A new financial year is fast approaching, and it will come as no surprise that there is plenty to occupy the busy minds of CFOs at multinational organizations around the world. They have had a lot on their plate just to simply adapt to the monumental changes presented by a COVID-19 dominated year.
In what is always a challenging role , this year has been a year like no other due to Coronavirus, where no member of the C-Suite team could possibly have anticipated a global pandemic would come along and shatter pretty much all of their preconceptions about the global marketplace.
In this article, we are going to focus on the interests and priorities that CFOs will have in the new year. We will look at some of the conclusions they can take from this year and examine how this extraordinary year will shape and influence both financial and technology related decision making at CFO level in 2021.
Managing Change
It has become a bit of a cliche at this point but managing change will always be a part of a CFO role. After the year we have just had, dealing with turbulent markets and ever shifting ground in financial regulation and technology innovation, may soon begin to feel like a normal day at work.
What is important however, is that chief financial officers continue to recognize that the scope of their roles is continuously broadening, and a number of new responsibilities will find their way to their desks. The role is simply not the same as it was 15 years ago, and a purely financial mindset will not be enough to navigate the numerous and varied challenges out there in the marketplace.
While this is information that CFOs already know, they will nonetheless be focused on how best to anticipate the levels of change and additional workloads and responsibilities that are coming down the line. They will already be having conversations with key members of their C-suite team about what to expect in the new year and beyond. One thing is for certain, a flexible mindset capable of pivoting and changing course at short notice, is going to be needed at some point in 2021. Juggling a number of different responsibilities together with keeping a close eye on data analytics and technology will be a major factor in their success in the new year.
Innovative technologies
The role of technology innovation has been of growing importance for several years now - but it is also clear that the global pandemic has fast tracked many digital transformation projects. Therefore, innovative technology will remain on the radar of any CFO in 2021 - they will be looking at them from 2 lenses, one will be how to decide the best way to allocate resources to invest in technology and the second will be to consider how these innovative technologies may improve departments that directly report into the CFO. For example, could automation technology lead to automatic invoicing, saving time and expense in crucial financial services departments across the business?
This can also be about getting the right information from the right people so a CFO can cut through the media hype and marketing inflated external noise, in order to get to the nuts and bolts of the technology and discover what it can do , how much it will cost over the long term, and how soon can the organization begin to see a significant level of return on investment that will justify any financial outlay or investment.
Technology innovations that will be catching the eye of a CFO in 2021 include:
- Machine learning and artificial intelligence
- Robotics and the Internet of Things
- Cybersecurity advancements
- Cryptocurrency and blockchain platforms
- Advanced integration technology
This is about balancing substance against the hype and avoiding a rush to purchase something that comes with a lot of PR noise but may not stand up to long-term scrutiny. It can be a fraught landscape, no CFO wants to feel that they have let an opportunity slip, but at the same time, they are also keen to avoid a costly mistake.
Prioritizing demands
At the start of a new year, a CFO can expect everybody to come with their hand out, looking for support in the form of either a technology or financial investment. Many will claim that they need their finance leaders and CFO to become the champion of their long-neglected department. They will state their case and outline the reasons why it is their turn to receive financial backing or some form of digital transformation.
This will be a test of the CFO's analytical skills, relationship management skills and their ability to align their decision-making with the long-term goals and strategy of the multinational. There needs to be a mix of a cautious approach along with some bold decision making-it can be a delicate balancing act, and someone or some department is going to lose out as it is not possible to please all of the people all of the time. This is not what a CFO is supposed to do, instead the person taking on this challenging role, must assess any request for funds or investment against the wider needs of the organization, and prioritize all demands in line with an agreed and mandated business strategy.
Every organization will have to deal with varying levels of negative impact on their business due to COVID-19 and the effects of the pandemic on the global business landscape. This will likely mean that any CFO will be facing demands from the departments looking to bounce back from a difficult year. These demands will be about recovery and response- in essence, getting back on track- so these demands may be a little different to what was originally expected. Prioritizing these demands while driving the business forward will be a significant challenge for every CFO in 2021.
Better and faster reporting
Every CFO needs to be able to analyze data and understand metrics for effective cash flow budgeting and financial planning. To analyze, they first need to receive this data quickly, efficiently and in a very digestible and easy to understand format. A common concern among CFOs at even the biggest and most progressive companies around the world, is that they do not have sufficient access to the type and quality of reporting they need to make informed decisions.
Without accurate, real time data, a CFO can feel powerless and in the dark. Better and faster reporting is simply critical to their day-to-day roles and they have a right to expect the best reporting possible.
In a world of big data, one of the big challenges for businesses everywhere is how to extract clear and actionable data from huge platform databases. In a multi-vendor and multi-platform technology environment, the data needed to deliver clear reporting is often scattered across multiple technologies and locations. A CFO would therefore be interested in any innovative technology that helps to connect disparate but related systems and ensure smoother data flows between them in order to facilitate enhanced real-time reporting.
CFOs may wish to access important human resources information such as employee headcount and location via reporting. They will also be interested in total labor costs - global payroll after all is always one of the largest expenses in play at a multinational. Any CFO will therefore be interested in clear reporting on country cost comparisons that can help them identify optimal locations for the workforce.
This has now become extremely important due to the global pandemic, as everybody wonders what the future of office life might look like and which locations may be best to locate future employees. Global payroll labor costs are crucial when a CFO is analyzing the financial health of a company - accurate, real time reporting is therefore critical to decision making and any advanced technology that offers predictive analytics around forecasting future labor costs is something to be welcomed. Ideally, a CFO will want access to this reporting in real time and in a self-serve capacity so that they are empowered to run the type of reports they need, anytime they want them and from any location. Only innovative, cloud-based reporting that leverages next generation digital tools can supply them with this level of reporting.
2021 is likely to be another challenging year for CFOs at multinational organizations around the world. The full implications of the pandemic are not yet clear, nonetheless, most CFOs already have a strong awareness of what their post-covid-19 key priorities for the new year are likely to be.