Evolving Role of the CFO

The Evolving Role of the CFO in 2021 and Beyond

by Divya Krishnan
May 07, 2021
6 min read

In the world of business, itโ€™s natural for roles to evolve over time. As strategies, market conditions, and customer demands shift, enterprises must shift with them โ€” invariably creating new responsibilities (and even entirely new roles) for teams and leaders alike.

But rarely is that change as explosive or pronounced as it has been with CFOs lately. In just a few short years, the role of CFO has evolved from simply being โ€˜the numbers personโ€™ โ€” a role that in itself, was anything but simple โ€” to a key driver of digital change, talent development, and enterprise innovation.

McKinseyโ€™s global CFO survey from 2018 found that in the two years since its previous survey, the number of departments reporting to the CFO had increased by an average of 50%, and the share of CFOs that say they oversee their companiesโ€™ digital activities doubled.

For todayโ€™s CFOs, that all adds up to more to do, more to balance, and far more responsibility. But with that responsibility comes great power โ€” and opportunity.

The modern CFO is in a better position than ever to drive lasting, far-reaching change in their business โ€” influencing everything from overall technology and talent strategy, to improvements in working capital. That is, if they can rise to these new challenges, and develop the necessary capabilities to meet them effectively.

Profiling the modern CFO

If the CFO isnโ€™t just โ€˜the numbers personโ€™ and the sworn guardian of financial resources anymore, who exactly are they?

Thereโ€™s no one answer to that question, of course. The modern CFO is:

  • Closer to people and processes than ever: Even before the COVID-19 pandemic hit, CFOs were getting much closer to their teams โ€” playing a more active role in talent strategy, personal development, and team creation. The pandemic accelerated that change significantly. Many CFOs reported the biggest challenge they faced in 2020 was developing the soft skills needed to keep people and teams on track while everything around them changed.

  • The Chief Transformation Officer: As the keeper of resources required to enable transformation, the CFO has always played a role in significant change projects. Today however, theyโ€™re a key part of the transformation process โ€” from strategy development, right through to performance monitoring. In McKinseyโ€™s most recent CFO survey, 44 percent of CFOs said that the leaders of a transformation report directly to them โ€” and more than half of all CFOs said theyโ€™ve been actively involved in developing transformation strategy.

  • The Chief Performance Officer: Closely linked to the above, the CFOโ€™s job isnโ€™t done once a transformation project is completed. Today, theyโ€™re increasingly responsible for measuring the performance of transformation initiatives, as well as staying on top of overall finance performance and risk management.

  • Still very much โ€˜the numbers personโ€™: Those new responsibilities havenโ€™t replaced the CFOโ€™s core role โ€” theyโ€™ve just been dropped on top of it. Everything the CFO had to do yesterday, theyโ€™ve still got to do today, just with significantly less time, and limited resources.

The five capabilities redefining CFO success

Those new responsibilities and new definitions of what it means to be an effective CFO demand new capabilities. To meet whatโ€™s being asked of them, and take their place amongst other strategic change-makers, CFOs need to develop:

A mindset that questions everything

Todayโ€™s CFOs need to constantly rethink processes, software, and the toolsets available to them. To do that, you need both the right mindset โ€” embracing change with open arms, ready to ask the right questions and reimagine current operations โ€” and the visibility to understand exactly where things could be improved.

A continuous reforecasting approach

The COVID-19 pandemic has made it very clear that business conditions can change in an instant, and often, you need information far more frequently than just at month end or quarter close. To gain that insight, CFOs must move away from structured forecasting and embrace a more agile approach that enables them to continuously ask new questions, and reforecast on the fly as conditions change. That in turn can help them adopt a proactive approach to change, and act quickly to seize new opportunities as they emerge.

Strong technology capabilities that support their evolving role

As weโ€™ve established, CFOs are under pressure to master technology and take a more strategic role in technology decision-making. For many, thatโ€™s a big change and demands a lot of new expertise. But, if they can master it, technology could easily be their greatest asset in their newly-redefined role. From deep-dive process mining tools that help them uncover underlying process issues โ€” limiting performance in finance and beyond โ€” to automation that can help them handle routine financial decision-making, there are a huge range of exciting capabilities on offer for the CFOs ready to embrace them.

Great listening skills

Listening is an important skill for any business leader. But for todayโ€™s CFOs, itโ€™s more important than ever. Today, theyโ€™re tasked with empowering teams, and ensuring they have everything they need to do the best job possible. To do that, they must be ready to listen to the challenges teams are facing โ€” not just responding to requests for new tools, but working closely with teams to discover the points of friction and inefficiency that limit their effectiveness.

An eye on the wider business

To become an effective driver of strategic change, CFOs must look beyond finance, keeping up with changes across the entire business. Only then โ€” with complete visibility and understanding of what the company needs to succeed โ€” can the CFO enable the right transformations, using the right technology, in the right way.

Your role is changing. But how is up to you.

Together, these shifts represent a huge change in how CFOs operate within their organizations. But, rather than a daunting change being thrust upon them that they must simply adapt to, this is an opportunity for CFOs everywhere to reinvent themselves, and become the strategic agent of change that their business needs.

What that looks like is entirely up to you. Will you move away from the traditional risk-averse CFO persona and embrace a much more proactive approach to enabling enterprise innovation? Perhaps youโ€™ll use new digital capabilities to extend your reach far beyond finance, and make changes across the enterprise that help improve working capital while you recover from the pandemic.

Whatever you want to achieve, and whatever kind of modern CFO your company needs, with so much in transition, now is the perfect time to reinvent yourself on your terms. With the right tools, capabilities โ€” and critically, vision โ€” on your side, you can start driving lasting, valuable change in finance and beyond.

To find out how Celonis could help you better understand and visualize your business processes and uncover powerful opportunities to improve performance, check out our Execution Applications.

Divya Krishnan
Senior Product Marketing Manager

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