The modern CFO spends less time on the books and more time helping other lines of business use data to set the organisation’s strategic direction, drive growth and speed innovation
Data is fast becoming the most valuable asset for many businesses. Disruptive digital platforms such as Uber and Airbnb are some of the forerunners of a data-driven future that is being built.
As the global network of smart sensors grows, connecting people, places, machines and things, organisations will develop their ability to generate and gather new data. Information will become a source of value in its own right.
“Organisations best able to understand, interpret and act on information are set to outperform their rivals”
As data becomes ever more central to corporate value creation, those organisations best able to understand, interpret and act on information are set to outperform their rivals.
The CFO is uniquely well placed to understand and shape this process. They understand how to value intangible as well as physical assets and are equipped to realise the implications of the different and disruptive business models that are emerging.
“Inside the organisation, CFOs have a privileged insight into every business unit and how they interact with each other”
Inside the organisation, CFOs have a privileged insight into every business unit and how they interact with each other. This gives them an ideal view of potential information-led transformations and how to drive them.
Senior executives certainly seem to recognise this trend. A recent CGMA survey showed that the finance function is playing an ever-larger role in information technology and digital transformation. A separate study revealed that agile finance leaders are far more likely than others to have fully implemented cloud-based enterprise performance management systems.
Cloud and the agile CFO
One of the most valuable tools for CFOs to drive such a transformation is the cloud. It is fast becoming the corporate nervous system that enables organisations to gather data from disparate sources inside and outside the business at speed and scale. This creates new possibilities not just to operate more efficiently internally but also to lead the drive towards new products, services and partnerships.
The modern CFO is prepared to take control of this system to act as the ultimate custodian of enterprise data.
The CFO as data specialist
In an era when there is an increasing drive for better collaboration between business units, the CFO is becoming not just a custodian but also increasingly a convener and enabler, working with senior colleagues from other key functions in partnership with dedicated information specialists who work across the organisation to unlock the value in data.
These teams can help colleagues from all lines of business identify future sources of more profitable growth. They can help lines of business make better, data-driven decisions, perhaps by embedding team members in business units to gain deeper commercial insights and help their board-level colleagues drive their own disruptive initiatives.
They also help the business look beyond conventional metrics for new sources of value, including mining less tangible information such as social sentiment.
Such endeavours increasingly require the CFO to invest in the infrastructure to support these aims, including real-time reporting and forecasting dashboards, mobile applications and other applications that speed up collaboration and workflow.
Supported by such tools, modern finance teams increasingly using data and algorithms to predict business opportunities.
Without the capability to operate in the cloud, trying to marshal the data on which deeper, predictive insights depend would take longer or would simply not be possible.
Managing life in the cloud
For organisations that are still embarking on a migration of their operations to the cloud, the task of ensuring the transition works now and in the future often also falls to the CFO, particularly where IT reports to the finance director.
This is likely to entail determining which skills existing IT and finance staff require. This includes ensuring the organisation has the specialist capabilities required to manage the complex service level agreements that go with running a business with cloud service partners.
Given the growing financial and compliance implications of data breaches, it is also likely to be part of the cloud-ready CFO’s job to devote enough resources to ensure that cloud services are secure and to measuring the return on investment.
“We saw in 2016 an unprecedented level of data hacks and people are very worried about the potential damage should they suffer a similar issue,” says Stuart Orr, a technology partner at EY, the professional services firm. “There’s no substitute for doing a thorough review and for having internal audit challenge and question your IT infrastructure.”
Indeed, this is an increasingly critical job given the rising risk of cybercrime and the growing organisational reliance on uninterrupted data flows into and out of the business.
“We are heading closer to the moment when a household-name organisation fails as result of a major breach,” says Ken Allan, a partner at PA Consulting’s digital transformation team. “We are advising our clients, where they have IT reporting into a CIO that it should report into the CEO or CFO.”
The CFO is often a good choice because they are tasked not just with the day to day finance operation but with future investment. CFOs who are information security savvy understand the relationship between the risk, the cost and the future wellbeing of the organisation.”
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