From the way we work to how we interact, modern technology greatly impacts our daily lives. In some cases, technology is creating entirely new roles or reshaping current positions.The accounting profession is no exception. I recently discussed how CFMs have transitioned from reporting on what happened in the past to knowing what’s happening right now with real-time data at their fingertips.1
This article will look at how emerging technologies are helping CFMs transition into the role of the modern-day CFO and allowing them to anticipate what will happen in the future. It will also examine the evolving role of the CFO by sharing findings from Sage’s “CFO 3.0 – Digital Transformation Beyond Financial Management” study of 500 top finance executives in the U.S.2
Since the construction industry has traditionally been slower to adopt new technologies, it’s beneficial to look at trends across other industries to see how this will impact the role of the CFM.
The Evolution from CFO 1.0
Technology has always had a great impact on the accounting profession. Adding machines and then calculators were technological breakthroughs when they were first introduced, but accountants still had to document all of their financial information as paper records.
Computer technology and programs such as Microsoft Excel revolutionized the industry, eliminating the need for calculators and paper ledgers. But accountants were still in a state of CFO 1.0, where the role consisted of reporting on what happened yesterday, last week, or the previous month and relied mostly on manual processes and monthly financial reports. Since any proposed corrective actions for running the business were based on outdated statistics and figures, they were not always the best solutions for the current state of the business.
For a long time, the sole focus of CFO 1.0 was on accurately reporting what had happened, but it was easy to lose sight of what was happening in the present.
Generational Expectations
As people have become more mobile, social, flexible, and adept at change, the way they work has also shifted. Millennials and Generation Z are known for being digital natives and look to technology to solve most problems. While Millennials have had a significant impact on the adoption and use of technology in the workplace, technology has also become more intuitive, which has led to increased adoption amongst the older generations.
Digitization vs. Digitalization
Digitization and digitalization are often mistakenly used interchangeably. Digitization is the conversion of analog to digital, such as changing a manual ledger to Excel, while digitalization is the process of creating a digital environment for business. This impact of digital technologies and digitized data on how work is completed transforms how businesses and customers engage and interact, thus creating new, digital revenue streams.
Take the evolution of blueprints as an example. Digitization would be scanning the paper plans and putting them onto a CD, and digitalization would be creating plans using building design software. The future involves cloud-based software that uses artificial intelligence (AI) to “predict” what a customer will do next, creating quicker and more accurate designs.
The digitalization of the financial industry has led to significant changes in the role of the CFO across a wide range of industries. Sage’s CFO 3.0 study found that 98% of senior financial decision-makers think that their job has changed in the past five years, and 76% of CFOs believe that they drive digital transformation in their business.
Business Data
As new technologies play a greater role in our daily lives, there is an increased demand for real-time data and the digitalization of the finance function. Technological advances such as the widespread availability of business data, cloud computing tools, and algorithms and analytic methods have made this transformation a reality for construction.
These changes have elevated the CFO role to one that goes beyond simply managing a company’s financials to one that provides strategic business counsel – the era of CFO 2.0.