The modern CFO role is evolving rapidly as intelligent technologies like AI drive digital transformation and give leaders the ability to shift their focus from backwards-looking reporting and compliance to strategic business advisory.
Today’s broader CFO role and responsibilities require a new mix of strategic, technical and leadership skills. Businesses will need to reevaluate the CFO role to address new challenges related to the capabilities enabled by AI.
The Modern CFO: A Role in Transition
Conventionally, CFOs worked within the silo of the finance department, handling tasks such as overseeing the accounting department, budgeting, reporting and compliance. This placed CFOs in a position to provide strategically valuable information to CEOs and boards of directors. Yet AI has expanded this role significantly by increasing strategic bandwidth and the ability to process and analyze more data than ever before.
Empowered by AI, today’s CFO cannot just report on accounting data. CFOs must extrapolate from the data, continuously forecasting trends and providing data-driven insights across the enterprise. To shoulder this responsibility, today’s CFO must be comfortable with emerging technology and possess the skill sets needed to harness it effectively.
6 Critical Skills for Finance Leadership
AI is reshaping the CFO role and responsibilities, and it’s influencing the skills that businesses seek in their finance leaders. According to a recent Paro Future of Finance Survey, 52% of businesses cite strategic vision as the most important skill in a modern CFO. Businesses that adopt AI are more likely to desire CFOs with strategic vision and a future-forward mindset, however businesses that haven’t adopted AI cite accounting and compliance as the most important skill for CFOs, implying a continued reliance on backwards-looking reporting.
1. Future-forward Mindset
What does a future-forward mindset really look like? The answer is a willingness to go beyond the traditional finance experience, whether it’s thinking on a global scale or embracing new technology.
CFO/COO and strategic advisor, Arjun P., describes his idea of the modern CFO:
“I think the modern CFO now needs to have a little bit more versatility,” Arjun says. “You know, I don’t think it’s about, ‘Hey, just sit in the financial model. Let’s do cash flow modeling.’ I don’t think it’s as simple as that anymore. I think modern conversations demand more from the CFO, and thus being more well-rounded, meaning having experience in potentially tech. Or, a lot of CFOs these days even know a bit about SQL, and they understand how their data comes together. So I think it’s just having a little bit more past the finance experience that really takes CFOs to the next level, and they go from a CFO to a strategic thought partner.”
Arjun adds, ” I like using the term opening the circle versus closing the circle. Do you allow perspectives in and then digest?”
2. Broad Business Understanding
To serve as strategic thought partners, modern CFOs need strong business acumen with cross-functional knowledge about how their role functions within their company. Today’s CFO should see the big picture that connects the finance department to functions such as operations, IT and marketing. These other business areas can benefit from the CFO’s analytical skills and ability to track and interpret key performance indicators. Recognizing this, many companies are redefining the CFO’s role in the organizational structure by bringing the CFO into operations in a hybrid CFO-COO role.
3. Data Analytics Capability
To make the most of today’s technology tools, today’s CFO needs a high degree of data literacy and analytics capability. In fact, 53% of businesses report that advanced analytical skills are lacking in their finance teams.
Today’s CFOs need to understand how to pool data from multiple sources into a unified perspective, how to turn that data into insights and how to present that data in user-friendly dashboards and reports.
They also need the analytical skills to participate in the training and monitoring of AI models. Success requires domain experts that can challenge model recommendations, question the key drivers behind model forecasts and inject human judgment into the analytical process.
4. Cybersecurity Competency
Business respondents cite cybersecurity and data security as the foremost concern in adopting AI.
While traditional accounting, controls and compliance competency remain a core part of the CFO’s job, technology has made it imperative that CFOs are capable of handling these duties in a way that meets cybersecurity challenges. The SEC’s latest rules on cybersecurity require public companies to disclose material cybersecurity incidents and to make annual disclosures on cybersecurity risk management, strategy and governance. CFOs are now responsible for meeting these types of technology-driven regulatory standards and cybersecurity rules.
5. Talent Development
CFOs depend on talent to achieve their companies’ financial objectives, and they hold the budgetary strings that fund corporate endeavors.
By working with department leaders and human resources personnel to identify needs and nurture talent, CFOs can help ensure that their companies have the resources needed to meet business goals, avoid unproductive skills gaps and reduce costly employee turnover. Skills in digital change management will help leadership identify and solve for the technical, analytical and soft skills necessary to undergo a successful digital transformation.
6. Storytelling Influencer Skills
“A CFO needs to be able to story tell and draw a really good narrative that’s helpful in tying an organization together,” states Arjun. Being able to tie marketing, operations and other functions into a cohesive story helps each department understand their piece of the puzzle and align on direction.
To fulfill their role as strategic partners, CFOs need the ability to communicate their financial insights persuasively to other decision makers inside and outside the company. Strong storytelling skills greatly enhance a CFOs effectiveness at communicating persuasively. A CFO who can translate financial data into dramatic narratives can be a persuasive and invaluable asset.
Accessing Specialized Skills Via Fractional Talent
Finding a CFO with a modern skill set can be challenging if you’re relying on a traditional hiring model to fill a conventional job description.
Whereas a traditional CFO may remain with a single company for much of their career, a fractional CFO brings experience from diverse industries and situations. This equips them with more dynamic capabilities and an outside-in perspective valued by agile, growth-oriented companies.
A fractional CFO has mastered the art of quickly assessing an organization’s pain points and potentials. They focus on high-impact changes that advance strategic finance goals versus just maintaining the status quo. And they continually expand their skills across new technologies, approaches, and ideas.
With a fractional model, a CFO works part-time for one or more companies as a regular team member rather than a project-based contractor. The CFO may work remotely as a virtual CFO or serve as an interim CFO that assists companies temporarily while they’re developing full-time in-house talent or undergoing a major change.
Is your business looking for finance leadership with forward-looking skill sets? Paro’s network of elite, fractional CFOs have experience in helping businesses build a strategic finance function. Find the right analytical skills, software experience, communication styles and industry knowledge to fit your business needs and take your business into the future.
