The changing role of the CFO in a post-pandemic era: Leading business change through digital transformation
The role of the chief financial officer is changing post COVID-19, according to Nathan Kale, country manager A/NZ for contract intelligence company Icertis.
Kale says there is no doubt Covid-19 has changed the nature of the finance office.
"The pandemic exposed a new normal where commercial circumstances are changing daily, and the CFO’s office is shifting to a more real-time and proactive focus," he says.
The traditional way of operating, with a monthly close, a quarterly close and an annual planning process, has been totally upended, according to Kale.
"CFOs must be totally agile now and be able to react immediately to changes in the business. Indeed, ultimately they have to look forward and predict what’s going to happen and steer their businesses in the right direction," he says.
"Like almost everything else that came with the pandemic, the imperative for the CFO to have insights into the day-to-day operations of the business—and play a strategic role in guiding those operations—will not go away once the virus is finally defeated."
In fact, in light of a post-pandemic boom, Kale says the CFO’s role is arguably growing even more expansive as companies lean on their expertise to help maximise their rebound from last year’s disruption.
Deloitte reports in its CFO Insights newsletter: “Over the past year, many CFOs have had to deal with higher demands and expanded responsibilities thanks to the COVID-19 pandemic. Across industries, those expanded duties have included leading transformation efforts—both within finance and the overall organisation—as well as driving enterprise growth as companies seek to capitalise on post-pandemic opportunities.”
Kale says these new demands are requiring finance professionals to think differently about the capabilities of their teams to meet these new challenges while, at the same time, “keeping the lights on” in the traditional finance functions.
"CFOs need to improve finance operations with a focus on delivering timelier information, better insights, and automation to streamline operations," he says.
"The modern finance leader plays a critical role in sponsoring and driving digital transformation efforts in both the finance function and more broadly across the business. These high-impact automation projects will help CFOs increase the agility and resilience of their businesses and increase the probability of success in this rapidly changing and uncertain environment."
Kale says the ability for enterprise leaders to respond quickly to changes in the operating environment is a function of visibility and control.
"Today, finance leaders have access to a depth and breadth of data that was unimaginable just a few years ago and our ability to use that information to drive tangible outcomes is still evolving," he explains.
"The pandemic has shown many of us that the gap between great business insight and the ability to act on that insight is still wider than it should be – many companies were unable to course-correct quickly because they lacked visibility and control in the midst of the crisis."
For this reason, Kale says systems that structure and connect contract data from across the enterprise are quickly becoming must-have systems of intelligence for CFOs.
"An organisation-wide contract lifecycle management (CLM) system can give finance and business teams instant access to the company’s full range of entitlements and commitments. That visibility gives CFOs great confidence in managing their business risk and the bottom line."
"Risk is present in every one of our businesses – that’s a fact," says Kale.
"Since we can’t predict the future, the goal as CFOs is to make companies more competitive by creating systems and processes that allow the business to be more risk-tolerant and resilient," he says.
“The pandemic highlighted the importance of resiliency and determining the ability of the enterprise to respond to, and navigate, a risk event,” Deloitte notes. “For example, if the supply chain for a critical semiconductor part in a company’s automobile production is disrupted, how quickly can it adapt to—and overcome—the constraint?”
Kale says operationally minded finance teams will partner with procurement and supply chain teams to drive a more proactive and nimble approach to plan for and manage risks to the business.
"Cross-functional teams can collectively leverage organisation-wide visibility to make the business more resilient and risk-tolerant," he says.
Execution and Outcomes
"As business leaders, we place a premium on people and systems that improve the probability of success. Deloitte notes that CFOs are increasingly leading the way inside their companies, with “49% of [CFOs] serving as co-leaders for business transformation," says Kale.
"It is indeed the golden age of technology for the office of the CFO – there are myriad solutions that automate transaction processing, streamline the close process, and give us levels of insight that would traditionally take armies of financial analysts to deliver," he says.
Kale says tools that act as systems of intelligence are available to give CFOs the visibility and control they need to manage their business.
"And through automation and integration into surrounding systems, these sophisticated solutions can ensure the intent of contracts are fully realised, which ultimately improves cash flow and reduces risk," he says.
According to World Commerce & Contracting, an estimated 9% of revenue is lost due to poor contract management.
"A contract intelligence platform can prevent this kind of leakage by automating contract renewals or by connecting to the revenue delivery system to ensure that all terms and conditions are met to maximise the earning process," Kale says.
"Similarly, businesses can leverage their contract systems to monitor supplier performance or to balance supply chain risk with customer obligations."
According to Kale, the CFO takes a long-term strategic view and works across functions to drive overall business improvement — they are in a unique position to lead digital transformation efforts that work across functional silos and systems to drive growth, improve the bottom line and reduce risk.
"As CFOs take on this increased responsibility to drive transformation across their business, they should consider investing in high-value systems of intelligence that provide the visibility and control they need to drive agility, resilience, and outcomes across the business."