Trends, challenges and vision for a long-term strategy based on data value and the new skills for CFOs in the digital age

During the last decade several technological streams (e.g. mobiles, platforms, internal application systems, electronic markets, social and semantic technologies) have converged to enable an unprecedented technological potential to transform business and management. On a very basic level, the speed of communicating and processing data has increased, which means that data has become available ubiquitously and that calculations are possible almost in real time for large sets of data as well as for complex operations.
According with a recent survey, the standout priority for CFOs and finance leaders is data — specifically, data governance, security and privacy, analytics and associated process improvements, and talent skill gaps.

top ten finance priorities CCH Tagetik

(Source: Protiviti, 2018)

 

In this context, the finance function is becoming more of a strategic business partner within organizations. Professionals in the finance function are providing more value-added activities, moving from the delivery of data and results to the interpretation of information and the contribution to decision-making activities.

 

These more value-added activities developed by the provision and share of financial and non-financial data. In particular, the collection, production and management of non-financial information become more and more relevant for CFO for two main reasons:

 

  • Non-financial information is the root of understanding and managing business “value drivers”. It allows the building of the “lead” indicators of performance, while the financial data provide “lag” indicators of performance. Indicators of time, quality, customer acquisition and retention, for example, measure the basements of business competitive advantage. Data on competitor performance and environmental impact as sources of risks are increasing their relevance in managerial reporting for strategic decisions. Operational data, KPIs, customer data are increasingly requested to controllers beyond traditional financial and budget (IMA, 2013).
  • Demand of accountability of business performance in a wider and effective way has grown from stakeholder and shareholder. Sustainability, Intellectual Capital (Intangibles), business model are new objects of accountability requiring the use of non-financial and narrative information for their disclosure. Integrated reporting and Social and environmental impact (according to EU Directive 2014/95/EU on disclosure of non-financial information) are examples of change in business reporting which privileges non-financial information.

 

On the other hand, the CFO profession is being disrupted by the new technologies, including Big Data, predictive analytics, artificial intelligence, blockchain, cognitive computing, machine learning, and robotics process automation. All these technologies increase the predictive potential of financial and non-financial information.

 

In this evolving finance landscape, what level of technological prowess will CFOs need to possess?

 

There are some who think in this new data-driven age that accountants will need to become data scientists — a new role that combines analytical, information technology, and business skills in order to extract information from data and add value to organizations. For sure, there are new competencies, abilities and skills to be developed by CFOs in the new digital context, such as:

 

  • Extracting relevant information from many sources (data scientist competence);
  • Prioritizing data (internal and external);
  • Using technologies that can foster the sharing of information and promote people interactions (social media, mobile, cloud);
  • Accelerating the dissemination of information in the organization (real-time-analytics & reporting);
  • Developing «ability to predict» (by Predictive analytics).

 

Today it is not important how much data are available. CFOs must avoid the risk of drowning in data (information overload), being able to organize and select information and develop the ability to predict what will happen in the future. This is the key to discover new trends to innovate services and products.

 

Further, new competences of interpretation will be required: only interpretation leads to actionable insights. In this respect, streamlining processes using technology will free up time for CFOs to perform this higher-value-added work. They will need to know how to exploit the data that is accessible, and to learn how to analyze them to become a better business partner for their organizations.

 

Finally, but not last in relevance, soft skills and «human touch» remain among the main strengths of CFOs and finance leaders: the ability to give better presentations and communicating more clearly make them more of an asset in company meetings. Still immeasurable is the value they can provide in explaining in person the impact of different costs and complex legal hurdles instead of having them by automated voice calls and faceless customer service systems.

 

Do you want to know more about this topic? Watch the series of Lino Cinquini's interviews below!


Video #1: Why non-financial data are useful for finance?

Video #2: How to create valuable insights into the business through data?

Video #3: What are the trends to improve efficiency of finance processes?


Corporate Performance Management

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