Accounting in the cloud is changing the role of the CFO as we know it. Today’s CFO is now dubbed the “digital CFO” because their role has expanded to encompass the systems used to support financial operations. Modern CFOs may need to be as fluent in technology as they are in debits and credits. Here’s how accounting in the cloud has changed the role of the CFO and what being a digital CFO means to today’s businesses.
The Rise of the Digital CFO Driven by Accounting in the Cloud
You may wonder how someone with a job title around finances has become the new digital go-to person in the organization. The shift began with the transformation of many on-premises applications to cloud platforms. Now, instead of IT managing the on-premises application, companies decided that the department lead could manage their respective domains’ technologies instead of relying upon IT.
It makes sense—who knows the accounting needs of an organization better than the CFO, or the marketing needs better than the CMO? But this change comes with new challenges and demands. The digital CFO must now know accounting in the cloud and how it shapes the company’s finances, personnel, and processes.
Financial Reporting in the Cloud
Accounting in the cloud encompasses financial reporting. This is where the digital CFO has the most experience. No one knows the company’s finances better and can ensure the cloud-based ERP system chosen for the company’s needs captures and reports on essential metrics while also performing basic accounting functions.
The digital CFO may spearhead the team selection of a cloud-based accounting system. They may choose the team, develop the RFP with team members, and evaluate various systems.
Because accounting in the cloud reduces the need for dedicated hardware, fewer IT personnel are needed. Instead, the digital CFO becomes the one most likely to utilize the system to report on key metrics. They are likely to become the default expert on the cloud accounting system. Because accounting in the cloud relies upon third party hosts and platforms to house the actual database and technology, the digital CFO can focus on the implementation and use of the technology rather than on the programming needs required. The ERP management role becomes more managing the inputs and outputs than managing the technology itself.
Lastly, the digital CFO oversees processes surrounding the cloud-based accounting system. CFOs may already be responsible for processes such as internal controls meant to combat theft and mismanagement of funds. If digital CFOs now manage the cloud ERP system, they need to also manage the processes surrounding the implementation and use it.
For example, instead of the IT department managing the data dictionary, or the repository of data definitions that define elements added to the database, the CFO’s financial team may oversee the data dictionary. Someone from the financial office may become the data champion, or the person responsible for becoming the go-to expert on the database itself.
Each of these adjustments in the roles and responsibilities of various personnel are part of the transformation from the traditional CFO role to the digital CFO and by the adoption of accounting in the cloud.
Technology Changes Everything
Many CFOs never dreamed they would have responsibility over a company’s technology, but with the rise of cloud-based systems, it is now more about what the technology does than how it does it. Managing such systems relies upon deep and rich subject-based knowledge rather than technical skills. As the digital transformation of businesses continues, expect to see the role of the digital CFO increasing, rather than decreasing, as CFOs take on a more active role in multiple areas touched by technology and finances.
Emerald TC provides software and consulting for manufacturing companies. Contact us or call 678-456-6919 for more information.