The CFO is dead, long live the CTO

Business, Warrior CFO

As hyperautomation technology advances, is the CFO about to see their role subsumed by a CTO? 

The CFO, as many used to know the role, is dead. Once left to manage manual bookkeeping tasks, CFO duties have expanded to financial control and business-wide strategising. With each advancement in technology or turbulence in global affairs, business responses have had to become more nimble and fit for purpose than competitors. As a result, just in the past few years, businesses have contended with operational challenges and sudden rising costs on a scale that, collectively, has never been seen before.

Shovelling vital decision-making fuel, financial leaders have dug deeper and faster to keep businesses ahead in the wake of whatever economic disaster might come next. Tasks like reporting, predictive analysis, supplier/debtor negotiation and more have been piled onto CFO’s shoulders, transforming the role under heavy expectations. Clearly then, it’s practically impossible to operate as a CFO without increasing your own stack of technological solutions to spread the load. 

Renaud Heyd, chief financial officer at SAP, shares an industry insider perspective with ERP Today: “The world is changing so quickly. If we had had this conversation last year, the environment would have been completely different. Now we have a war, resource shortages, and energy shortages, with inflation that we didn’t have since the Second World War. 

“Organisations have to change their strategies and operating models completely, and technology plays a big role in intelligence, compliance and operational efficiency. This is a tough issue in the UK because our productivity is pretty low.”

In answer, the Fourth Industrial Revolution has seen hyperautomation technologies pick up the pace. So much so that many financial tasks once added to the CFO in-tray are already being managed by technology like AI-powered RPA. Gartner Insights claims that 80 percent of finance leaders have implemented RPA solutions or have plans in the works, with one solution displacing up to 30 times the work of a full-time human employee. Moreover, Gartner’s analysts predict that combining hyperautomation technologies will lower operational costs by 30 percent by 2024, with AI-driven solutions set to triple value generated from tasks by 2025. 

Inescapably, these once-CFOs are seeing their roles distorted into hybrid technologist packages. With business change set to continue down the technology path, it begs the question, will the next evolution see the CFO role replaced by finance-savvy technologists? 


The disappearing tasks of the CFO

The rise of technology tools for finance, including ERP, AI, RPA, IoT devices, SaaS and more, have been game changers in providing accurate and timely financial data. Specifically, finance teams are now combining RPA, AI and SaaS low-code solutions to create intelligent automated processes that replicate human actions much faster and most efficiently. 

In effect, the tasks that once made up a CFO’s daily role are quickly disappearing. Large swathes of time-consuming processes are tackled without information requests from people across departments and time zones. Document uploads, account reconciliation, and repopulation tasks can be pre-coded to perform automatically. Chatbots can help to categorise and simplify financial requests for easier assignments. Entire data sets can be analysed for non-compliance, and items such as approved internal expense claims can be completed and paid without manually submitting and accepting invoices, all from the original order master data.   

It’s the human interaction, being able to think out of the box – something a computer might not do very well

Speaking to Heyd, the disappearing tasks of CFOs is a trend that is likely to continue: “When I joined SAP last century, I shadowed the CFO of SAP UK for a month – it was a completely different world. There was almost an entire floor of our building just for response people. It was pretty disorganised, not because we didn’t have the right people, but because there was so much to do and the tasks were so diverse. 

Renaud Heyd chief financial officer at SAP

“No one could really specialise in anything,” Heyd explains, “so they had to do a bit of everything, but not everything (correctly). Now 20-plus years later, I’m in the shoes of the person I shadowed – I spend only 30 percent of my time on core finance tasks or topics. In five to ten years from now, most of our tasks will hopefully disappear. We need to be prepared to anticipate that on an individual and an organisational level.”

You would imagine the SAP CFO might be a little more worried and a little less hopeful that key financial aspects of his role will no longer be required. But, as Heyd explains, disappearing tasks in one area frees up the time to address the wider issues facing businesses and welcomes a shift in the ways CFOs operate moving forward.

“Automation and artificial intelligence shouldn’t be seen as a threat,” Heyd says. “The technology should be used to augment the experience of the humans involved. Instead of just processing transactions, we will be able to help the business make better plans. We want CFOs and finance people to move from reporting to insight, from observer to key contributors, and from scorekeepers to business partners.

In five to ten years from now, most of our tasks will hopefully disappear

“Individually, we have to challenge ourselves and develop skills that will not be replaced by automation,” Heyd continues. “Now, 70 percent of my time is supporting the business, talking to customers, thinking about the vision of the company, and being that person who challenges the business to ensure we are suitable and resilient. It’s the human interaction; it’s the ability to understand very complex scenarios and combine the old facets of a problem and the creativity, being able to think out of the box – something that a computer might not be able to do very well.”

Heyd makes a valid point. In moments of business uncertainty, having a CFO who can manage the dialogue with financial counterparties is essential. If venture capitalists or other funding providers are involved, they will surely want the certainty of a CFO presence rather than a stand-in CTO, CEO or external provider. Whether managing key supplier or creditor negotiations, or your business’ assorted financial providers as a whole, a skilled human touchpoint is a must for relationships make all the difference in enterprise. 

With so many elements to the CFO role as inferred by Heyd, it would be a relief to have the manual and mundane ones passed across to technology’s bidding. The same was suggested by almost 40 percent of CFOs, who claimed in a recent Brainyard survey that their biggest challenge was juggling too many responsibilities. 

