Transformation, upskilling the way forward for future CFOs

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Article attributed to Singapore Management University (SMU) Accountancy

DigitalCFO Asia Newsroom | 16 August 2021

Transformation, upskilling the way forward for future CFOs

As business priorities in areas such as technology, the speed of change, and business resilience, start to shift, change is clearly on the cards for CFOs globally.

According to recent surveys conducted by the Association of Chartered Certified Accountants (ACCA), financial transformation would be the next step in the evolving role of financial professionals and CFOs, although financial experience remains a requisite. Sharing on some of the trends being observed in the future role of finance professionals and CFOs was Mr. Vincent Lim, CFO, Asia Pacific, at Datalogic S.p.A., in an Accounting MasterClass titled The Changing Roles of CFOs.

With years of experience under his belt, Mr. Lim pointed out that increasingly, companies across different industries are starting the move towards financial transformation. “The real financial transformation work is not always sunshine and rainbows. While it is a lot of hard work, it also has a lot of very practical benefits,” he quipped.

Citing a 2019 report by the ACCA in partnership with PricewaterhouseCoopers titled Finance: a journey to the future?, Mr. Lim presented six hypotheses on what the world of finance will look like in the next 3-5 years. Perhaps the harbinger for this financial evolution is the shift in focus on historical financial information to real-time, customer-centric decision making – which from a business perspective could determine whether a company wins over or loses a client, and ultimately impact its bottom line.

“All of us in the industry know that many of ERP (enterprise resource planning) solutions today focus on past information, the same as in accounting, with very little real-time information. However, going forward, a lot of the information will be in real-time, and when that happens there will be one unified central truth for the whole company,” he explained.

Furthermore, trusted data will be available across the organisation, and “AI, machine learning and blockchain will form the basis of transactional processing and transform data quality”.

Added Mr Lim, “In some of the companies that I’ve worked at, the finance team is the custodian of information, which gives the team significant authority within the company. However, all this will go away, according to this hypothesis, and trusted data will be open and accessible, throughout the entire company.” With the growing need for real-time information and trusted, more accessible data, the role of finance professionals will shift from simply compiling data and providing reports to stakeholders, to producing forecasts and insights that would drive the business ahead.

“The finance team will spend all their time generating insights – this means we need to tell the story behind the numbers, the data, and the information. While we are not quite there yet, this hypothesis states that if we’re not able to do this part, we will become irrelevant,” Mr. Lim cautioned. Traditional finance roles, such as manual accounting and financial work, will no longer exist, the report predicted. “This hypothesis clearly predicts that very soon we will have a lot of capabilities like AI, RPA (robotic processing automation), machine learning, and once these are common systems, traditional functions will go away, “ he said. Also expected to dissipate is the traditional accounting role of the CFO, wherein the accounting CFO “will need to adapt to focus more on financial and business acumen and stakeholder management”, Mr Lim continued.

Citing a separate report released by ACCA and the Institute of Management Accountants (IMA) titled The CFO of the Future, Mr. Lim pointed out that stakeholder focus and strategy formulation are two hypotheses in the role of a CFO that are set to pick up going forward. “Currently many traditional CFOs do not manage stakeholders. But going forward, there’ll be more instances where we as CFOs will take charge of managing stakeholders,” stated Mr. Lim. Growth optimisation and forward insights are additional roles that future CFOs will need to adopt, the report continued, which comes across as an extension of a previous hypothesis on ‘generating insight’.

“It sounds very intuitive, but in accounting, most of the time the team’s job requires them to look back at historical data and information. If we focus on growth optimisation, then many of the transactions that we do will suddenly be very different. We’ll be focusing on estimation, forecast and trends,” he remarked. The report also identified that a finance business partner experience ranks the highest for those most likely to become CFOs, with chief accountant experience coming in second. “This tells us very clearly that if you want to be the CFO of the future, finance business partner experience is the most important,” Mr Lim stated.

It goes without saying that the role of future CFOs is one where the focus on finance, while still important, will need to make room for other skills that would eventually widen the scope of opportunities for future finance professionals and CFOs alike. “It is very crucial that finance professionals adapt or we will become irrelevant. Some are of the opinion that this transformation can wait a few years, while others believe that it should be taking place now. There are very different views on what’s next for the industry, but I believe that financial transformation needs to happen today,” Mr. Lim concluded.

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