The nature of finance is fundamentally changing. The speed of business and increasing volume of data means that Chief Financial Officers (CFOs) are running short of time – the time that they can spend watching what competitors are doing and waiting for change to be implemented in their organization.
Technology can empower CFOs to meet business goals, as they are at the fulcrum of decision making in the face of changing customer needs and new competitive threats. Ultimately, the CFO should be considered the ‘economic guardian’ – the person who is there to provide insight, direction and measurement of business outcomes.
“We see the CFO as the right hand of the CEO in helping to make sure that strategy is enabled in a way that gets to an outcome that analyst, peers and investors can measure and understand,” said Steve Culp, Senior Managing Director of Accenture’s CFO and Enterprise Value Function, speaking at this year’s CFO Rising conference in London.
Since 2003, Accenture has been looking at how the role of the CFO has changed with trend analysis and insight on how they can be more effective with CFO technology. To provide evidence for its most recent CFO study, the consultancy spoke to more than 700 CFOs globally and 200 up-and-coming next-generation CFOs.
Accenture found five forces changing the role of the CFO:
1. Increased expectations
The role of the CFO is moving from the bottom line to front line. CFOs must work with the business, external analysts and customers – it’s no longer simply a focus on the monthly close.
2. The pace of change driving decision making
It’s hard to imagine a world without mobile devices and connectivity – the pace and flow of data communications has exploded and only continues to increase. The next five years may see more change than there was in the last 30 – that’s a real challenge for the CFO.
3. Control and compliance
Over the last decade since the last financial crisis, a lot of time has been spent on the regulatory agenda. Today more than ever, it’s not just about money and profit – businesses must service customers with embedded regulatory controls – these aren’t separate agendas.
4. The power of data
With an increase in the volume of data, this requires new focus and capabilities. Digital technology now empowers CFOs to shape strategy through higher-level thinking made possible by insights gained from data results.
5. Driving results
It’s always been the case for CFOs that there’s a pressure to show growth and profit. In challenging business times, this often requires new, innovative thinking.
In addition, Accenture believes there are three main areas of focus for today’s CFO.
1. Maintain control and make the sums add up
Finance leaders might make sure debits, credits, assets, liabilities, outputs and statutory reports get done. The sums have to add up at the bottom line, and they must have control. CFOs have the core responsibility of driving the finance organization. That’s always been true – but today it should only take about 20% – at the most – of their capacity.
2. Be the right hand of the CEO
Today, CFOs need to help CEOs guide and execute overall business change, providing the insight and analysis to make sure outcomes are achieved and the economics are sustainable.
3. Deliver the digital value story
Of the three areas of focus for a CFO, this is the newest. Every organization is making significant investments in digital platforms, tools and systems. The CFO has the role of making sure that the pace and scale of investments actually make sense when it comes to the outcomes and the overall strategy.
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The view from the CFO
Rachel Lawrence, CFO at Allied National Banks (AIB Group), was also at the CFO Rising event to talk about the transformation of the finance function.
Lawrence felt that finance executives had a great deal to offer the wider business, but they needed time to build this influence. She said, “I spent a good proportion of my time talking to customers, which gives you a great insight into what our purpose is as a bank.
“You can forget that if you’re sitting in a room doing accounting or planning. Finance people have a great deal of experience that they can use to educate others, and supporting the entire business with what they can offer.
“We’re good at numbers and keeping them in check. With transformational projects, businesses can forget what they’re trying to deliver. We have the ability to give it grounding through numbers, which can help people keep on track.”
Also speaking at CFO Rising was Magdalena Markiewicz, CFO at 1Rebel, a fitness company that has a number of gyms in London. She believed that CFOs had a major role in driving transformation in businesses as they would be tuned into its strategy.
Markiewicz said, “Very often, CEOs get pulled in many different directions, dealing with strategy and the big picture. Finance is in the first place to see how the strategy is translating into numbers and whether it had delivered.
“We (CFOs) are in the first place to see that information and we should play a big part in driving and initiating transformation. We have a better view on that then many other parts of the business.”
How CFOs can drive change
Although CFOs are in a great position to initiate and drive change, that won’t necessarily happen if they are time-poor or even sidelined by other parts of the business, which might not understand how much positive input finance can give.
Lawrence advised CFOs to be pro-active and to “stick their noses in”. She said it was about having a certain mindset – traditionally finance people might have been thought of as ‘bean counters’, so it was their job to go out and influence.
She said, “The reason I go out there to see customers is to be seen not just as a finance person, but as an advocate for our business.”
Markiewicz added, “Go out there and talk to your operation and marketing teams. When I first joined 1Rebel, the CEO said that they didn’t want finance to be the quiet people in the room or sitting separately.
“The CEO wanted me to be sitting together and integrated with the rest of the team, constantly speaking and meeting with other departments.”
Technology considerations for the CFO
Lawrence has considerable history in the banking sector, initially working with startups and later on working with mature banking organizations. She said the difference in technology between the two is immense, with long-established banks held back by legacy technology and many years of history.
She said, “Automation can be hard for banks, because the technology behind them might not be as sophisticated as you might think. However, most reasonably sized finance functions now have automation in terms of accounts payable or machine learning.
“Many large banks are looking at the repetitive processes you can do with financial functions and customer service, and how Artificial Intelligence (AI) fits into that. You’ve also got predictive analysis.
“Finance should wake up to the fact that a proportion of what we do is repetitive, and we should embrace technology in dealing with that. It allows us to do a lot of the stuff we enjoy doing like adding value to the business. Finance could become irrelevant if they don’t embrace it.”
At a much smaller scale, 1Rebel is still in its infancy in terms of automation. But being such a data-rich company, it is already reaching the limits of what Excel can do. Markiewicz said that 1Rebel is looking at other systems and tools, as well as providers that could manage that data.
She said, “Our booking system for our fitness classes is done by a company in the US which is also essentially a startup. We’re collaborating so we can also help them improve their systems, which will ultimately help us get the right data.”
From startups to large businesses, technology empowers business leaders like the CFO to drive change in a way that simply wasn’t possible before. Through data, CFOs can support the CEO in making sure strategies makes sense and investment is put in the right places. In these challenging economic times, that’s more important than ever.