Today's and tomorrow's challenges for CFOs (and how to tackle them)

Mar 18, 2024
  • finance

In today's rapidly changing business environment, the role of CFOs is undergoing a profound transformation. Beyond their traditional financial role, CFOs today are strategists and catalysts for change, driving their organizations through periods of uncertainty and opportunity alike. As we navigate through the changing complexities of the 21st century, recent research and market trends confirm the expanding role and capability set of CFOs.

According to a 2023 survey by McKinsey, nearly 60% of CFOs now see themselves as the primary drivers of business strategy, having shifted from traditional finance roles to more integrated business leadership positions. This evolution is further supported by the growing emphasis on data analytics and artificial intelligence in decision-making processes, with a Gartner report indicating that over 70% of enterprises will be leveraging AI for decision support by 2025. And similar to previous evolutions in tech, the finance office should acquire a new capability set to remain competitive.

Yesterday’s, today’s, and tomorrow's challenges

Agility and resilience to counter economic uncertainties

The global economy presents a complex puzzle of geopolitical tensions, fluctuating inflation rates, and supply chain vulnerabilities. These factors demand CFOs to possess an unparalleled level of financial agility.  

The challenge for CFOs has evolved significantly from the pre-COVID period to the present, with a shifting landscape of risks and uncertainties. Initially focused on navigating economic volatility and geopolitical risks, the onset of COVID-19 amplified the need for robust financial planning to withstand unpredictable global events. This period highlighted the importance of effective business continuity and disaster recovery plans, testing the agility and resilience of finance organizations. Today, the focus has expanded to building a finance function that is agile and resilient, with technology solutions such as AI and advanced analytics empowering CFOs to anticipate changes and make informed decisions swiftly, ensuring their organizations remain competitive even amidst supply chain disruptions like those caused by the Russia-Ukraine conflict.

Embracing ESG initiatives

With the new ESG (Environmental, Social and Governance) reporting requirements coming into effect, the spotlight on sustainable business practices has never been brighter. CFOs should not only navigate these regulations, but also lead towards a net-zero future through climate technologies and transparent reporting practices. 

The trajectory of regulatory and compliance requirements, particularly around ESG initiatives, has seen a significant shift. Pre-COVID, CFOs were primarily focused on managing regulatory complexity and compliance risks. The pandemic highlighted the importance of sustainability, creating the need for strategic planning to achieve long-term success. In the current landscape, there's an accelerated movement towards comprehensive ESG strategies.

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Leveraging data and technology 

In the age of digital transformation, CFOs must pivot towards data-driven decision-making. The integration of AI, cloud technology, and autonomous finance systems are key to transforming data into actionable insights

The evolution of data and technology has been marked by a shift from managing cybersecurity risks and driving digital transformation to harnessing the power of advanced analytics, AI, and machine learning. In the increasingly digital world we live in today, the emphasis is on enhancing data governance, data security, and leveraging cutting-edge technologies to drive efficiency and strategic insights, and to remain competitive.

Striking a balance in value creation 

Amidst the pressure to optimize costs and fuel growth, CFOs must find a delicate balance. Effective cash and cost management strategies, coupled with strategic investments in growth areas, are vital. 

Value creation has always been a core objective for CFOs, but the approach to achieving it has shifted. In the past, the focus was more on balancing short-term financial performance with long-term strategic goals. Recent economic events, however, have underscored the importance of developing effective cost management strategies while maintaining a vision for growth. In the current landscape, CFOs are tasked with driving growth through investments in emerging technologies while balancing cost-cutting measures to navigate economic uncertainties.

From stability to strategic vision

The role of CFOs has dramatically transformed, from managing economic instability and compliance risks to embracing ESG initiatives, digital transformation, and beyond. These past few years, the scope of CFO responsibilities has expanded, and CFOs can no longer rely on traditional finance competencies alone. It is clear that there is a new demand to invest in more advanced and innovative technologies that addresses risk management, regulatory compliance, agility, talent diversity, and technological innovation.  

delaware’s expertise in the finance domain and understanding of market trends and challenges, allows us to stand as a strategic partner for CFOs, ready to navigate the challenges and harness the opportunities of the modern world together. 

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