By Liran Edelist, PhD  

The role of the CFO has undeniably grown, moving beyond purely transactional accounting and auditing activities where financial controls and reporting had been the mainstay. The position – in part due to technological advancements that support augmented decision-making, alleviate labor-intensive manual tasks, and accelerate long-term business performance – has moved more toward the stewardship of capital that enlists CFOs to be strategic business partners. This requires supporting business decisions by allocating capital toward its most productive uses through planning, budgeting, forecasting, performance management, and financial analysis at all levels of the enterprise. As financial planning and analysis (FP&A) grows in visibility, CFOs will shift from generating reports to generating and optimizing value for the entire organization.

Three Key Areas  

There are three key aspects to the evolving role of finance professionals: moving from capital reporting to strategically allocating capital with a forward-thinking mindset; increasing agility while simplifying complexity; and redirecting focus toward increased collaboration that supports a culture of decisiveness and confidence.  

While the traditional accounting role often meant recording transactions, FP&A analyzes where the capital should be used strategically to create the most value. Though accounting requires a high level of accuracy, FP&A professionals know that data is rarely perfect or complete. Nonetheless, decisions and plans must be made with what is available. Knowing how to reveal business drivers (and, subsequently, value) using artificial-intelligence-supported solutions is the modern intersection of increased accuracy and greater granularity that has historically been a challenge for accounting.  

Strategy, Operations, and Finance

The Association for Financial Professionals describes the function of FP&A professionals as business drivers who reside at the intersection of strategy, operations, and finance. Generally, they will do the following:

• Fuel growth with a focus that goes beyond just cutting costs.  
• Are the last port of call before data is finalized or released to the public. As both data stewards and financial translators, they understand the significance behind the numbers, knowledge that is shared companywide.  
• Bridge strategy and operations, offering feedback on business performance and helping decision-makers remain accountable for the corporate vision.  
• Operate as business partners who do more than control and manage data by knowing how to tell the story behind the numbers.
• Offer critical insights about financial scenarios, with a willingness to impart difficult messages.
• Work across all departments, not alone in a silo.
• Help other stakeholders create value through better decision-making through real-time insights.

The top qualities of FP&A professionals include an ability for forward-thinking, harnessing data for better insights, and applying digital solutions. Being curious, and even a tad fearless, with an ability to ask the right questions, will pave the way to becoming a strategic business partner.  

Data Deluge and Solutions

The global volume of data created, captured, copied, and consumed is estimated to reach 181 zettabytes¹ by 2025. The amount of data available creates both a dilemma and an opportunity: knowing how to use advanced forecasting capabilities based on data that is cyclical in nature, for instance, can supercharge business planning and budgeting. But how can companies leverage this data using old-school finance methods? The answer is that it is virtually impossible. Embracing technological advancements in the finance space is no longer a luxury; rather it is a priority for those organizations who aim to be able to react in real-time to changes, plan for opportunities, and uncover what wasn't thought to be possible.

For instance, let’s look at hotels: using advanced tools such as predictive forecasting can help significantly increase the accuracy of room occupancy, associated prices, and the required capacity. In turn, this leads to optimized revenue forecasts, which is a key performance metric for that industry. Using predictive forecasting opens up pathways for better planning and better decision making that just wasn't possible with forecasting methods that had historically been used by finance.  

Conclusion

As data continues to grow exponentially, the finance function will expand and increase in significance. Those equipped to lean into it with confidence and embrace an increasingly collaborative environment will soon find themselves at the forefront of the field.  

¹ A zettabyte is about 1 billion terabytes.

Liran Edelist, PhD, is president of Jedox Inc., which is the North American entity of global software company Jedox GmbH. Based in Boston, Edelist has over 20 years of first-hand experience with financial and strategic planning technologies in both public and private sectors. He can be reached at info@jedox.com.

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