Evolving Role of Finance Leaders in the Digital Era

By Jayanta Ghoshal 

Finance operations in the world of business are being impacted by multiple megatrends, with technology advancements, digital acceleration, and changing business demands being the primary drivers. This has resulted in significant changes in the role of finance heads, which goes beyond just being the custodians of numbers, managing financial records, budgeting, and capital raising. 

They have now become the most significant advisors to the business, expected to lead the role of strategic partners who can provide valuable insights to support the stakeholders with decision-making, managing risks, and driving the new age story through digital innovations. A McKinsey Global Survey on the role of the CFO suggests that finance leaders are now involved in long-term strategy and management decisions, with about two-thirds of them being closely associated with digital transformation initiatives.

To meet the growing business demands, finance leaders need to reassess their operating models built around platforms, and partnerships. They need to address various external issues such as changes in geo-political factors, environmental concerns, government regulations, technological advancements, and changing market trends, to provide relevant insights to the leaders to grow their business. 

Changing Responsibilities Of Finance Leaders 

Technological Advancement: Finance is doing things that it never could before – thanks to digital technologies. Finance extensively leverages technology across all accounting and finance processes for better performance. 

The evolution of enterprise resource planning (ERP) systems, along with the emergence of transformative technologies such as automation, has presented finance leaders with an opportunity to deliver services as usual with fewer staff enabling organizations to streamline their financial operations while enhancing the efficiency and effectiveness of their operations. 

At the same time, organizations look forward to financial professionals to manage and interpret the available data with the many data analytics tools available like Robotic Process Automation and Artificial Intelligence as they already are equipped with the software and IT skills required to do so more effectively. 

Data Management: From the conventional way of building reports from scratch on spreadsheets to using software to manage the data, defined by Deloitte as the ‘Data Tsunami’, the data management process has undergone significant transformation. The automated, analytic-based and cloud-based models are proving to be useful for streamlining financial planning, especially for companies who want to improve their existing financial data management processes because they can address both internal and external data requirements. 

Risk Management: With the increasing reliance of leaders from various business functions within the organization on the software to interpret confidential data, finance leaders must analyze the potential risk expected with the usage of software at every level of business decision-making and formalize the risk management strategy beforehand to support the business leaders in making compelling decisions that enable the organization to succeed. 

As the role of finance leaders turns to be more strategic in nature, the global business is now setting-up their Global Capability Centers in India to hire young talent with fresh mindsets to drive innovations and develop unique strategies, implement automation and digitalization initiatives to improve operational efficiency and reduce costs while ensuring accuracy for all finance-related activities within the center. 

Things The Finance Professionals Should Consider include: 

• Be more agile and aware of the changing environment by working collaboratively with leaders from different verticals to design rights solutions around possible business models considering the market situation, competition and risk management.
• Be predictive of the potential risks with a continuous audit process to ensure that the organization gets the desired results, improves continuously and minimizes exposure.
• Lastly, become an innovation champion by taking a lead role in identifying, refining and supporting innovations within an organization and become a transformational leader to create an innovation culture within the organization. 

To maximize value and business growth, next-generation finance leaders must foster innovation, manage employee expectations, and integrate technology by adapting these new expectations, which will enable them  to navigate the challenges and opportunities of today’s business environment and more to come in the future. 

The world over, Finance is ready to take on more evolved and challenging roles for decision-making in all business functions. The leaders just need to create the extra push internally and use the available technologies extensively and thoughtfully.

(About the author: Jayanta manages finance, planning and execution functions at Advance Auto Parts GCC. The views expressed herein are those of the author and do not necessarily reflect the views of the publication)