The role of the CFO has changed dramatically in recent years. Today, a CFO no longer acts only as a financial manager, but as a strategic partner who is deeply involved in the digital transformation of a company. The upheaval is so great that it bears his own name: finance transformation. This raises the central question: What role should a CFO take on? This decision depends heavily on the specific orientation and also the size of the company. Large consulting firms such as Deloitte, EY or Accenture speak in this regard of a target operating model in finance – or TOM for short. TOM serves as a guideline for holistically incorporating financial functions into the core of the company, thus making it effective and future-proof. It is a process that can take as long as 10 years and requires constant adjustment due to the unpredictability of our wonderful VUCA world.
Of course, this topic alone would go beyond the scope of our article. That is why we are focusing in this article on four key strategic areas that prepare the modern CFO for the digital future: automation & digitalisation of financial processes, data analysis & real-time reporting, cybersecurity & data protection, and strategic leadership & change management. These areas are indispensable building blocks for CFOs to successfully lead not only their own department, but the entire company, through the challenges of digital transformation.
Digital finance meets digitalisation in finance
To start with, let's clarify two related terms:
‘Digital finance’ refers to the use of digital technologies to make financial processes more efficient and agile. It encompasses the use of data analytics, automation, artificial intelligence and other digital tools to provide real-time insights and make informed financial decisions.
‘Digitalisation in finance’ describes the broader, ongoing process of transforming finance functions and processes through digital technologies. While “digital finance” is one part of this digitalisation, digitalisation in finance also refers to changes in structures, strategies and business models.
In summary, digital finance is a specific approach within the broader concept of digitalisation in finance, focusing on the application of digital tools and technologies to optimise finance processes.
Digitisation and automation of financial processes
Technologies such as robotic process automation (RPA), artificial intelligence (AI), machine learning and process mining offer enormous potential for automating repetitive finance tasks. This improves efficiency and also reduces human error. The main advantage, however, is that CFOs and finance departments have more time for strategic decision-making instead of getting bogged down in manual processes. And they need that time.
Automation allows for rapid responses to changing market conditions. Decisions are increasingly based on real-time data that is immediately available. Instead of manually preparing the financial fundamentals, CFOs can focus on the question: How can we use the available resources most efficiently?
Deloitte emphasises the role of digital processes in deploying resources in the finance department more effectively while also reducing costs. Automation also results in improved data processing, which makes it easier to identify trends (forecasting) and enables forward-looking action.
Of course, it is not enough just to integrate new technologies. Organisations must ensure that they are used correctly. This includes training employees and ensuring that everyone is using the new tools efficiently. Even though self-services are on the rise (self-services enable users to create financial reports independently via an app or chatbot), all parties involved – including a CFO – must constantly expand their technical knowledge.
Data analysis and real-time reporting: the role of FP&A
Operating in today's financial world means analysing data in real time and converting it into actionable insights. Financial planning and analysis (FP&A) is a crucial part of this, helping the CFO to not only evaluate company performance retrospectively, but also to plan ahead. FP&A ensures that CFOs and executives can make informed decisions based on accurate, up-to-date data and analysis.
FP&A can be understood as a set of interconnected processes for maximising returns. These include planning, forecasting, scenario modelling, budgeting and performance reporting.
A well-positioned FP&A team is the link between a company's finance department and its operational units. It translates financial data into actionable information and provides a basis for strategic decisions, from budget planning to performance evaluation. By using modern data analysis tools and automated systems, FP&A can deliver real-time reports that provide deep insights into the company's current situation.
How FP&A helps the CFO
FP&A provides CFOs with the necessary transparency and clarity of a company's financial and operational metrics. Thanks to advanced data analysis and forecasting models, FP&A helps to predict future developments and identify risks at an early stage. This enables CFOs to adjust corporate strategy and ensure that financial goals remain achievable.
Another advantage lies in the role of FP&A as a central point of contact for all financial matters within the company. The ability to gather relevant information from different departments and consolidate it into a consistent financial report ensures a coherent and transparent basis for decision-making. This not only promotes collaboration within the company, but also increases efficiency in communication with other executives.
FP&A as an interface in the company
FP&A is much more than just a financial department. It acts as a link between the finance department and operational departments by collecting and analysing information on market trends, production data or customer behaviour. This enables the entire company to make data-driven decisions that improve strategic alignment. Whether it's investments, cost optimisation or growth projects – FP&A helps to monitor the company's financial health and make adjustments at an early stage.
