The evolving role of a CFO in the current business scenario

The Chief Financial Officer (CFOs) of a business organisation especially that of a telecom sector knows how to utilize the pillars of leadership that can fulfil promises. The individual in this role has the primary responsibility of both financial and operational functions. He is the custodian of the company’s assets and securities and in charge of the communication of delivering financial data to stock analysts, investment managers, and regulators, and detailed performance metrics to fellow officers and employees. CFOs specializing in Telecom business work well in highly diversified companies that need to compare performance across different businesses, have aggressive growth or cost targets, or whose limited resources require careful allocation. A CFO is a combination of 80% functional and 20% leadership package. The concept behind his functional role involves embedding the risk management of the business, strengthening the life insurance industry in India by mitigating financial crime risks. As the CFO’s role becomes more strategic, the challenges facing the insurance industry become more transparent. In particular, regulatory demands are a significant burden. Ever-changing regulations can be a major distractor from the strategic work of the CFO but are nonetheless critical to the health of the organization. It is this particular individual who can genuinely help organisation achieve higher growth, reduce risk, and uncover greater opportunities.

Traits that make a great CFO

The role of a CFO plays a pivotal part of company leadership team, that help in making crucial financial decisions and leading the execution of those decisions. CFOs play a very important role in any organization and do a lot more than just crunch numbers. To maintain the stature, they must possess a holistic understanding of the financial workings of their company, and also of their entire industry.

However, their roles as a chief financial officer has changed dramatically over the past decade. They excelled at managing inventory, accounting, capital expenditure, working capital and cost control, but are now being called upon to act as strategic partners to chief executive officers (CEOs) and work towards sustainable financial growth of the company.

A CFO should have a long-term vision on how he can build the organization. For a CFO’s stint to be successful, equal importance should be given to the finance department, compliance and risk management. CFO should leave a legacy as they a major role to play in strategic management.

A study by EY suggests that much more is demanded of CFOs in today’s dynamic business environment – which is way beyond their traditional finance skills. The traits of a successful modern CFO are someone who thinks broadly and strategically about the growth of the business, turns strategy and tactics into actionable plans, and possesses the skills to communicate the strategy across the organization, external stakeholders as well as the employees. On top of these, the strategic CFO must also learn to manage crisis and enhance the company’s resilience and mitigate the risks as the organization grows in order to have a successful stint. CFOs must also be comfortable with operating in unfamiliar territory in the face of changing business conditions and situations such as mergers and acquisitions.

Disruptive Technology and its implications

At present, Digital Transformation is a focus across all industries today because of the emergence of new technologies such as Artificial Intelligence (AI) and Machine Learning and an economy driven by customer and service led business models. It’s already very clear that the development and use of AI is going to play a big role in shaping future workplaces. However, it is not certain that the emergence of technological transformations will replace entire functions such as finance department.

If new technologies and trends are adding to the development of the CFO’s role, they should also have the potential to make it easier for the finance team to understand the current business complexities. There is a wide array of tools that can help CFOs benefit from technological developments and the digitization of finance processes. CFOs should understand and increasingly deploy such tools to lead complex enterprise-resource planning efforts, among other challenges that they are being tasked with managing.

Companies are becoming more sophisticated in their approaches to business planning, supported by new cloud technology. The insight the CFO can derive from this for planning will become a driving force for business in the future. And AI raises the bar again, helping make sense of even more data and automating outcomes. The disruptive technologies could in turn give finance teams the power to access decades worth of projects, around the world, at the touch of a button which could help them develop a better-informed risk assessment, mapping the project against a much larger database of historical projects.

As technology improves, AI will become smarter and faster at providing analysis, and the competitive disadvantage that businesses not using it will experience and become more pronounced. Businesses don’t want to replace their employees, but they do want to make better financial decisions, and AI and Machine Learning will allow them to do that faster and cheaper than a whole team of human effort. Overall, AI will enable skilled office workers to spend more time focusing on their core competencies over the mechanics of maintaining data. On a larger scale, this will result in lower financial costs for organizations and time saved on tasks usually spent on manual operations or classifying data.

About the Author

Hemant Kumar Ruia is the Chief Financial Officer (CFO) at Indus Towers Limited. Hemant is a Chartered accountant, cost accountant and a chartered financial analyst and brings with him over 23 years of diverse experience across industries in various coveted organisations. Prior to joining Indus, Hemant worked with Reliance Retail Limited as the CFO. He played a business partnering role across various brands with Reliance Retail – Reliance Fresh, Digital, Jewellery, Trends, Footwear and Reliance Markets. Before Reliance Retail, he was associated with Agro Tech Food Limited. Hemant has extensive experience in Business Partnering, Funds Management, Information Systems, Legal and Secretarial and other aspects of leading the Finance Function. Hemant is a winner of ‘Top 100 CFO Award’ for four consecutive years from 2013-2016 as well as the CIO& Leader Business Impact Award for 2015.