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Financial Management Systems Empower Digital CFOs

in: Company News, Financial Management

financial management system concept. Young businessman working on a virtual screen of the future and sees the inscription: CFO

The new, modern financial management systems are one of the driving forces behind the rise of what’s been dubbed the digital CFO. These systems (mostly ERP systems) offer unprecedented data collection and analysis. Powerful integration capacities make this an even bigger project than at first glance, demanding inputs from finance, accounting, marketing, sales, and operations. And, at the center of it all is the digital CFO: a CFO well-versed and comfortable with technology, owner of the ERP project, and potentially the driver of systemic change throughout the organization.

The Role of the CFO Has Changed

Step back to the middle of the 20th century, and the role of the CFO was virtually unchanged from what it had been for the past 50 to 100 years. A CFO walking out of his office in 1922 and accidentally stepping into a time portal to 1952 could still perform many of the same functions as his futuristic colleague. He’d spot the general ledger, know where to put the credits and debits, and analyze the carefully typed documents and tables created by his secretary.

Now fast-forward to 100 years and the same CFO, stepping into his time portal from 1922 to 2022, would wonder what planet he’s on when he steps into the CFO suite. Setting aside his confusion at the plethora of strange devices called computers and cellphones, the CFO would be hard-pressed to understand the financial management system and the ramifications of using it.

Instead of performing advanced accounting functions, the modern CFO is also spearheading a technology team analyzing various enterprise resource planning systems. Instead of waiting weeks for inventory reports to trickle in from warehouses around the country via snail mail, the modern CFO taps a button on the computer to call forth a dashboard displaying the latest item counts. They can make an immediate decision on whether to authorize added budget or staff based on the figures at hand—no need to find the right file in the cabinet and estimate based on its recency. The data is there, right at the fingertips, and accurate, thanks to cloud ERP.

The CFO’s role has evolved from a functional role to a strategic role. Today’s CFO may be equally at home advising the CEO on the company’s direction as behind the computer monitor performing functional tasks. Most, if not all, are digitally savvy, and have a major or minor role in everything from marketing to technology. And they are now, more than ever, the one responsible for financial management systems.

Five Aspects of the Digital CFO’s Evolving Role

KPMG Hong Kong has identified five aspects of the digital CFO’s evolving role. We put that figure at eight, including some of what KPMG identified and our own take on the subject.

According to KPMG, the digital CFO must have the following aspects to excel in the role:

  1. Strategic leadership
  2. Data-driven value creation
  3. Digital labor
  4. Cross functional collaboration
  5. Cyber security

To this, we add:

  1. Communications leader
  2. Financial management systems expert
  3. Cross-functional understanding

One: Strategic Leadership

As part of the evolution of the CFO role into the digital CFO, CEOs expect much more of their financial leaders. They expect CFOs to provide strategic insights and bring them to the C-suite table. Many treat their CFOs as trusted advisors, leaning on them for advice and insight into the inner workings of the company.

As the digital CFO, this new breed of CFO understands that the data under their control offers an excellent opportunity to provide the CEO with important points for consideration. In many cases, the CFO knows as much, if not more, about the detailed information in the financial management system and can proactively advise leadership based on this knowledge.

Two: Data-Driven Value Creation

Data by itself is useless. It’s not until it is transformed into meaningful information that it can be helpful to a business. That role is assisted by financial management systems and completed by the digital CFO, who is skilled enough in the inner workings of the system to generate the reports that offer the best information to the team. By reviewing this data, the digital CFO can offer expert insights and opinions that can assist sales, marketing, and operations, and improve financial management throughout the company.

Three: Digital Labor

This is where our time traveler from 1922 would be astonished at the role of the digital CFO. For not only does the digital CFO consult on financial management systems, but they also consult on other methods of automation within the company. A manufacturing company shopping for automation may consult the CFO not only on the financial aspects of the purchase but also on its ability to integrate with the company’s ERP system. Other methods of digitizing labor from robotic warehouse systems to time-saving software are all part and parcel of the digital CFO’s job to understand and use.

Four: Cross-functional Collaboration

As the digital CFO becomes more engaged in the company’s overall data, they must also become a cross-functional wiz, able to collaborate with all departments in the organization. Department managers lean on them just as the CEO does for expert insight and data resources that can paint a clearer picture of progress towards KPIs. The ability to understand and work with all departments and teams is an essential skillset of the new, modern digital CFO.

Five: Cyber Security

So much of a cyber criminals’ work is around data theft: credit card data, personally identifiable information, and more. This data is often housed within the company’s ERP system or financial database. Consequently, the digital CFO must also become savvy about the nuances of cyber security. They must understand how cybercrimes occur and what can be done to prevent them. Just as many CFOs are responsible for a company’s internal controls within the accounting department to avoid in-person theft, so too do they manage online security.

Six: Communications Leader

Gone are the days when the company’s “bean counter” was an introvert hiding behind his ledger. Today’s digital CFOs, while not required to be extroverted, must at least be comfortable communicating with a wide range of people. They must be skilled at giving public presentations, gathering data from the financial management system, and transforming this data into useful information for audiences with varying understanding of the financial world.

Seven: Financial Management Systems Expert

The digital CFO is more than a financial expert. Digital CFOs must now be the systems expert when it comes to the financial management system. Although most ERP implementations do include training for an in-house data expert, the CFO often takes this role on as well to ensure that not only can they get what they need from the system, but they can also assist their staff to do the same. This requires a high degree of comfort with computer technology and the curiosity to learn and ask questions.

Eight: Cross-Functional Understanding

Along with cross-team collaboration comes cross-functional understanding. In addition to working with other departments, the digital CFO must also understand them—what each does, and what each contributes towards progress to the company’s KPIs and bottom line. This understanding enables the digital CFO to harness the powerful data generated by the ERP and provide the strategic insight and direction companies crave—bringing us full circle back to the first aspect of the role of the digital CFO.

Not Quite the Resume You Expected

The digital CFO has a resume that’s not quite what you expected. It may seem like a Herculean task to possess all these characteristics in one person, but many CFOs do, and they quietly go about their tasks as if it’s nothing special to be a Superhero.

Digital CFOs, the time has come for you to have an ERP as robust as the skills you bring to the workplace. If you are ready to complete your company’s digital transformation, we’re here to help. Contact us or call 512-990-3994.