation. According to the seventh annual global banking survey conducted by The Economist Intelligence Unit in March, 45 percent of respondents said their strategic response to the crisis was to build a “true digital ecosystem”. This objective of digital transformation was the top response, increasing from 41 percent of respondents in 2019.

The finance department of the future
A recent World Economic Forum (WEF) report states that half of all work tasks will be handled by machines by 2025. The think tank said a “robot revolution” would create 97 million jobs worldwide but destroy almost as many. According to the WEF, manual jobs in administration and data processing were most at threat of automation. This has implications for the finance department and finance professionals entering the workplace.

Matt Kloos, the CFO of Comparisure, leverages finance technology to boost productivity and minimise time spent on manual work, allowing for up-to-date financial information at the click of a button. He acknowledges that using technology will keep the head count down in his department. “The sad reality for many job seekers out there is that the maturation of smart software, machine learning and AI has meant that software is continually replacing functions and roles that historically belonged to humans. The right software can usually handle the job multiple times quicker than a human, for a fraction of the cost,” he comments.

He encourages finance professionals to embrace the technology tools available. “Young finance professionals need to be aware of the software options available and familiarise themselves with the leading options, for example cloud accounting. If you can become an expert in some of these packages, there will always be a business out there in need of your skills to manage the software,” says Matt.