The changing role of the financial function

Alexander Rahusen (CFO Exact): technology creates a need for 'people with a different mindset'

Future of Finance

A lot is being said and written these days about the changing role of the CFO and the financial column within organisations. But has much actually changed in the past fifteen years? Aren’t the same issues still involved? Alexander Rahusen (CFO of the Exact software company) and Alexander Staal (partner and finance transformation leader at PwC) aren’t so sure. 'Things we’ve been talking about for the past fifteen years have now become reality.'

Alexander Staal, partner and finance transformation leader at PwC

Function of CFO has become much more substantial

The two Alexanders know one another from way back, when they were both already involved in the financial world. They recently met up again and jokingly remarked that not much had changed in all this time. They then went on to talk about things more seriously (remotely, of course).

Looking back, Alexander Rahusen says: 'At the time, we were already talking about the changing role of the financial function. The comparison we made was that the CFO needed to act more like a co-pilot. Together with the captain, he or she would control the plane, with the co-pilot mainly keeping an eye on the weather and the indicators.'

'That’s basically still the case, although the function of CFO has become much more substantial. The co-pilot is now flying the plane more and more actively. That’s partly because technology has made the indicators better, meaning that he’s better able to look ahead.'

‘The financial function is becoming more of a spider in the web of the entire organisation. The CFO is much more involved with the strategy and ensures that all the different departments are working in harmony – that everyone is looking at the same reality.’

Alexander RahusenExact

A shift from accounting to being in control

Alexander Staal nods in agreement: 'Within finance, the Holy Grail is still ‘from scorekeeper to business partner’. But in recent years there has indeed been a clear shift from accounting to being in control. It used to be that the CFO explained what had happened; nowadays, the CFO and his/her team mainly try to look ahead and contribute to the right decisions being made. For me, finance is above all a reflector of the primary process within an organisation. The department doesn’t only record the transactions; it also tries to distil meaningful information from that data, so as to help control the business.'

'That way,' says Alexander Rahusen – who’s been Exact’s CFO for a year now, and previously held various (financial) positions with the ABN AMRO bank – 'the financial function is becoming more of a spider in the web of the entire organisation. The CFO is much more involved with the strategy and ensures that all the different departments are working in harmony – that everyone is looking at the same reality. In the past, organisations were fare more ‘siloed’, with each department having its own reality. The new role of the financial function also means that it ensures greater connectivity.'

Alexander Rahusen, CFO of software company Exact

'De financieel professional anno nu moet niet alleen verstand hebben van boekhouden, maar ook begrijpen hoe de business in elkaar zit. En welke externe ontwikkelingen van invloed zijn op de bedrijfsmodellen.’

Alexander StaalPwC

Technology makes more time is available

Both the Alexanders realise that technological developments, following on from one another at breakneck speed, have been an important catalyst in all this. 'First of all,' says Rahusen, 'digitalisation has made more time available. Processing transactions and drawing up reports used to take up a lot of hours, but a great deal of that work has now been automated. That means you have more time to look ahead with the help of data analyses.

But there’s another requirement for being a true business partner for the rest of the organisation, according to Staal, and it’s by no means the least important. 'I’m talking about the skills of today’s financial professional. You don’t just need to know about accounting, but also to understand how the business works, and what external developments affect the business models.'

Other skills

Rahusen: 'That’s definitely true. The way I see it, we’ll soon need a very different type of person, with a very different mindset. I now see a lot of specialists who are very good at financial reporting within data structures. But they’re often less able to look ahead and think what that data means for the future. What you need are more and more people who are energised by the latter.'

Staal: 'Exactly, people who can think in terms of scenarios, Who can utilise technology to resolve business issues. If you make sure that your data structures are harmonised and your systems are properly linked up with one another, then creating a report is just a click away. But to generate useful insights, you need people who can create algorithms, people who can handle predictive analytics. That demands much more than just being familiar with the tool.'

Hardcore financial know-how remains necessary

'Those skills can hardly be called ‘financial’ any more. You have to ask yourself whether the financial function will still exist in ten or twenty years’ time. The financial tasks will then be in the business and the specialists will run their scenarios and analyses from that basis,' says Staal.

Rahusen: 'I don’t know whether it will come to that, but consultancy-type skills will dominate, although from a finance perspective. Within reporting, there’ll always be issues that require hardcore financial know-how, things like the IFRS regulations, which change every year. But to go back to the metaphor of the co-pilot: financial specialists are increasingly being asked to watch other indicators of their own accord so as to keep an eye on whether the organisation is still flying in the right direction. That’s more like consultancy.'