The generative AI era has arrived, and it's a make-or-break moment for CFOs, who must use their influence to advance their organization in innovative ways. Execution is essential. Complacency is not an option.
Leading CFOs are already making powerful moves to drive innovation and prepare for the future, reveals the 2024 Global CFO Study from the IBM Institute for Business Value. What sets these leaders apart? And how can other CFOs follow their lead?
CFOs must guard stability while sparking transformation
Nearly two-thirds of CEOs in IBM’s 2024 CEO Study say they need to rewrite their organizational playbook to remain competitive. You can’t run the business of tomorrow with today’s skills, technology, or operating models. And with 72% of top CEOs saying competitive advantage depends on who has the most advanced generative AI, the tensions finance leaders already face are compounded: risk versus reward, short-term versus long-term, optimization versus constraint, agility versus discipline, and innovation versus financial stability.
That leaves CFOs to act as both guardians of stability and agents of transformation. At the epicenter of strategy development and execution, CFOs, working hand in glove with tech leaders, supercharge technology as the transformative force in their organization. They play a crucial role in driving competitive advantage and creating value for their organizations.
They’re looking to change heavy initiatives, such as accelerating technological modernization, creating economies of scale, differentiating products and services, and building strategic alliances to help them deliver this advantage. Yet, IBM’s study reveals that some CFOs are leaping forward while others are being cautious.
Nearly three-quarters of leading CFOs identify their CTO as highly important or critical to their success, more than any other role. And 65% of all CFOs say their organization is under pressure to accelerate ROI across their technology portfolio. But only 35% of finance organizations engage in early IT planning with tech leaders to set expectations on how technology advances enterprise strategy.
In this high-stakes environment, CFOs must make power moves that confront hard truths about transformation, talent, innovation, and more.
The 4 characteristics of a powerful CFO
The report identified a group of leading CFOs, representing 9% of IBM’s global data set, outperforming the competition. Here are the four powerful CFO characteristics that enable tackling the hard truths of the generative AI era.
1. A sharp focus on a strategic future
Leading CFOs articulate vision and strategy to optimize long-term investment value. They not only control and manage risk, but also finesse it with financial effectiveness.
2. An adeptness at strategy execution
Leading CFOs translate decisions into financially astute actions—and embrace cloud-based enterprise performance management.
3. An agile responsiveness to changing market conditions and new opportunities
Leading CFOs are decisive, making decisions with more speed and financial effectiveness than their competitors. They’re enabling better, faster decisions across their enterprises.
4. A keen eye for technology that drives competitive advantage
Leading CFOs connect tech investments to quantifiable business outcomes. They create cross-functional teams to forecast and allocate technology costs and manage tech budgets.
The power moves CFOs must make
There are six power moves that CFOs must make that successfully use technology to propel their organizations forward, the report finds. Here are three of them.
1. Champion tech as core.
With technology becoming core to the enterprise—not just an enabler—CEOs recognize that collaboration between finance and tech is crucial to success. Since leading CFOs say CTOs are their most important relationship, with 72% identifying them as highly important or critical, CFOs need to advocate for tech leaders’ expertise in the boardroom. They can do this by integrating evaluation, investment, and planning, forming a powerful coalition that drives strategic growth.
2. Make execution the yin to strategy’s yang.
CEOs are accelerating transformational change in 2024, with 77% maintaining or increasing their pace. With decision-making processes and performance management intertwined, CFOs are poised to be agents of change. To succeed, CFOs must balance precision and agility while navigating new factors influencing strategies, requiring a harmonious “dance” of strategic planning and execution. In fact, 36% more leading CFOs are able to respond with agility to changes in strategy than their peers.
3. Show me the ROI.
CEOs sacrifice long-term innovation for short-term gains, citing short-termism as their biggest hurdle. More than half (57%) of CFOs succumb to prioritizing short-term targets over long-term investments—often increasing technical debt, for example, by sacrificing long-term maintainability for short-term functionality. Opportunities in tech, sustainability, and emerging markets demand a departure from traditional investment strategies. With their strategic oversight and financial acumen, CFOs must guide investment decisions that capture value over short-, mid-, and long-term horizons.
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