The CFO's evolving role in technology-led businesses | The Modern CFO

From the Desk of Wayne Boorer, CFO at RCK Partners.

Wayne Boorer (ACMA)

Chief Financial Officer, MLRO and Partner

The role of the CFO has changed significantly over the past decade. Once viewed primarily as the custodian of finance and reporting, today's CFO is increasingly expected to play a central role in shaping business strategy, driving innovation, assuming ownership for technology procurement and implementation.

Technology now influences almost every aspect of a business and as a result, CFOs are being asked to evaluate a growing range of investments in areas such as artificial intelligence, automation, digital transformation, cybersecurity, and innovation. These decisions often extend beyond traditional financial analysis and require finance leaders to make decisions about increasingly complex technologies when they often don’t come from technology backgrounds.

In this inaugural issue of The Modern CFO, we explore how finance leaders are responding to these challenges. Through insights from CFOs and industry leaders, we examine how organisations are approaching innovation and AI investment, evaluating funding support on offer through the R&D tax credit scheme, and the broader role finance leaders play in helping businesses thrive in an increasingly technology-driven economy.

The conversations shared throughout this issue highlight that the CFO is increasingly becoming one of the most influential voices in determining where organisations invest, how they innovate, and how they remain competitive, acting as a trusted strategic partner to the CEO. In many businesses, the CFO has become one of the key architects of long-term value creation.

This newsletter aims to support CFOs as they navigate this changing environment and each issue will explore a different theme related to The Modern CFO with contributors who have addressed these challenges before, sharing their first-hand experience and advice.

R&D tax credits: commentary from Rufus Meakin

Rufus Meakin

Senior Advisor and Brand Ambassador

Issue 1 written by Rufus Meakin:

When the R&D Tax Credit scheme for SMEs was introduced in 2000, it was deliberately designed to change business behaviour. The Government recognised that smaller businesses faced greater barriers to investing in R&D, so it introduced a generous SME scheme. Relief for larger companies followed two years later at a lower level of support. The intention was to encourage businesses to invest more in R&D than they otherwise would, so a simple 'volume-based' relief was chosen as the most practical way of delivering the incentive.

For loss-making SMEs, the relief could be paid in cash and was intended to be delivered quickly to minimise delay and uncertainty. Tax incentives are ultimately judged by whether they influence business decision making in the direction policymakers intended. If the original SME scheme was designed to encourage additional investment in R&D, our new research suggests many finance leaders now believe the recent reforms are influencing behaviour in the opposite direction.

Almost two-thirds (62%) of surveyed CFOs said the recent reforms had reduced their company's investment in R&D, compared with just 13% who reported an increase. Surveyed CFOs were almost five times more likely to report reduced investment in R&D than increased investment.

Whether that represents an acceptable trade-off for reducing fraud and error is ultimately a matter for Government. However, if the original purpose of the SME scheme was to encourage additional investment in R&D, these findings raise the question of whether the current incentives are still encouraging businesses to invest more in R&D than they otherwise would.

Commentary from RCK Partners Innovation Advisory Council

Darren Purkis

RCK Advisor and CFO of VodafoneThree, Former Deputy CFO at Hutchison 3G, Former FD at Warehouse Fashions, Former Head of Finance at Borders.

Evaluating Investment in AI and Innovation

Darren Purkis, CFO, VodafoneThree

The evaluation of AI and innovation investments are broadly the same as any other investment. AI has created a huge amount of hype / excitement and trepidation across industries, including telecommunications, and there is no doubt that it has the potential to transform the way businesses operate. However, as a CFO, the role is to ensure that capital is allocated responsibly and delivers value for our customers, the business and our shareholders.
Whether the proposal is for AI, innovation, or any other form of investment, the underlying questions remain the same: what problem are we solving? what value will it create? what are the risks? and how confident are we in our ability to execute successfully? The starting point is always the business objective or problem we are trying to solve. Defining this from the outset allows the ROI and project success to be accurately assessed. The role of the CFO, would be to assess any AI or innovation investment through the lens of revenue growth, cost reduction, risk mitigation, productivity enhancement or customer experience elevation. I compare the expected return against the total cost of ownership, implementation risk, and time to value.
Innovation,by its nature, carries uncertainty and a higher risk of failure. The reality is that many innovation initiatives will not achieve their intended outcomes. As a CFO and to encourage a culture of innovation, where feasible budget should be set aside to account for the failure rate of innovation and there is often not a direct ROI from every innovation within a business. I would advocate a culture of ‘Test and Learn’ so that opportunities are assessed and evolved before full scale approach, in addition I would also therefore favour a portfolio approach. Some investments will focus on delivering incremental improvements and near-term efficiencies, while others may be more transformational and longer-term in nature. The role of finance is not to eliminate risk, but to ensure that risk is understood, managed, and balanced appropriately across the portfolio.
One of the most important considerations today is the cost of inaction. In today's environment, choosing not to invest can be just as significant a decision as choosing to invest. If competitors are successfully using AI and fostering innovation to improve efficiency, accelerate product development or deliver abetter customer experience, standing still may represent a greater risk than moving forward. That does not mean investing simply because others are doing so, but it does mean considering the long-term implications of delaying or denying investment.
Ultimately, AI and innovation are not separate categories of investment. The role of a CFO is to ensure that every investment, whether in AI or otherwise, supports the businesses strategic objectives and creates lasting value.

