One of the most talked-about trends related to finance over the past three years has been the changing role of the CFO. But it's not just changing. It's expanding. Deloitte calls this phenomenon “exponential” CFOs, suggesting not just expansion but rapid expansion.
According to Deloitte, an exponential CFO has three goals. It's about accelerating value creation, driving operational excellence across the company, and shaping people and culture. This is a much wider range than what is prescribed in financial textbooks.
But does the exponential framework match reality, and how do technologies like GenAI need to mature to give CFOs more room to expand their responsibilities?
Dennis Johnson has served as Qlik's CFO since 2018, and previously served as the data management and analytics company's chief accounting officer. 3 months ago philadelphia business journal I named him this year's CFO.
In a recent interview, Johnson spoke about the expansion of his role, his expectations for GenAI, and the additional responsibilities CFOs may take on in the coming years.
What does the expansion of the CFO role mean to you and what changes have you witnessed at Qlik?
CFOs have taken on a broader role. We have been called upon to act as arbiters of many big decisions brought about by the pandemic, such as companies' transition to work-from-home. As the workplace evolves and business priorities change, we remain committed to optimizing our operations. In addition, the regulatory environment has become much more complex. Responsibilities such as reporting and compliance need to be taken more seriously than ever before. We also found that having contingency plans in place for a variety of positive and negative scenarios is essential.
Being a great CFO is about leadership. I lead by example in a way that is agile and adaptable to change. The right approach and attitude go a long way.
As AI use cases become more sophisticated, what are the most strategic benefits of AI for the financial sector?
It depends on the type of AI being considered. For example, automation has been part of my workflow and that of many other companies for many years. This streamlines analysis, removes some non-strategic manual tasks, and provides more accurate and up-to-date insights into your operations.
However, we are still in the exploratory phase when considering new AI capabilities like GenAI. I know it increases productivity in day-to-day operations, but I'm more interested in what additional strategic value it brings to finance. Governance and risk management come to mind. I'm interested in seeing what other operational efficiencies GenAI can deliver across the business.
As the CFO role expands, what revenue and bottom line metrics are you looking at and why?
To measure the top-line performance and momentum of a business, I look at metrics that measure sales and customer success: annual recurring revenue (ARR) growth, gross retention rate, and net retention rate. The final metrics I look at are EBITDA and profit margins. These are to accurately represent the operational performance of the business. We focus on ARR and EBITDA because they drive free cash flow generation. For me, free cash flow is ultimately the most important metric. It encapsulates sales growth and operational efficiency.
What are the biggest opportunities for CFOs and finance departments in the coming years?
Just as AI is transforming entire businesses, it will also have a profound impact on the finance function. Finance leaders who take advantage of opportunities to learn all they can about technology will be in the best position. You can't lead your business through a major technology transformation like this one without understanding technology and applying it to your practice.
The second area of potential opportunity for CFOs is ESG. Many financial leaders are actively participating, but some are resisting. Still, market direction indicates that company-level environmental and sustainability efforts will become increasingly important, especially for investors. For someone in my position, it would be wise to rise to the occasion and help the rest of the C-suite address this increasingly complex requirement.
Third, CFOs need a strong voice in corporate strategy, especially M&A. Qlik has been able to significantly increase market opportunities and create shareholder value through M&A over the past few years. This will continue to be reflected in our plans.
