Advice and Information for Finance Professionals

CFO’s Office Needs to Expand Skill Set to Stay in the Game

Guest Author

Ash Noah, CPA, CGMABy Ash Noah, CPA, CGMA

Digital technologies are fueling the disruption of business models, enabling startups to upend traditionally strong and established businesses. The value of the enterprise is moving more from tangible assets (such as real estate, equipment, and inventories) to intangible assets (data and software). Consultants Ocean Tomo reported that about 85 percent of value held by S&P 500 companies today are intangible assets. The exact opposite was true in the mid-1970s: Most assets were hard assets. 

Tech disruption is also impacting the lifespan of businesses. In the 1960s, the average lifespan of an S&P 500 company was 33 years. By 2016, this had dropped to 24 years, and by the year 2027, it is forecast to be only 12 years.

There is a real and present need for today’s CFOs to transform the finance function to become true partners to the business. Up to this point, CFOs have always delivered on governance, compliance, and controls. Now they need to also focus on delivering business guidance. They need to become the architects of value by adapting to our new, turbulent environment. This requires adopting new technologies and leveraging data.  

This has not been easy for most finance functions. Much of this struggle arises from the need for CFOs to develop new skills themselves and within their teams. Only 10% of 700 recently surveyed senior finance leaders said their finance teams have the skills they need to support the organization’s digital ambitions.

This makes sense considering the traditional finance skillset, which supports a backward-looking view and focuses on verification and control. These governance tasks are still important in modern business models, but they are only a part of what CFOs have to deliver now. 

Learning new territory: predictive insight and customer POV

The digital transformation evident in the S&P 500 and other companies is ongoing and has resulted in a faster, more unpredictable economy and markets. This has cemented the need for reliable and predictive insight. Organizations are turning to CFOs to provide this insight, but they are being held back by outdated finance applications and a lack of familiarity with new technologies.

It’s like a vise: pressure from one side because they can’t draw out comprehensive, quality data from old systems, and pressure on the other side because they can’t articulate a business case for replacing old systems with advanced technologies, such as cloud applications that use machine learning.

While resources to learn more about new enterprise technologies are out there, a better path would be to bring in technology experts rather than try to become one. CFOs need to develop an understanding of the impacts and implications of modern technology, but they don’t have to become experts in it. They need to master “the art of the possible,” so they can understand where digitation can create more value.

Automation creates bandwidth and capabilities

Understanding what’s possible with technology and how customer value is created are essential skills, but they are not actionable without the proper tools.

CFOs will never be able to develop new skills if they don’t have time, and for most, governance duties crowd their schedules. Making sure everything is ticked and tied, especially with old applications, is incredibly time-consuming. Among the same 700 financial leaders mentioned earlier, the No. 1 barrier to playing a more influential role in digital strategy is, “We have to give our focus to core finance responsibilities, such as compliance and control.”

The answer to this conundrum is automation, which creates the bandwidth and the capabilities the finance function needs to serve in a larger role. Cloud-based finance applications (like Oracle ERP Cloud) have tremendous power to automate time-consuming data gathering, reconciling, matching, and other tasks. When supplemented with built-in machine learning, these applications can automate finance processes with minimal human intervention. This frees up the finance team to focus on providing the higher value, strategic guidance that business demands.

Automation also is key to providing forward-looking business guidance because it enables the integration of large sets of data—financial and non-financial data—that are needed for comprehensive predictive analysis. For example, weather data could be needed to accurately assess future demand for certain products, such as tents and other camping gear. In another case, geo-tracking data might hold important clues about where to invest in new service sites, and where not to.

Don’t just report history—write it

If CFOs put these parts together—an eye for digital value opportunities, an understanding of what makes customers tick, and use of modern finance applications that can provide insight through analytics—they will have the knowledge and tools they need to provide strategic guidance, partner with the business on decision-making, and influence future direction. They will also have to master “soft skills,” such as communication and leadership.  And finally, they will need to help their own teams develop and hone those skills through continuing education, such as the CGMA Finance Leadership Program. This program offers an on-demand, personalized learning journey to guide finance professionals to develop a mastery of the technical, business, leadership, and people skills required for business today.

I am convinced that when CFOs and their teams have command of these new skills, they will be surprised by the immediate and ongoing potential to grow personally and professionally—and transform the role of the finance function.

Think about it this way: CFOs typically came in when the action was over. They reported on what an organization had already done. Today, with the right skills and technology, CFOs could contribute to writing the story instead of just telling it afterward.

To learn more about how to build and lead a digital finance team, please download the complete research.

Ash Noah, CPA, CGMA, FCMA, is Managing Director of CGMA Learning, Education & Development at the Association of International Certified Professional Accountants. In this role, he engages with CFOs and Finance Leaders worldwide to understand how finance teams are evolving and guides Association’s initiatives to ensure that the Chartered Global Management Accountant (CGMA) learning content, syllabus and examinations are future-ready. He works to make sure the CGMA designation continues to be recognized as the qualification of choice by employers and supports CGMA holders to help them create more value for their organizations in the digital age. 

Ash joined the Association in 2012, and prior to that served as CFO of the International BU of TNT Express, the global transport and logistics provider and led finance teams in 45 countries through significant transformation. Ash is a licensed U.S. CPA, a CGMA designation holder and a Fellow of CIMA. He is also an avid aviator. Ash is based in Durham, North Carolina. 

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Comments ( 1 )
  • Noel Cullen Wednesday, March 13, 2019
    Great article Ash

    For me, it raises two concerns:

    1) What becomes of displaced finance staff: As robots replace many of the repetitive tasks in finance, this will inevitably displace a large number of accountants

    A significant proportion of these displaced accountants will not be suited to the new finance operating model and may struggle to find roles at other organisations. How do we as finance leaders, and world citizens, address this?

    2) How to manage the pace of implementation: Much of the technology is still in early form. In the rush to automate, the role of robotics is being overused and overextended to cover not only repetitive tasks, but the codification of business process and rules. This is especially true where RPA is coded up by users with little to no experience of business architecture and finance principles. Complex processes and procedures risk being extended with RPA often done in haste. Future agility may be being sacrificed to deliver short term efficiency.
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