5 minutes with a modern CFO…

Stuart Hood

CFO at Centri

We sat down with Stuart Hood, CFO at Centri and this month's featured Modern CFO, to discuss some of the key themes explored in this issue.

Are the poll results surprising to you?

*62% of surveyed CFOs said the recent changes to the R&D tax relief regime have led them to reduce investment in R&D.

Not entirely. Many businesses will continue to invest in R&D because innovation is fundamental to their long-term growth and competitiveness. However, for many businesses tax incentives play an important role in determining where that investment takes place. The recent changes to the UK's R&D tax relief regime appear to have reduced confidence among some businesses, making the UK a less attractive location for R&D activity compared with other jurisdictions who offer more favourable incentives.

Rather than stopping innovation altogether, there is a real risk that businesses choose to undertake a greater proportion of their R&D overseas, where the financial support available is more predictable and competitive. With 64% of surveyed businesses reporting reduced investment, the findings raise important questions about the UK's ability to remain a leading destination for innovation and whether the current regime is doing enough to encourage companies to locate in the UK.

What is the biggest challenge you are currently experiencing in relation to AI?

AI is a major challenge for Centri as we provide cybersecurity training to people, while the industry is increasingly adopting AI. A key concern is whether there will be the same demand for entry-level cybersecurity professionals in the future. Rather than training large numbers of entry-level analysts, we expect a shift towards upskilling a smaller number of specialists who can oversee, manage, and mitigate AI-related risks.

At the same time, AI is introducing a new category of cybersecurity risks that many organisations are not yet fully prepared for. One of the biggest concerns we are experiencing is "shadow AI", where employees use personal AI tools without official sign off, outside approved environments. This often happens when organisations have a single AI tool license, but employees prefer a different LLM and opt to use this. This creates risks of data leakage, the loss of control over sensitive information, and reduced visibility for security teams.

How do you approach budget allocation for innovation within your organisation?

As Centri's CFO, I see innovation as a core part of how the business grows and evolves, and currently we take a relatively informal approach. Rather than operating through a separate innovation budget, we embed innovation across the business in the day-to-day, leveraging our in-house expertise to continuously enhance our cybersecurity training offering. As the business continues to scale, we expect our approach to become increasingly structured.

Key takeaways for CFOs

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This issue highlights how the role of the CFO continues to evolve. Today's CFO is increasingly expected to play a central role in shaping business strategy, driving innovation, and helping organisations navigate rapid technological change. CFOs are being asked to evaluate a growing range of investments. These decisions often extend beyond traditional financial analysis and require finance leaders to balance opportunity, risk, and long-term value creation.
Innovation remains essential, but confidence in government incentives has weakened. Our research found that 62% of surveyed CFOs believe recent changes to the UK's R&D tax relief regime have reduced investment in R&D. While businesses continue to recognise the importance of innovation, many finance leaders are questioning whether the current framework is providing sufficient encouragement to invest and grow inthe UK.
AI should be evaluated like any other strategic investment. Successful AI projects begin with a clearly defined business problem and measurable success metrics. CFOs must balance potential returns against implementation costs, execution risks, and the wider consequences of delaying investment in an increasingly competitive market.Managing risk is becoming as important as driving growth. From cybersecurity threats to the rise of shadow AI, finance leaders are being asked to assess a broader range of operational and technology-related risks. The CFO's role increasingly involves ensuring innovation is pursued responsibly and governed effectively.

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'Creating Value as a CFO', by Jitesh Sodha, member of RCK’s Innovation Advisory Council

The Modern CFO: The CFO's evolving role in technology-led businesses