Cybersecurity und Datenschutz
As digitalisation increases, so does the risk of cyberattacks – especially in the financial sector, where highly sensitive data is at stake. The complexity and frequency of these threats are constantly increasing. For the modern CFO, this means a significant expansion of responsibilities: finance departments must now also ensure that cybersecurity strategies are comprehensive and effective.
More than just technical failure
Cyber attacks are complex threats that go far beyond the theft of data. Attacks such as ransomware, in which companies are blackmailed for access to their own data, have increased dramatically in recent years. This not only affects IT security, but also results in direct financial losses and possibly the shutdown of a company. Wolters Kluwer emphasises that CFOs must recognise the close link between cybersecurity and financial stability. A successful attack can have a severe impact on a company's revenue, share price and long-term market position.
Data protection as a business case
In addition to the technical side, data protection is a legal and trust-building component. CFOs must ensure that their company strictly complies with applicable data protection laws (GDPR, etc.). This not only protects against expensive penalties, but also strengthens the trust of customers and stakeholders. Data protection becomes a key competitive advantage here, as it strengthens credibility and trust among investors and customers.
CFOs are gaining data sovereignty
In our digital world, the CFO is increasingly becoming a key figure in a company's global data management. With the use of digital core systems, supplemented by microservices and cloud-integrated subsystems, the CFO takes responsibility for making data accessible securely and efficiently. New technologies such as automation, language processing and machine learning are replacing manual data processes and ensuring precise data management.
In this context, the CFO, as data steward, must ensure that governance guidelines are adhered to – and that all areas of the company can access clean, integrated data. This data stewardship approach is not only a technical challenge, but also a strategic task that ensures that data is understood and used as a valuable resource. With this task, the role of the CFO is shifting away from purely financial issues and towards comprehensive control of the data landscape and data sovereignty in the company.
Strategic leadership and Change Management
CFOs are faced with the task of managing far-reaching changes throughout the entire organisation, which goes beyond the implementation of new systems. The main focus here is on identifying outdated processes and replacing them with more efficient, technology-based solutions. This also means developing a vision for digitalisation that clearly defines how technology can support long-term business success.
Integration of systems and processes
A key point is the integration of different systems that often work in isolation in different departments. Silo thinking hinders the flow of information and makes it difficult to create a consistent data basis for decisions. CFOs must therefore ensure that ERP systems, CRM tools and other software solutions are linked to enable a holistic view of company data. This requires careful planning and implementation, with a focus on data consistency and quality.
Resource allocation and budgeting
Another critical aspect is the redesign of budgeting and resource allocation processes. Traditional annual budget cycles are often too rigid and slow for the fast-paced demands of a digitised business. CFOs need to implement more flexible budgeting models such as rolling forecasts that allow resources to be dynamically adjusted in line with changing business conditions. This sometimes also requires a cultural shift towards greater flexibility and responsiveness within the organisation.
CFO as a creator of digital ecosystems
In the digital transformation, CFOs are not only concerned with switching to digital tools, but also with integrating and managing entire digital ecosystems. The CFO's responsibility increasingly extends to not only managing products, but also designing holistic platforms and experiences that bring users and providers together. These platforms make it possible to create new revenue streams and value creation processes that go far beyond traditional finance functions.
One example is the management of M&A projects within these platforms, where CFOs ensure that investments are seamlessly integrated into the digital ecosystem. Here, too, data-driven insights are used to make value-adding strategic decisions that drive growth across the entire organisation.
Platforms instead of products
The future of the CFO function lies less in managing individual products and more in managing platforms that provide a seamless experience. This requires adapting internal structures so that the finance department acts not only as a transactional body but also as a strategic partner within the entire organisation. CFOs must develop an agile mindset that allows for flexibility and continuous adaptation to technological changes.
This transformation also requires a greater focus on agile financial management, in which budgeting processes, risk management and customer prioritisation are made dynamic. CFOs are in demand as shapers who influence the digital experience of customers while ensuring long-term financial stability.
Change management as a core responsibility
In addition to their technical responsibilities, CFOs also have a cultural role to play in supporting the transformation. The CFO must ensure that not only the right digital systems are implemented, but that the entire team understands and applies the meaning of these new ecosystems. The transition to a digitalised platform economy requires close collaboration between the CFO and CEO to quantify digital risks while ensuring operational flexibility. In this sense, the CFO is becoming not only the guardian of finances, but also a driver of innovation and change management.
Conclusion
The finance transformation is equally disruptive for organisations and for the role of CFOs. Data sovereignty, change management, the design of digital ecosystems and cybersecurity are all topics that are challenging in themselves. FP&A is the strongest ally in supporting strategic decisions. This transformation will take time and the support of the stakeholders involved.
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