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The evolution of the Cfo between new priorities and the node of digital skills

Research highlights how Cfo's are becoming increasingly strategic in the era of digital transformation, contributing to the work of CEOs and Coo's and integrating financial data with human resources data

by Gianni Rusconi

2 September 2024

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The speed of technological transformation is profoundly changing the financial sector, generating significant impacts for those in senior roles in this area. The role of the Chief Financial Officer, in other words, is becoming increasingly strategic within organisations, and a recent survey conducted by Andaf Lombardia and Workday (now in its third edition) tried to shed light on the emerging trends affecting this figure. Of the more than 100 Italian Cfo's surveyed, almost all (94%) were convinced that the analytical work provided to the company can make a decisive contribution to the work of the CEOs and to a lesser extent (62%) to the Chief Operating Officers, while also bringing value to the IT and HR areas.

More specifically, the finance department has crucial tasks in aligning investments in new technologies with strategic growth plans (50% of respondents claim this) and in predictive analysis of business scenarios (41%) and plays a key role (according to 63% of Cfo's) in integrating financial data with human resources data, providing essential insights.

In general, the research revealed a strong focus on agility, performance management and process optimisation, confirming how - on the one hand - data quality and cross-departmental collaboration represent key challenges and how - on the other - the digital transformation process and the adoption of artificial intelligence are seen as key investment areas for improving efficiency and decision support.

The three priorities of Italian Cfo's

Three, in particular, are the priorities shared by Italian Cfo's. The first, which involves just under two thirds of the sample (61% to be precise, compared to 36% last year), concerns improving agility and precision in the budgeting and forecasting phases, with the aim of allocating resources more appropriately and responding more quickly to market changes. The second, chosen as a priority by 50 per cent of Cfo's and considered crucial to ensure the competitiveness of the company, aims at real-time monitoring and management of company performance. The third, finally, is shared by 43% of the managers surveyed (they were 15% last year) and refers to increasing the digital skills needed to fully exploit the potential of emerging technologies.

In order to meet these priorities and to improve efficiency and decision support, there are three pillars on which finance chiefs must rely: the quality of available data (currently considered to be only moderately sufficient and decreasing slightly by 2023), digital transformation driven by artificial intelligence, and collaboration with other corporate functions (synergy with the CIO, for example, is considered essential by one out of two CFOs to align investments in technology with growth and development plans). The study, moreover, tells us that 59% of Italian chief financial officers plan to invest in AI in their company within the next two years (with expected benefits favouring planning and forecasting activities), and at the same time indicates that 55% are concerned by the lack of specific skills, 42% by the low level of integration into existing processes and 29% by the availability of quality data.

Inhomogeneous and inconsistent data is a problem that stems from a combination of several factors. "The secret to overcoming this obstacle," says Fabrizio Rotondi, Workday's country manager for Italy, "lies in the propensity to embrace innovation and the ability to execute change. Only in this way can Cfo's elevate their function and guarantee the flexibility of the business with the data necessary to enable rapid transformation and increase competitive advantage'.

Then there is a more practical issue to be addressed, and it concerns the 'state of health' of IT infrastructures. Often, as Rotondi pointed out, they are the result of a stratification of application layers based on obsolete technologies that make data analysis difficult. In contrast, today's use of the cloud allows for a particularly extensive analysis fluidity, which means that all business performance can be at hand at all times, to the benefit of faster decision-making. The application of machine learning tools to investigate the quality and accuracy of data, Workday's manager added, "will become a key risk mitigation strategy, precisely because simplifying the technology infrastructure with the cloud is a strategy that helps streamline processes and create an operating environment where financial data and people data coexist on a single, fully integrated platform.

Investments in AI

Turning instead to the propensity of Cfo's to invest in AI, according to Vittorio Biassoni, Vice President of Andaf, the figure should be read in a positive light. "Today," he explained to Il Sole 24Ore, "I believe that there is a favourable attitude towards the adoption of AI in finance, not only thinking of the traditional areas where the technology can be immediately applied, and I am referring to the performance of repetitive and labour-intensive activities that are typical of accounting functions, but also in areas such as controlling and reporting, which remain among the most critical areas for Cfo's.

Artificial intelligence and robotic automation of processes, this is the message launched by Andaf's vice-president, therefore create efficiency and reduce the risk of costly errors, and even the widespread concern about the risk of a skills gap should be understood in a positive way, as a sign of a growing awareness of the impact of AI on people. Finance managers, in this sense, are recommended to build a team that is able to make the best use of new technologies and to know how to manage human resources effectively, finding the right balance between the team's professional and experiential profiles. 'The success of a Cfo,' Biassoni concludes in this regard, 'will depend on the combination of the intelligence of the technologies with the interpersonal skills of the talents and finance staff in general. I do not believe in a negative impact on employment, but rather in the need for a review and gap analysis on competences and soft skills using change management and reskilling processes'.

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