Sunday, 19 November 2017 10:02

Re-shaping CFOs for the age of automation

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Could chief financial officers (CFOs) become redundant? That was the question I posed at the CFO Strategies Forum in Dubai last week. And the answer? Well, no-one believes CFOs will be redundant – not yet. But everyone recognises the impact of artificial intelligence on the accounting function and the need for the CFO to develop and change considerably. But how?

I had shared my own thoughts on the impact of automation on the role of the CFO and was keen to hear from those on our panel

Here are the highlights of the discussion, and with thanks to my fellow panellists for a lively discussion!

1.       Change must happen now

Artificial intelligence (AI) and automation systems are already transforming the accounting function – and this will continue at an increasing pace. As Adham Gasser said, “We need to be ahead of the curve.”

2.       CFOs need to become more advisory

Dr van Linder defined the three main roles of the CFO as chief performance manager – driving the business forward and adding value; chief strategiest – assisting the CEO on the strategic view and the critical role of benchmarking; and chief accountant – with technical skills and managing standards. 

He commented that the easiest CFOs to hire are the chief accountants – but it is very rare to find a CFO with all three qualities.  He went on to say, “Artificial intelligence will take over anything that can be automated.  The role of senior executives and the CFOs will be more of strategic advisory, as most of the functions will be automated to the maximum extent. AI will assist to make decisions better so the role of the human will be to make judgments and decision-making.”

Adham Gasser agreed that AI would make it easier for future CFOs to be far more concentrated around advisory/strategic skills, with AI taking over much of the operational side of activities.  He said CFOs will have to ‘remove themselves from Excel and Powerpoint’ - and that 10 years down the road, CFOs will need to think a lot more about strategy.

I was interested in this timescale of ten years – as a headhunter we are already seeing expectations for the CFO to be more strategic.  Within three to five years I think the brief for new recruiting CFOs will look very different.

CFO panel photo 1

3.       The CFO’s role needs to have more power

We had an interesting question from the audience, ‘How can we develop the role and the power of the CFO? How can we bridge the gap between CEOs and CFOs, and CFOs and other departments?’  The delegate gave a context for this question and mentioned seeing power struggles in some organisations, where the CEO inhibited the CFO’s ability to communicate effectively with the board.  He also talked about the challenges CFOs can face when needing to give instructructions to other departments – when they are not always taken seriously because others don’t recognise the CFO’s power.

Dr van Linder was absolutely clear, if the CEO is inhibiting the CFO’s communication with the board, then, “The CEO would not be doing his job in this case”.

Waleed Abu Eleiz talked about the need for a CFO to have good communication skills – so if they are facing resistance then they need to explain the potential implications if they don’t comply. It’s the CFO’s job to make sure they understand and take matters seriously.  He pointed out that often departments and individuals are not aware how their actions will affect the business so this is about communicating a message so people understand and relate to it.

Adham Gasser felt that the right incentives need to be shared across the organisation so people are motivated to take action.

As the delegate asked the question, it reminded me of one of the biggest challenges when recruiting executive roles. It is usually relatively easy to find the technical skills – much harder to find the right mix of strategic and communication skills combined with them. The ability to influence and persuade is often under-rated as a critical leadership ability.

Image from Twitter video

4.       CFOs need to increase data analysis role

As we discussed the role of automation, Adham Gasser emphasised the need for CFOs to increase their data analysis capacity.  He argued, “If you launch a new product and it fails, the easy answer is to say it could be due to unfavorable market conditions. However, you have to analyse a lot of other data to come up with a real answer for this, and make sure to look for any inconsistencies.”

5.       CFOs have to be more holistic

Waleed Abu Eleiz is group CFO but also acting COO so has a dual perspective on the CFO role.  He talked about how as CFO he can look at the brands under Harvey Nichols and it’s a simple, financial decision to remove the ones that are not profitable. However, as a COO, he has to think about the bigger picture and understand the importance of having these brands there, regardless of their financial performance. These brands could be important for their clients and stakeholders and could be used to attract other brands in. Having them in the Harvey Nichols portfolio is strategically important.

This seems to me a good example of how CFOs need to combine their financial head with taking a more holistic view of the business.

Adham Gasser commented that the focus of CFOs needs to shift from short term to long term and to setting the agenda for automated systems that will take care of operations, legal regulations and more. CFOs will act more in oversight to automated systems.

I was delighted to see the recognition from our panel and the audience that the CFO role is changing and will continue to change at pace. We may have different views on the timescale for this, but we all agreed that if CFOs are to be relevant in the future, they need to be leading and managing automation, develop their communication skills and becoming far more strategic.

If they achieve this, there will be roles for CFOs for some time to come.

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