The pandemic shifted responsibilities for CFOs across the globe, in every industry. Whether you’re the CFO of a manufacturing company or a leading grocery chain, chances are your job looks a little different than it did in early 2020.
In this new world, consistency and routine are hard to find, especially when you’re a CFO or financial executive. There are some responsibilities that are new and extremely important to a CFO’s role now, such as meeting diversity requirements and planning for ESG disclosures - both of which are seen as top priorities for CFOs in 2022. But for the purpose of this article, let’s take a look at additional ways in which the financial executive role will evolve in 2022.
Take a peek around every corner
Risk and crisis management, if not already a top priority, will only become more important in 2022. Nobody knows exactly what will happen in the next year or so. There are hopes that supply chains will improve and inflation will ease, but the last couple of years have illustrated that there’s no actual way to be sure of anything in the future.
Because the future is so uncertain, CFOs are being asked to peek around every corner and to be more cautious, and strategic, in decision making. This is not the first time this has happened either. As a result of the 2008 financial crisis, organizations had to adopt new control and governance requirements such as CFO certifications as well as stress testing and financial modeling to predict and account for potential future financial disruptions.
Coming out of the pandemic, financial executives understand that they must take this process a step further by having visibility into near real-time financial and operational data to support decision-making, as well as more frequent forecasting and scenario modeling to predict business changes and navigate any and all disruptions that may negatively impact the financial performance of an organization.
Advocate for modern technology
Historically, organizations have under-invested in their finance departments, especially when it comes to new technology. For many organizations, the last time the finance department went through a mass transition in technology and how we complete our work was pre-Y2K. Over 20 years ago!
It’s time to update your technology and business processes if you haven’t done so already, and 2022 is the year to advocate for more up-to-date technology investments in your department. The pandemic and disruption we all experienced in the past two years was a wake-up call for digital transformation for many organizations that had to face the prospect of remote work. This has driven increased demand for cloud-based planning and analytic tools as a replacement for spreadsheets and legacy applications that have held organizations back from transforming.
A recent study found that 63% of finance executives are making more use of cloud-based planning and reporting tools vs. pre-pandemic. The study also found that 65% of CFOs reported their company started using more Machine Learning (ML) solutions since the pandemic, and the growth will only continue as 74% also stated that their department is using (or planning to use) ML more in 2022. These solutions have a wide range of benefits for finance teams and can help with things like financial forecasting, financial planning, and analysis (FP&A), and in general, streamlining basic tasks to allow teams to focus on higher value initiatives.
If advocating for modern technology is not on your to-do list for the next year, I strongly recommend that you add it. As other parts of the enterprise, such as marketing and sales, make strides toward digitization, it’s your responsibility to make sure your department does not fall behind. 2022 is the year that many organizations will drop legacy, on-premise financial applications, many of which were implemented during the pre-Y2K boom, in favor of more modern solutions that leverage ML and even Artificial Intelligence (AI).
Keep up with geopolitical matters
As digital economies come to fruition and the internet advances, technologies that help break down borders and support globalization, such as Cloud-based applications, will continue to be a priority for many organizations. At the CFO level, this can be a tricky task to navigate, but your role in the globalization effort is essential to its success.
There are many moving parts when entering a new market and the administrative tasks can start to feel like a laundry list between setting up payroll, understanding employment laws, enrolling bank accounts, and so on. But, as the CFO, it’s also your duty to pay attention to the geopolitical matters of the market you’re scoping out or where you are expanding.
The world is becoming more volatile, economies and governments can change in a matter of hours. Depending on the situation, this could impact the leg of your business involved in the market in which this is happening.
Geopolitical planning is gradually becoming a major responsibility for CFOs as more companies globalize. It’s crucial for you to stay up to date on your markets and know what’s projected in their future. This will help you adjust business operations and account for market-specific disruptions that may impact the financial results of the company.
Agility is essential for success
Business disruptions are unpredictable. Technology is advancing. Geopolitical matters are always shifting. What does this mean for us as finance executives? Our roles are not revolutionizing, they’re evolving.
We all want to be successful in the New Year, and for most of us this can come in many different shapes and sizes. But for all of us, to meet goals and close out 2022 with a bang, we’ll need to grow into the “new” CFO role and continue to be an asset to the rest of the C-Suite, our team, and the organization as a whole.
Bill Koefoed is the CFO at OneStream Software.