The Modern CFO

Who is a CFO?

Well, before we get into understanding what a “Modern” CFO is, let’s first answer the fundamental question – “Who is a CFO?”

When this question was posed to a bunch of finance leaders, the one answer which stood out was that – “A CFO is someone who solves problems you don’t know you had, in ways you don’t understand.”

This answer proves how complicated and ambiguous the role of a CFO is – way beyond the realms of financial reporting and analysis!

Traditional Vs Modern CFO

We spoke to Amit Shrivastav, CFO of Gupshup (the AI-enabled conversational messaging platform recently valued at a whopping $3 billion) who has his hands full with several acquisitions prior to listing on the NASDAQ, had a very riveting take on this subject.

He says, “The role of today’s CFO has evolved from traditional activities like accounting & auditing, financial planning and analysis, investor relations and financial risk management to more tactical roles like corporate strategy, organisational transformation, digitisation & enterprise risk management.”

This implies that the roles and responsibilities of a CFO are more diverse than ever. While the older set of tasks continues to be critical, they are now seen as a “minimum requirement”. The Board often takes it for granted, which is why the Modern CFO is expected to go above and beyond their “traditional” role.

We have time “and” again heard and experienced on a first-hand basis that “Change is the only constant”. The same, very clearly, also applies to the role of a CFO.

Let us find out how this role has evolved and what it takes to be a flourishing CFO in the present time.

The Push & Pull between Finance & Strategy!

The alliance between Finance and Strategy forms the core of the new set of responsibilities of the Modern CFO. They are expected to directly influence the vision of the company.

Before, the CFO’s duty was limited to implementing a pre-decided business strategy. Now, CFOs are expected to proactively define and create the strategy & vision statement of the company.

CFOs of today cannot just be number crunchers. They need to have a wholesome view and a forward-looking outlook on their business.

A CFO must don multiple hats!

The present-day CFO backed by technological innovation and access to massive amounts of data is expected to lead the team as a “Change Agent”!

The Modern CFO is now required to don multiple hats, such as:

• Talent Development:

It is no secret that attrition rates in the corporate world are at an all-time high today. In a recent survey undertaken by Deloitte, CEOs have ranked “labour and talent” as their biggest challenge. While multiple reasons attribute to such brain-drain, one which stands out, is the “Crisis of Mentoring”.

Gopal Agarwal, CFO at i-exceed technologies has been personally involved in the talent acquisition and development at his organization. He says, “The willingness of the CFO in investing their time in the learning goals of their team, is directly proportional to the productivity of the broader finance function. “

This proves that when CFOs or senior finance leaders work with talent to create a sense of shared purpose and guide them towards the means to achieve it, they tend to be more committed.

• Operations Optimizer:

Now that we’ve established that the efficiency of a company is directly dependent on raising the bar of its talent, the CFO must also work towards improving systems and processes.

The Modern CFO must understand that “Finance cannot work in isolation”. Processes need to be continuously optimized and the CFO who has a bird’s eye view of operations needs to be leading such optimization.

• Market Manipulator:

A seasoned CFO is someone who has an exhaustive knowledge and understanding of their product or service’s “Supply Chain” & “Distributor Channel”.

It is no longer only the job of a CEO to keep track of the new opportunities in the market. The Modern CFO must work collaboratively with the CEO to keep track of all such market activities.

• Technology Transformer:

We reached out to Chandrasekaran Venugopal, CFO at Kaar Technologies (a leading player in SAP Digital Transformation and Implementation). When asked about the CFO’s role in technology, Chandrasekaran who has over 16 years of assimilated SAP expertise says, “juggling between Digital Transformation, AI & data analytics, never have CFOs been the center of such immense innovation. These Digital elements have become imperative to ensure successful cross-functional collaboration among Sales, Marketing, IT, and Finance for achieving the strategic objectives of the organization.”

What role does DATA play for the Modern CFO?

Mark Patin, the CFO of BlackLine (a cloud-based service automating the financial close process) once remarked, “FP&A [financial planning and analysis] used to hold all the cards; they had all the data at their fingertips. Nowadays, valuable data resides across the business. It’s a battle to find out who has the best data, much less what this data is. Otherwise, a vacuum will develop that smart executives will fill up with their own data. The CFO must be always on top of information flow.”

Turning real-time data into reliable, accurate information remains the top-most priority for the CFOs even today. What has changed is the way in which the Finance team now mines and analyses this data.

With increased reliance on data, CEOs have turned to CFOs to make fast, critical business decisions.

The journey from CFO to CEO:

Despite CFOs taking on so many varied roles and being at the centre of strategy building and decision making, why is it so that globally only 13-16% of CFOs have transitioned into the role of CEO? This is because traditionally CFOs were not tasked with innovations and defining competitive strategy. Instead, executives with experience in dealing with business complexity, and ambiguity while heading operations were often trusted upon to lead the organization.

This has been successfully done in the past by notable CFOs who later took on the mantle of a CEO. Indra Nooyi of Pepsico or Rajesh Gopinathan of Tata Consultancy Services have both been great examples of CFOs who went on to become CEOs.

Normalise asking for help!

“Heavy hangs the head that wears the crown!”

It is completely understandable how these new set of functions and duties might seem overwhelming even for a Finance leader with decades of experience. At such times, asking for assistance is in no way a sign of weakness. Instead, what would be a grave mistake is not seeking professional expertise to bank on a sea of opportunities!

At ConTeTra we work with CFOs and senior finance leaders across the world by helping them get the competitive advantage they need – whether it’s creating financial statements that make more sense for a global world, or finance strategy that drives their business to new heights.

We hope you found this to be an insightful read. Follow our CEO and CFO on LinkedIn for more content about #internationalGAAP #IFRS #BusinessFinance #FPA #FinanceStrategy and more!