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What are the Widening Responsibilities of Finance Leaders in 2022?

Sam Reed

Head of Architecture at Node4

The responsibilities and expectations placed upon finance leaders are becoming more diverse and demanding.

CFOs, FDs and other senior managers have been key decision makers in digital transformation investment and measurement, with many leading the charge on digital initiatives in smaller organisations.

But as digital transformation intensifies in urgency and complexity – in large part due to the pandemic’s effects and insights – the responsibilities of finance leaders are widening at rapid speed and scale. We explore 3 key ways that the senior finance function is predicted to change over the next few years.

 

1. Masters of advanced data analytics

Advanced analytics is a strong emerging trend and investment priority for finance leaders. With unrivalled Business Intelligence (BI) for planning, budgeting, forecasting and reporting, advanced analytics capabilities in the latest Finance and Management software can transform organisation-wide decision-making agility and effectiveness.

Although advanced analytics has become a fundamental value creation tool, the expectations of finance leadership are more demanding as a result. The finance function is now drowning in data, with the onus placed on leaders to shape digitised roles, processes and analytical competencies capable of taking vast amounts of new financial data and interpreting it to make solid operational and organisation decisions.

For many, this granular level of involvement is unfamiliar territory. In the year ahead, CFOs and other finance leaders will be required to expand and deepen their functional knowledge of advanced analytics and its technological implementation, to realise digital transformation goals and clearly communicate benefits to stakeholders and investors.

 

2. Gatekeepers of technology budgets

Growth is subject to digital transformation. And digital transformation is subject to a business model fine-tuned for cloud infrastructure, big data and new technological adoptions (such as Artificial Intelligence and Machine Learning). Business leaders are acutely aware of these dependencies, evidenced by a near-unanimous 96% of board directors saying that the effects of the pandemic have accelerated their digital transformation initiatives.

The success of remote working posed challenges to the established commercial estates and operational setups that characterise finance organisations and departments, making a strong case for enhanced hybrid (cloud-led) infrastructure. Equally provocative questions were raised about the need for more robust operational resiliency and business continuity, and a competitive edge against low overhead, digital-native financial services.

Increasing investment in technology, and business processes that drive digitisation, will expedite transformation roadmaps. But to achieve this, cost reductions must be made in other areas, of which finance leaders will be responsible for. CFOs cite that Marketing, Human Resources and Sales are top in line for reductions, with savings funnelled into IT, technology, and corporate restructuring.

There is also consideration needed for consumption-based services that enable businesses to pivot and scale with unparalleled agility. However, finance leaders need to be aware that consumption-based services bring variable billing, and their IT budgets need to be in line with this. The industry is rapidly moving away from traditional CAPEX investment which can be written off over 3-5 years, and changing to not only ‘per user per month’ services, but also just ‘pay for what you use’ down to per minute billing.

Finance leaders are well acquainted with streamlining and raising capital through M&A activity. But generating significant funds for tangible tech investments (with short-term gains too) may add another string to the bow. For many, this may call for a divergence from traditional capital budgeting and a new approach to measuring, funding and managing performance gains linked to digitisation.

 

3. Experts in a business technology niche

In 2022 and beyond, according to Gartner research CFOs and finance leadership teams are set to spend significantly more time, budget and strategic bandwidth on realising digital transformation goals. Priorities include Artificial Intelligence (AI), Machine Learning (ML), robotics integrations and advanced analytics pulled from big data.

After nearly 2 years of relative economic instability and rapid digital transformation, the pressure is on to pivot plans into actions and results. Finance leaders prefer digital initiatives to concentrate on top line board priorities and optimising finance functions. Strategically sound for both short term and sustained gains, but firmly handing greater responsibility for technology performance to a non-IT leader.

But digital transformation goals are becoming more difficult to achieve, due to being intensive in both time and expertise. For example, advanced analytics and automation capabilities (from AI, ML or Robotic Process Automation) have a significantly longer implementation period and digital skills requirement but are both considered critical to continued financial performance, operational efficiency and business sustainability.

To ensure that the right solutions take hold in good time, the average finance leader will need to bring sharpened technological knowledge into their team. Developing awareness individually is recommended, but CFOs and others should consider bolstering their decision making with third party digital transformation consultancy. With 87% worried about the state of digital transformation skills, working with a partner is a low risk, quick win solution for busy finance leaders.

Learn more about how you can do things differently with Node4 here, including how we’ve helped our customers in the finance and insurance industries digitally transform.