It’s unlikely that organisations would eliminate finance professionals from the workforce, despite the promise of advancing technology. Larger enterprises may have dedicated sales, stock management, purchasing and other teams to negotiate costs, but each regularly defers to the CFO and finance team for spending approvals, demanding a finance team to support these operations. 

The vertical structure of a medium or small business would perhaps see a much smaller finance team, but the CFO would take on greater business responsibility, often stepping in as deputy to the CEO. Even if accounting functions were outsourced, there would likely still be a resident finance team. Whatever the set-up, there will surely remain space for an experienced CFO.

Like a child learning to become an adult, the more you give, the more interaction you have

Worth consideration also is whether the technology we are hoping to, in effect, create or ‘low-code’ our very own CFO with is up to the challenge. It was not too long ago that businesses investing in early RPA found that rather than speeding up tasks, they were merely mirroring the same inefficiencies of human actions in their code. Back in 2019, an EY study found that 30-50 percent of initial RPA projects failed due to factors including a lack of change control process and risk-based functional testing. Plus, without good data sets feeding into AI-powered solutions, the technology isn’t able to learn the best ways to perform and automate efficiently. A single retail chatbot experience shows us that its functionalities are also far from perfect at understanding users.  

“Of course, it can always be better and always improve,” Heyd says, ever the technology advocate. “An intelligent enterprise learns all the time from its past performance and uses the technology to predict the future to make the best decisions. The technology is like that as well, learning as you implement it. Like a child learning over time to become an adult, the more you give, the more interaction you have, the more intelligent it will become and the earlier you start, the better.

“Your competitors are not waiting,” Heyd continues, “and so their ability to react faster and be more operationally efficient will be so high that the gap will be very difficult to close because you’re learning years behind the others.”


CFOs cannot afford to bury their heads in the sand

So, it’s by no means goodbye for good for the CFO, but the role is undoubtedly changing. Improvements continue to emerge in technology offerings, and finance leaders cannot afford to pass the buck entirely onto CTOs to upgrade and utilise these new tools. A new kind of finance specialist is required, one that is not only technology-savvy but who can further help to shape the use of this technology for the benefit of the business and help to educate their team too. 

For Heyd, more work is required for many CFOs to stay relevant long-term. It’s not an either-or: CFOs are needed, but they have to be increasingly technologically literate to deliver more value in their role. 

“How can I personally, as a finance individual, stay relevant in the next five, ten, 20 years? It’s absolutely essential for the finance organisation to understand technology,” Heyd says. “The CFO has to set the tone and educate themselves to understand what the art of possible is. Your technology shouldn’t be a black box. We need to be tech savvy because if future tech is going to action up to 90 percent of our current tasks, we need to control what technology is doing and ensure that it’s doing the right thing.” 

I don’t see a competition between finance leaders and the CTO but rather a collaboration

What is argued by Heyd is not that CFOs need to don fully fledged CTO hats amongst their many other roles, but that there needs to be an understanding of how the technology interacts with the business’ financial functions. 

“CFOs don’t want to be CTOs. We are not solely responsible for making sure we understand all the technical details of the technology – we have to rely on technical experts to support us with that.” Heyd continues. “But, surely, we need to be able to audit how the process runs because we cannot simply replace an erroneous manual process with an erroneous automatic process. We in finance need to counter any failures, comprehending how the tech works and how it’s integrated and the data flow. 

“The entire organisation relies on us – finance has a very high responsibility not only to auditors or investors but also to the business to make sure that the system of record is doing the right thing with no errors and with consistency.”

With industry experts such as Heyd predicting these dramatic changes in the role of finance teams within the next ten years, CFOs cannot afford to put off individual and departmental skills development. It’s clear that a C-suite needs a finance expert on board. There will be key moments in the lifetime of a business where a steady hand at the wheel is needed during delicate negotiations. However, if that financial leader does not possess the skills to interact with the organisation’s finance technology, huge gaps begin to emerge in C-suite capabilities to perform. 

To begin bridging the educational gaps in the workplace, Heyd calls for team member development, taking the hybrid finance technologist approach head-on.  

“My biggest asset is our employees, not a bank balance sheet,” Heyd says, “So I’m working very closely with my human resource development to optimise the way we attract, retain and develop our employees. I don’t see a competition between finance leaders and the CTO but rather a collaboration. 

“Businesses need to have a hybrid team of finance people who are tech savvy and IT people who have finance understanding to exactly bridge those two worlds.” The CFO continues, “With everybody understanding each other’s language, business requirements can efficiently be translated into technical terms so that technology can quickly solve their pain points. It’s about building bridges, not silos.”

Though it is easy to label Heyd, coming from a leading business technology vendor, as being a CFO ahead of the times, it is difficult to deny that the CFO role is evolving and must continue to do so. Building a bridge between the finance and technology languages will become ever more pressing as businesses look to further utilise SaaS offerings for their finance tasks. 

In the coming years, we are entering a finance landscape where technology such as blockchain will help to mitigate cyber risks, and hyperautomation will absorb growing quantities of mundane tasks. The need to invest in sourcing or to internally develop these educational unicorns cannot be understated. In fact, you could say the success of the CFO depends upon it.