The business world has changed dramatically since the recession, and the specific role and responsibilities of the chief financial officer have evolved as well. Not only do CFOs need to be able to manage financial performance, but they have also needed to act as agents of transformation and develop expertise in their specific industries. Few positions encompass such a wide range of influence and profile, according to a report from Ernst and Young. This shift has largely been driven by financial uncertainty and unpredictable demand.
In fact, two-thirds of the respondents to E&Y’s survey said the title CFO is inadequate for what the job really entails. As the complexity adds up, some organizations may start to appoint deputy CFOs to help manage the responsibilities. However, more skills are needed to succeed as a CFO than were required in the past. Seventy-three percent of respondents did not feel that there was anyone on their current finance teams who could step up to this crucial role. It isn’t because they don’t have talented financial professionals in their organizations; this belief stemmed from the continued structural changes happening in many businesses.
Key challenges for CFOs in today’s business climate
CFOs are facing broader responsibilities. For example, they need to focus on big data to model financial predictions. As technology evolves at a breakneck speed, organizations need to keep up. The pace of new developments is one of the reasons financial organizations are facing a significant skills gap. Citing data from the U.S. Bureau of Labor Statistics, Forbes said accounting hiring is projected to grow 13 percent from 2012 to 2022. However, accounting roles are notoriously tricky to fill. Not only do accountants need financial skills, but they also need to have a deep understanding of business strategy.
In addition to these issues, CFOs also need to have an updated knowledge of changing internal controls. The previous policies expired on Dec. 15, 2014, and auditors will be tougher now.
Where does technology come into play?
While big data is expected to play a stronger role in the responsibilities of the CFO, these executives are struggling to instill transformation while managing legacy systems, Information Week reported. CFOs are expected to provide business insights to drive the company into the future, but this is difficult when they’re held back by outdated systems. In the past, CFOs were largely responsible for reporting financial results for quarters that had already ended, but now they need to create forecasts for the future. In some organizations, financial executives are spurring the adoption of big data analytics.
One of the biggest problems facing CFOs today is that current data systems often do not match business structures or have the right reporting capabilities, according to a report from the Association of Chartered Certified Accountants. This is even more significant in high-growth companies because the business is changing so quickly that technology needs will soon be different, which can result in the finance department investing a lot of time in reworking their data. Getting bogged down with reporting and outdated technology can inhibit growth in other areas. CFOs need to find a way to standardize the finance team’s data so they aren’t held back by a learning curve in analytics.
Ultimately, financial executives need to find new ways to reduce costs, improve efficiency and take a more active role in creating business strategies. CFOs will be expected to serve as transformation agents in high-growth firms. This will mean transformation in their own departments, as well as the business as a whole.
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