Chief Financial Officers (CFOs) are no exceptions. With increased technological advancements, evolving business regulations and norms, heightened risks, and market volatility, the financial landscape has transformed; ensuring that CFOs are no longer seen as the gatekeepers of business finances alone but also as strategic business leaders.

Modern-day finance leaders are expected to move beyond what was a narrowly defined role with money management at its core and take on a more visionary stance. A 2020 report by Microsoft, highlights how the role has evolved, “Today’s financial decision-makers must be versatile, fast-paced and digitally-minded to be able to anticipate and respond to ever-changing circumstances. Those poised to achieve the greatest success are long-term visionaries, equipped with big ideas, the right technology, and the ability to anticipate change in an unpredictable world.”

Put simply, surrounded by this deep sea of changes, CFOs must have the vision and agility to stand shoulder-to-shoulder with the rest of the C-suite and prepare for what lies ahead.

Embracing Change, Powering Transformation

With the role of a CFO extending to strategic planning, enabling digital transformation, data analytics, cross-functional collaboration, and more, the once tactical position is now tasked with bringing strategic priorities to life. No doubt, there is no dearth of challenges. 89% of CFOs say striking the right balance between cost-cutting and investing for growth is a top challenge to transformation. Despite today’s inflationary climate, CFOs are seeking to embrace digital investments to maximize profits and cut down on costs. According to a Gartner study in 2022, over 78% of CFOs planned to maintain or increase enterprise-wide digital investments over the next two years. The importance of digital investments has only grown since then. By taking the lead on embracing digitization and transformation within their organizations, CFOs are not only adopting new tech but also understanding how it can be woven into existing systems and processes to drive value. Leading such monumental change means that CFOs are faced with several challenges that go beyond their traditional financial expertise; making adaptability and diverse skills indispensable.

Data analytics, for instance, has become an everyday part of a financial leader’s life. The right data empowers CFOs with insights to influence strategic decisions, recognize and leverage opportunities for operational efficiencies, and forecast business trends. Successful CFOs are adept at interpreting data and can derive actionable insights that drive long-term business growth.

Another critical skill is strategic thinking. For CFOs to participate actively in shaping the direction of their organization, they must understand the broader business context and the implications of the various strategic choices an organization needs to make. By cultivating a strategic mindset, they can provide valuable insights and perspectives that contribute to the decision-making process in a meaningful way.

Most importantly, the role of a CFO now includes supporting CISOs (Chief Information Security Officers) in managing the various risks associated with technology and cybersecurity. This demands a strong level of digital/ technical understanding. At the same time, increased interconnectivity across business functions calls for strong leadership and communication skills. These new responsibilities and demands underscore the need for CFOs to broaden their skillset. Organizations today are looking for CFOs who can articulate their vision, be technology enthusiasts, and foster cross-functional collaboration to enable transformation effectively.

Observing these growing trends, it is also clear that having experience outside of the financial realm can be a significant advantage. The benefit of having broader experience outside is twofold: 1) It equips CFOs with a better understanding of the larger/ big picture business context, and 2) Arms them with diverse competencies, which as we know is critical in the fast-paced, ever-changing business environment. CFOs with broader and more diverse experience are also in a unique position to add value to the business by taking on a more strategic role. Connecting different organizational functions, given their holistic view of the business, is a critical role such leaders can play. By building strong cross-functional relationships, CFOs can promote collaboration, improve the flow of information, and ensure stronger, more strategic decision-making.

Strengthening the Finance Function

Like everything else, the finance landscape is also evolving. In their expanded role, CFOs have an integral role to play in strengthening the finance function, ensuring that their teams are equipped with the right talent and competencies. The first step towards building a future-ready finance function is to assess and identify the current skill gaps. How proficient is the team in handling data? What strategic value do they bring to the table? Can they skillfully adapt to new financial tools or are they resistant to change? With eyes on the future, finance leaders must examine where their team stands before crafting a plan of action.

Upskilling is and will continue to be an essential part of a robust finance team. Having said that, in the era of rapid digital transformation, learning cannot be a one-time activity. Once CFOs identify the gaps they need to fill within their teams, they must foster a culture that prioritizes learning. This involves access to courses, regular training sessions, ensuring that the team is updated on industry trends and corresponding skills. CFOs can also play an important role in mentoring their teams, providing guidance, feedback, and sharing insights from their own experiences. Being invested in their team’s learning and growth can not only improve employee engagement but also increase talent retention, and help build a strong pipeline of future finance leaders.

Parting thoughts

Technology and the digital era have transformed everything we do. While adapting the business and culture of an organization to keep up with this change is not something one typically associates with a CFO’s job description, but disruptive times call for equally disruptive measures. Unless CFOs of today and the future can partner with their CEOs and COOs, and truly integrate with the C-suite, they cannot expect to succeed in this new world. Finance leaders of the future will have to be focused on more than just reporting and recording numbers. The most effective CFOs will also double up as agents of change; taking on a stronger, and more visible lead on business strategy.