Do we really need CFO's anymore?

But do we still need CFOs? As the guardian of a company's financial well-being, a CFO has many very important responsibilities: Compliance and governance, budget allocation and audits, tax planning and forecasting. These tasks are not only important, they are dramatically important, because if they screw up, they can quickly find themselves behind Swedish bars.

But let's be honest. Actually, you don't need to pay a CFO for these tasks. Just hire an accountant who knows Datev. But who will monitor the company's financial situation? Today, there is not only one app for that, too, but even several. 

Moreover, none of this is higher mathematics. Double-entry bookkeeping has been around since the 15th century - literally since the Middle Ages. The basic formula is quite simple: your expenses must match your income. If the numbers add up, you can close the books. That's pretty much it. You can probably see what I'm getting at: Of course you need a CFO, but not necessarily one of the kind most have envisioned so far. 

Traditionally, 80 percent of a CFO's job was to tell people what was happening, track current status and monitor budgets. The other 20 percent consisted of interpreting those numbers to allocate resources, make forecasts and implement strategies to keep the company going. Today, however, that ratio has reversed. 

The focus of tasks has shifted radically. Today, CFOs are far more concerned with business models than with budgets. Don't get me wrong, compliance and governance are still absolutely essential. However, managing budgets is not witchcraft. It's basically just balancing headcount and expenses against assumed revenue. And most CFOs have good teams to do it.

The management of a business model, on the other hand, is more complex. It is a mixture of strategy, new insights and ideas, which also define a quantitative framework, but this framework is fluid. After all, a new business model brings about change, and it must respond to that change on an ongoing basis. And as customer-centric business models become the norm, they become highly dynamic in some cases and their tailoring is therefore strategically essential.

Consequently, companies need someone who can responsibly steer new business models and continuously adapt them to changing customer needs. Of course, companies also need a CFO for this purpose. However, his or her tasks have changed dramatically. New CFOs have to act much more like a COO, which also leads to massive changes in finance departments. They also need to become much more customer-focused and significantly more agile. Equipping finance departments to manage agile business relationships is therefore one of the most important tasks of a CFO today. The more agile they are in doing so, the more future-proof they are.

Many smart companies have therefore accelerated internal IT projects to meet these new agility requirements better than classic ERP systems can. In my experience, the use of such much more modern agile IT systems has always delivered the better return on investment. Not only because they eliminate all the previous problems of rigid IT solutions, but also because they help identify the true strategic growth drivers.

The greatest amount of unused "competitive intelligence" probably lies on the servers of companies. However, many decision-makers are not yet aware of this, and many solutions currently in use are still far too sluggish. Today, however, it is necessary to become more agile and to be able to implement necessary new measures immediately. This is what customers and also competitive pressure are increasingly demanding. Ultimately, then, financial systems automation should be seen as a kind of "superpower" that enables finance teams to do much more meaningful and creative work.

Incidentally, the increasing influence of CFOs and finance departments on corporate events has already had an impact on corporate organizations: Over the past decade, the percentage of Fortune 500 companies with a COO has declined by more than 50 percent. Three guesses as to who their duties now fall to. That's right: the CFO, and as agility increases, their performance becomes even more relevant to the overall success of the company. However, high agility is essential for this.