CFOs are redefining their roles to keep pace with a shifting competitive landscape. They are operating on the forefront of change as they collaborate with others across the business to define effective enterprise responses.
What we are hearing: According to our latest survey of CFOs and finance leaders, data security and privacy and financial planning and analysis (FP&A) stand out as urgent priorities to address during the next 12 months.
What’s next: Boards are urging CFOs to explore AI’s potential for revenue generation and cost containment, signaling a shift from mere productivity enhancements to strategic innovation.
Bottom line: Effective enterprise responses to evolving business priorities will require a focus on data security, FP&A, and more innovation related to the adoption of new technologies and capabilities, such as generative AI.
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As immersed as CFOs are in guiding the organization’s responses to prolonged volatility and an aggressive competitive landscape, it’s easy to overlook the fact that their priorities and activities are transforming and expanding, often in real-time.
My firm’s ongoing discussions and work with finance leaders across multiple industries suggest that two assertions crystalize the current state of the CFO role:
- Never before have the CFO’s core finance competencies been more valuable or more sought after.
- Never before have CFOs applied their expertise to more non-finance challenges and opportunities throughout the enterprise.
Results from our latest survey of CFOs and finance leaders worldwide confirm the validity and relevance of both statements. The security and privacy of data, followed closely by financial planning and profitability analysis, stand out as the most urgent priorities that CFOs and other finance leaders intend to address during the next 12 months. Although artificial intelligence (AI) does not rank quite as high as a near-term priority, finance groups continue to make significant strides in deploying this technology, most often to enhance process automation and financial forecasting, and AI is a critical element in addressing eight of the top 10 issues noted in the survey. This is good news, given that boards of directors are pressing C-suites to move beyond productivity-focused applications to figure out how AI can generate additional revenue and contain costs.
From where I sit, these priorities frame an interesting snapshot of the CFO’s evolving role and expanding sphere of influence. To that end, I want to highlight what we’re hearing from finance leaders about challenges related to these focal points and the approaches they’re employing to address them.
Security and privacy of data
What we’re hearing: While data security and privacy is certainly not the sole purview of the CFO, this area is a critical CFO priority because of its ramifications for so many other finance focal points, including financial reporting, regulatory compliance, financial planning and analysis (FP&A), risk management, and business performance. Business value is increasingly dependent on the relevance, and protection, of organizational data assets, the size of which continues to expand thanks to the use of AI, advanced analytics and cloud-based systems.
This explains why CFOs and finance organizations continue to take more prominent roles in data governance and management. A new group of regulations, such as the Securities and Exchange Commission’s amended Cybersecurity Disclosure Rule and the EU’s Network and Information Security Directive 2 (NIS2), target larger swaths of data governance. These rules, along with new sustainability reporting requirements in numerous jurisdictions around the world, have elevated data security and privacy on the CFO agenda.
What CFOs are doing: As regulators and, by extension, boards zero in on data security and privacy capabilities, CFOs are clarifying organizational disclosure roles and responsibilities, creating new compliance and accountability processes, developing cybersecurity materiality frameworks, and adopting cybersecurity best practices. This work flourishes when CFOs develop highly collaborative relationships with CIOs and CISOs.
Financial planning and analysis
What we’re hearing: Financial profitability and performance analysis combined with technology enablement is another top CFO priority. The CFO’s heightened focus on these bread-and-butter FP&A activities is driven by twin pressures. Amid a heightened external risk environment, boards and CEOs are asking CFOs for more clarity and specificity regarding which businesses, geographies, product and service lines, and individual offerings are most, and least, profitable. More detailed, frequent and forward-looking projections of performance and profitability generate better intelligence on potential growth opportunities and strategic shifts. Within the enterprise, more groups are clamoring for finance’s FP&A expertise and guidance to help them advance their business planning and analysis activities. Supply chain, HR, marketing and sustainability leaders now need to produce and respond to predictive analytics—often in response to CEO and/or board mandates.
What CFOs are doing: These pressures make it imperative for CFOs to get advanced FP&A processes and systems in place and then improve them continuously. Finance leaders are also looking for opportunities to integrate generative AI and other advanced technologies into forecasting, the order-to-cash cycle, demand planning and sensitivity analyses. By helping other business leaders strengthen the relevance and accuracy of data used in their analyses and forecasts, CFOs are improving overall organizational responsiveness and resilience while laying the groundwork to introduce new analytics and metrics to FP&A processes.
Artificial intelligence
What we’re hearing: As AI, including generative AI, adoption progresses, boards and CEOs are eager for news on more lucrative returns—those measured in revenue generation and return on investment as opposed to non-specific promises for increased productivity and other benefits. CFOs and their C-suite colleagues must address tough questions: How is our organization leveraging AI to improve business processes and operations to drive profitability? Where can we best deploy AI near-term and long-term? Where are the best opportunities for us to achieve significant long-term results? What related investments are required? What’s the best way for us to deploy AI in our organizations safely and profitably?
AI holds tremendous promise, and the technology will continue to advance in unexpected ways in the coming months and years. CFOs should play a leading role in leveraging these opportunities. Fulfilling that objective requires an innovation mindset, a mentality that more CFOs need to embrace in this digital world. Finance departments will need to hire or upskill their intergenerational talent base in order to have teams who not only know how to use AI in their work, but also know why they’re using it and where it may be appropriate to do so. Our survey results indicate that one in three finance organizations currently are using generative AI. While this represents a good start, we expect far more finance organizations to employ AI, including generative AI, in the coming years, particularly once they begin to realize the savings that 58% of those who reported using it have been able to achieve by doing so.
What CFOs are doing: Leading CFOs are helping their organizations define the data and metrics that identify which AI investments are better bets to generate larger returns and realize longer-term value. Inside finance organizations, CFOs are evaluating and prioritizing investments in AI applications that can produce lucrative long-term results. They also are working with technology and business leaders to enhance organizational AI governance frameworks and policies.
The CFO’s role in a changing world
CFOs are operating in a rapidly changing world. Accordingly, the roles they perform in the organization are changing rapidly. By striving to give their organizations an edge as the competitive landscape continues to shift, CFOs are operating on the forefront of change as they collaborate with others to define effective enterprise responses. In the coming year, these responses will require a focus on data security, FP&A precision, and more innovation related to the adoption of new technologies and capabilities, such as generative AI.
This article originally appeared on Forbes CFO Network.
