Have European companies positioned themselves for the future and replaced their CFOs with robots?
Probably not. However, for those that are good at utilizing the potential within digitization, a robot will be able to do a lot of the work in the not-so-distant future. These companies will also gain an immediate, positive effect on their cost levels.
Today’s CFO need to consider which skills he or she should develop, in order for the company to reach its goals. Make no mistake – digital processes mercilessly removes many “human” tasks. It happens fast, and it happens right here and right now.
To make the right decisions – fast
Traditionally, the CFO has been the CEO’s wingman. The CFO has provided the CEO with business-critical information to ease decision-making and insights within a wide range of areas. Everyday life consists of handling heavy processes within compliance and governance on one side, to being a watchdog of costs on the other. Somewhere in between, there is reporting and the consideration of accounting transactions. Just to mention a few things.
Making the right decisions is all about having the time. However, everyday tasks tend to be operative. All financial departments faces massive technological change. Changes and innovation brings about a lot of pain in any organization, and the world becomes more unpredictable.
As a CFO, you simply have to embrace those changes and start viewing things differently.
Data collection or decision-making support?
Historically, CFOs have mostly worked within the fields of data collection, transactions and control. In other words gathering data, not analyzing them. As little as 5-10 per cent of their time has been invested in supporting decision-making.
Going forward, there will be plenty more time for important processes such as reporting and decision-making support. But reporting in itself is not a value-adding process. The analysis of the data, and the decision being made on the basis of it, is where the actual value is created. In the future, more and more time will be available for CFOs to deliver real value-adding services, which will undoubtedly be business-critical.
It is still a while left before systems are totally integrated, and the stream of transactions and big data find their way to their respective business solutions.
However, studies suggest that businesses utilizing the potential of their systems and buying systems adapted to the complexity and size of their organizations, are able to achieve a higher level of digitization. Thus, they may reduce costs in their finance departments.
Today vs. tomorrow
Digitization can be dealt with efficiently. Today. If you do the right things now, you will gain competitive advantages. PwC has conducted studies of financial functions in companies, showing that the 25 per cent most cost-efficient businesses deal with a third of the costs, compared to that of an average business. The 25 per cent best companies has a cost-level which is 50 per cent below average, and the average financial function spends almost three times as much resources as the best.
What separates the best from the less good? A high number of digitized processes.
Updating the CFO toolbox
Tomorrow’s CFO will have to juggle multiple roles.
Management potential and a bit more extroverted behavior should be expected, while simultaneously having strong analytical skills. As an integral part of the company’s management, the future CFO must understand an array of different business models and their vulnerabilities to disruption.
In short – the CFO needs to take on a larger responsibility and to a larger extent become a strategic partner to the CEO. This will require substantial knowledge of the value chain, the market and technology.
The future is already here. But we have just started to scratch the surface.
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