Today's CFO faces a complex web of risk and opportunity, driven by technological globalization, geo-economic instability and the lingering ripples of the 2008 global financial crisis.
While that same complexity makes it difficult to truly predict the future, here are 15 upcoming structural shifts that are guaranteed to have an impact on the Office of Finance under your leadership.
As a CFO, you'll be tasked with providing insightful counsel as your organization works to develop contingencies and fallback plans to prepare for future supply chain crises
1. The Eternally Transitioning CFO
In its latest CFO View report, accounting firm Deloitte revealed that more than 40 percent of senior executives leave their role within 18 months, including CFOs.
Even when you're not among that number, it's increasingly likely that you'll enter organizations that have an established history of inconsistent financial leadership.
2. The Call for Strategically Visionary Counsel
Surveys consistently show that CFOs in every industry feel rising pressure to adopt a holistically strategic mindset. However, those same surveys reveal that this mission is often in progress, rather than already achieved.
This indicates a clear need to develop processes and procedures that innately support, even encourage, robust strategic capabilities.
3. The Need for Incisive Risk Assessment
In the hyper-connected global economy, risk is everywhere. This reality puts a premium on your ability to accurately identify those areas of risk that are most relevant to your organization and develop effective strategic responses accordingly.
When it comes to modern risk assessment, there is no ‘needle in the haystack’ dynamic. Rather, you'll be tasked with identifying only the most crucial needles in a stack of needles.
4. The Increased Interdependency of Global Markets
Experts predict that the global economy is about to reach a tipping point. For the first time in the history of international commerce, a plurality of market-traded organizations are expected to generate more revenue from international sources than their nation of origin.
To assess the potential consequences, you need look no further than the state of the U. economy, which – despite having recovered from recession years ago – continues to face strong economic headwinds tied to everything from the China economic slowdown to the treasury balances of the peripheral Euro nations.
5. The Fragility of International Supply Chains
Increased global interdependency adds another dimension to the precarious nature of many international supply chains. In just the last decade, multiple industries have faced the need for abrupt (and potentially fatal) adjustment to major supply disruptions caused by the Japanese tsunami, a volatile Middle East and North Africa, Russian military activity in Eastern Europe, and political unrest in South Asia.
As a CFO, you'll be tasked with providing insightful counsel as your organization works to develop contingencies and fallback plans to prepare for future supply chain crises.
6. The Transition to Customer and Client Success
In both the B2C and B2B sectors, you'll need to grapple with the transition from a ‘seller-to –buyer’ mindset to the new reality of ‘customer success.’
With its emphasis on building relationships versus a more transaction-oriented dynamic, customer and client success throws many of the old formulas for revenue prediction out the window. Your projections and analysis as CFO will need to take into account longer income cycles and the need to predict the impact of prematurely terminated client contracts and relationships.
Doing so will require powerful, intuitive data tools that can give you both macro- and micro-perspectives on demand.
7. The Need to Incorporate ‘Soft Power’ Into ROI Perspectives
An increasing share of your organization’s investment will be directed toward ‘soft power’ initiatives focused on building and maintaining client and customer relationships.
While B2C organizations have grown very familiar with the potential (and danger) of a world where word-of-mouth can go global in an instant, even the B2B sector is increasingly focused on reputational concerns.
The old metrics attempting to spot one-to-one ties between dollars spent and dollars returned no longer apply, and you'll need to find a way to leverage your data to spot the new ROI of soft power.
Whether your organization has a direct investment in tech, or simply relies on the sector's products or economic activity, you'll need to be prepared with future-focused strategies for the time the tech bubble bursts
8. The Maturation of the Gig Economy
While the temporary workforce has been a tool in the business toolkit for some time now, the rise of mobile technology has created an entirely new employment sector.
Known as the gig economy, 1099 economy or simply Millennials' economy, this new dynamic opens up a range of opportunities for organizations to aggressively pursue growth strategies that no longer need to rely on costly expansions of a permanent (or even in-house) employee base.
9. The Rise of the Product-as-a-Service Model
Where once Software-as-a-Service (SaaS) was the primary poster child for this new market model, everything from consumer goods to corporate infrastructure equipment is now available under the ‘as-a-Service’ umbrella.
The predictability that the as-a-service model imparts to revenue projections can be useful. But dilated revenue cycles also make it harder for the company to respond to short-term business changes. Navigating that disconnect will become a top priority for the Office of Finance.
10. The Tech Bubble Question Mark
Analysts have called the Silicon Valley-centered tech sector frothy for some years. The prediction that a market correction is imminent has grown increasingly strident and could very well come to pass.
As the "Uber for X" business model posts disappointing performance, venture capitalization in general has stalled over the last 16 months, potentially affirming the assessment that a market correction is imminent.
Whether your organization has a direct investment in tech, or simply relies on the sector's products or economic activity, you'll need to be prepared with future-focused strategies for navigating the correction.
11. The Wearable Technology Revolution
As companies seek to expand the horizons of their data ecosystems, experts predict that wearable technology will accelerate the data-generation potential that mobile devices in general have already solidified.
Whether it's clients, employees or third-party partnerships, a groundswell of new data will be generated and enabled by wearable technology. The Office of Finance must embrace the mission to discover the value in this new Internet of Things (IoT).
12. The Growing Popularity of Cryptocurrencies
While the US dollar is in no danger of losing its status on the global stage, experts predict that the rise of cryptocurrencies could lead to transformative consequences for commerce.
If consumers increasingly embrace Bitcoin and its alternatives, your office will need to find a way to incorporate non-state currencies into the revenue stream while maintaining compliance and mitigating exchange-rate uncertainties.
13. The Age of State-Sponsored Hacking
Long declared imminent by global political prognosticators, the age of state-sponsored cyber warfare has arrived. History will show that the US Stuxnet hacking of Iranian facilities and the Sony hacking (tied to North Korea by security experts) marked the beginning of the world's initiation into this new geopolitical dynamic.
When nations go to war in cyberspace, corporations and other organizations will often be primary targets. Civilian hackers are usually profit-oriented and opportunistic. State actors have proved to be both more powerful and more determined, amplifying the need to develop robust protections for your financial data.
To face this uncertain future, the Office of Finance must develop a technological regime that's sturdy enough to stand the test of time, and adaptable enough to maintain utility and value in changing circumstances
14. The Inevitability of Cyber Intrusion
The adage that nothing connected to a network is ever truly secure remains true. When advising civilian organizations, security experts consistently state that your mantra should be ‘not if, but when.’
Recognizing the reality of cyber intrusion requires more than preventative measures. Your office will also be tasked with finding ways to mitigate the fallout from successful attacks and developing outside-the-box solutions to protect your most valuable informational assets.
15. The Certainty of Uncertainty
Above all, the modern Office of Finance is tasked with understanding and preparing for the certainty that the future is uncertain. From political conditions to technological developments to climate disruption and resource shortages, the potential avenues for future disruption are innumerable.
To face this uncertain future, your office must develop a technological regime that's sturdy enough to stand the test of time, and adaptable enough to maintain utility and value in changing circumstances.
With the right technology platforms, your organization can start laying the foundation today that will ensure stable and powerful operational capabilities tomorrow.
About the Author
Eric Cheung is Chief Financial Officer at Unit4 Asia Pacific, a provider of enterprise applications designed to empower people in service organizations.