It wasn't always interesting to write about CFO problems - except for those who find general ledgers and spreadsheets sexy (sneakily raises hand). Well, now those problems are getting interesting.
In recent weeks, I've hit on the need for finance leads to collaborate beyond finance, to be data storytellers for the business, and to find that balance between admin/compliance and forward-thinking strategy.
But as Sage's new Redefined CFO report shows (free with sign up), I wasn't even scratching the surface. Check these report stats - percentage of US CFOs whose responsibility has increased within alternative business areas:
- data and cybersecurity - 76%
- digital transformation - 79%
- sustainability - 75%
To me, that speaks to the daunting challenges CFOs face - but also their relevance. Sage's data on AI captures that same mix of opportunity-versus-organizational pressure:
- Almost two in five (38%) finance leaders say that AI and ML will have a major impact on creating or maintaining a competitive advantage in the future.
- However, less than half (47%) say that their wider organizations are prepared for upgrading software, developing new products and services (46%), or integrating new technologies (46%).
Diversity and inclusion - should CFOs become Chief Fairness Officers?
Then there is the increased responsibility for diversity, equity and inclusion (DEI). Should CFOs aspire to be "Chief Fairness Officers"? And how can CFOs create diverse teams? That was the starting point for my video chat with Judy Romano, VP and CFO, Sage North America. Even before joining Sage in August 2021, Romano had a track record for building diverse teams. How does Romano turn diversity from a platitude into reality for finance teams? As she told me:
I have actually reflected a little bit on the journey of the last couple of years. At Intercontinental, I had to force diverse candidates to come through the funnel. If they don't come through, you cannot give them the opportunity to be part of the selection.
While at Intercontinental, Romano took action - she asked her hiring team to anonymize the application process, so that candidates didn't get cross-checked and filtered out based on schooling, or even comparing LinkedIn profiles.
Eliminating that was super important. So I had my team start looking at candidates based upon their experience, rather than the rest of those things.
At Sage, Romano hasn't had to bear down on hiring processes:
Maybe the market dynamics shifted, because I did not have to make the same recommendation or request to my team. I look around, and I have diversity that is absolutely incredible. Maybe because I'm drawing that kind of candidate pool. Maybe it's not one thing, but it's just amazing.
The changing needs of finance teams may also be a driving factor. Romano explains:
I'm going after talent that has different skill sets, in addition to the finance skill sets. I'm looking at data; I'm looking at technology experiences, business intelligence tools, to augment the traditional finance case. There is a lot of diverse talent that fits that profile. So I'm profiling by unique experience, rather than profiling by race or gender.
And are diverse teams providing a business payoff?
Yes. It's fantastic to see how they come together, work together, and drive creativity and collaboration. I have nothing but positive results that I have seen.
Cybersecurity - part of the CFO's domain now?
What about that CFO report stat on data and cybersecurity - with 76% of CFOs surveyed seeing their purview include those issues? Does this resonate with Romano?
I have a stronger passion for cybersecurity, having worked at Equifax during the breach. When a breach happens, no matter what part of the business is breached, it challenges the entire finance and accounting organization, because you do have to prove to the external auditors that you have a way of identifying if your systems have been breached.
Once you go through that, you appreciate cybersecurity much more... I personally have taken quite a lot of cybersecurity certifications, so that I could become a better leader, and an advocate for the importance of cybersecurity...
A couple days ago, I met with a couple of people from cybersecurity here... Next week I'm meeting with the CISO. It's probably unique for them to hear a person in my role may be passionate about it, but I think cybersecurity is a tremendous cost - it's an investment. And then when you get breached, you have insurance, and you have a lot of costs that you might not see today - but if you get into trouble, it will start coming up very quickly. As a CFO, you need to know those things.
Sustainability and ESG - time for the CFO to take it up a level?
The stats on increased CFO engagement with sustainability were hardly surprising. But is ESG really changing the CFO's purview? Let's face it, the sustainability hype has exceeded the organizational reality for a long time. Romano says that the urgency of sustainability can vary by industry. At Equifax, physical goods weren't an issue. During her time at IHG, from disposable shampoo to laundry, she had to tackle waste head on.
But now, sustainability is either a talent draw, or a talent repellent. Younger workers take this into account - and they can see right through the lip service of sustainability brochure talk:
When it comes to recruiting, it's super important... How do you walk the talk? Right, right. So I have seen Intercontinental do that. I have not been close to it yet in the nine months I have been here, but it is an important topic.
If the SEC's new proposed sustainability fund guidelines codify, that will apply more CFO pressure - with more SEC compliance changes coming, including climate change reporting. This time, change will come from the top:
That starts a call to action - you have to change your ways of working. So I think when the SEC requirements come out, the same for security - when you have to start reporting. And there will be KPIs and metrics that are publicly available. I think it will drive a faster call to action than when you do it at your own pace.
My take - on crypto, green ledgers, and leadership
I find cryptocurrency to be overhyped to the point of absurdity, so I didn't spend much time on that during our interview. But it does make sense for CFOs to be thinking about how they could incorporate "crypto" into their payment options and ledgers. The Sage Redefined CFO report backs that up, albeit with regional variance:
Americans are ahead of the curve when it comes to cryptocurrency adoption. Around half of US finance leaders have either used cryptocurrency for payment for personal transactions (47%), invested in it (51%) or plan to invest in it (49%). Meanwhile, one in five (21%) of these leaders say their organizations currently accept cryptocurrency as payment, compared to around one in ten finance leaders in the UK (13%) and Canada (12%). A further one-third (33%) of US finance leaders say their organization has plans to accept cryptocurrency as payment within the next year.
Romano hasn't dug into sustainability in a big way at Sage yet, but there's no question Sage has this topic on the hot burner. See my review of Sage CTO Aaron Harris' ambitious 2021 keynote, Sage Transform - can we tie finance software to the issue of digital trust? And does AI and blockchain play a role? As other ERP vendors start talking about green ledgers, I'll be interested to see what Sage (and Sage Intacct) unfurl this year. As diginomica contributor Brian Sommer pointed out, productizing sustainability is how we make this issue stick - for CFOs and beyond (What does it take to turn sustainability hype into practical reality? Questions smart buyers need to ask their ERP vendors). Harris has created a place in Sage's "digital trust" narrative for sustainability, I'll be looking to hear how it all plugs in.
This much is undeniable: the CFO's purview is shifting. Those who embrace it will claim new opportunities - and change their companies. Others will lag - and that won't fly. Romano's parting thoughts:
I think the CFO role is broadening into other spaces like technology, security, even in recruiting, where either as an influencer or a stakeholder, we have a role to play. The more we educate ourselves on those topics, the better partners we can be to the CTO, to the CISO, to the leadership team.
That includes the question of on-prem versus cloud:
You have to evaluate the risks and the opportunities that come along with it, your running costs, for example. You go from a CapEx to an OpEx model... How do we make it the most effective and efficient? Thinking about the shareholders, the colleagues, the customers. You don't have to have the answers at all. It's about knowing enough that you could ask intriguing questions, and have a conversation, and then agree on how to move forward.