New Sage research highlights how digitisation is changing the CFO role

If you wanted evidence that the only constant in life is change, said McKinsey communications director Sean Brown in the “Inside the Strategy Room” podcast, then look no further than the evolution of the CFO role.

Sage commissioned a study, surveying 311 senior financial decisionmakers working in SA who shed light on the rapidly changing function of the roles of the CFO, in its “CFO 3.0 — Digital Transformation Beyond Financial Management” report. 

The majority of the respondents were from companies that employ between 201 and 1,000 people, 35% were from organisations with 51 to 300 employees, and 19% from large enterprises with a staff complement of more than 1,000 employees.

Pieter Bensch, executive vice-president at Sage Africa & Middle East, said: “Our research highlights how the role of the CFO has evolved from managing compliance and accounting activities to providing strategic leadership and driving digital transformation. As finance enters the CFO 3.0 era, CFOs need tools that enable them to deliver on their core competencies, and to be confident in driving the digital agenda throughout their organisation.” 

Presenting the research findings, Arthur Goldstuck, MD of World Wide Worx, which conducted the research, revealed that Covid-19 accelerated digital transformation and amplified challenges around remote working, compliance and cybersecurity. In fact, 27% of the CFOs found themselves involved with remote-worker management.

Granted, Covid-19 has shaken up the world of work as we know it, resulting in a seismic shift in roles as more people work remotely and companies being compelled to accelerate their digital transformation agendas to remain operational. 

But Goldstuck maintains that trends that were at play before the pandemic — the move to the cloud, managing remote work and achieving compliance had to be accelerated. Faced with these new challenges during a pandemic, senior financial decisionmakers showed agility and embraced technology as a key to succeed in their roles. “SA CFOs are confident. In technology, in the future, and in themselves,” reported Sage in its research. 

CFOs occupy pivotal roles in companies. From problem-solving to leadership and strategic vision and financial management, CFOs have always occupied a pivotal role as the backbone of an organisation. To add to their responsibilities, the survey shows that CFOs are no longer simply signing off budgets for digital acquisitions at the request of the CEO or the chief information officer (CIO), they became active participants in the digital strategy of their organisations. 

Alongside CEOs, CFOs are supporting innovation, as they adapt to a fast-changing work environment that relies on technology to provide data and analysis for sustainable growth. 

A McKinsey report affirmed this, suggesting that the number of functions reporting to CFOs is on the rise and that they oversee their companies’ digital activities and resolve issues outside the finance function.

Sage’s research revealed that nine out of 10 CFOs play a key role in their organisation’s digital strategy, adding vital input, insight and even direction, while 15% were fully responsible for digital transformation. 

FTI Consulting’s “The Digital Transformation in Finance” report also revealed that CFOs were often leading digital transformation initiatives as first movers of digital solutions to quantify the benefits and also demonstrate potential cost savings or efficiency gains. 

Evidently, consumer behaviour is changing, and companies that invested in digital transformation have benefited from their ability to digitise end-to-end processes such as order processing, supply chain and accounting, thereby capitalising in uncertain times. 

There is no doubt that Covid-19 has accelerated the use of digital technology by consumers across the world, including in developing countries, thus compelling businesses to speed up the implementation of their “Vision 2025” strategies on digital transformation to address the needs of their customers and employees during this period of digital disruption. 

Another trend highlighted by the Sage research was how CFOs embraced automation and artificial intelligence (AI) as enablers within their portfolios. Seventy-five percent of the respondents said they didn’t believe that automation would make them redundant while 88% welcomed AI as an innovation that would further enhance the delivery of their core competencies. 

In fact, PwC’s CFO Global Pulse Survey on Covid-19 found that 68% of CFOs in Africa planned to accelerate automation and new ways of working, proving that the once risk-averse and conservative CFO was stepping up and taking charge of workplace innovation to achieve sustainable results. Even with impending cuts in investments due to the negative financial outlook resulting from Covid-19, CFOs did not foresee cutting back on their planned digital transformation investment, in line with their plans to accelerate automation.  

Unsurprisingly, remote working came up as a workplace shift that required strategic direction from CFOs. And interestingly enough various studies show that remote working is likely to be a permanent phenomenon beyond the pandemic. 

Responding in the Sage CFO 3.0 research, 27% of senior financial decisionmakers admitted to being involved with remote-worker management and said it is the single biggest shift in the role of financial decision-making in the past decade and required leveraging on digital technologies to achieve the best results.

A few concerns around the disintegration of organisational culture arising from remote working were shared by leading finance professionals during the CFO Community Conversation, a webinar hosted by CFO SA. Despite some contrasting views, the majority of CFOs admitted to noticing an increase in productivity from remote working, a direct benefit from technology which had been rolled out as part of embracing the digital revolution. 

Putting people (employees) first during the pandemic was critical as employees were struggling to adapt to their new working environment — their homes. This called for leaders to be empathetic, tolerant of employees being disrupted during meetings, and to offer tailor-made support for each member of their teams such as single mothers and colleagues who lived with their elderly parents with comorbidities. While most CFOs said they had encouraged their colleagues to continue working remotely for longer, some raised concerns about the sustainability of this arrangement in the long run.

Apart from managing cashflows and budgets, CFOs have had to quickly adapt to a fast-changing business environment that includes managing more than 50 people in an online meeting and virtual audits, and they’ve had to learn new skills as they prepare themselves and their workplaces for digitisation. 

While the Sage research indicates that SA companies have begun rolling out automation and AI, with CFOs playing a pivotal role in digital acquisitions, only time will tell just how far the role of finance leaders will transform the finance profession as we know it. 

This article was paid for by Sage.