By Ian Charles, CFO, Host Analytics
There’s no question that the role of the CFO has evolved over the past few years. Historically recognized as scorekeepers or senior bean counters, CFOs were primarily responsible for overseeing the books, minimizing risk, and informing the C-Suite on the state of the business. Today, CFOs do all that in addition to being involved in nearly every strategic decision across the organization. The purview of the CFO gives them the unique position to impact strategy through data analysis of historical results and future operational performance projections. This includes human resources, real estate, IT, infrastructure, business expansion, product rollouts, acquisitions, and other areas that didn’t traditionally fall in their wheelhouse.
What changed? A few things, not the least of which are global competition and the digital economy, both of which have increased the volatility of business, which makes gaining insight into performance across the company a necessity. This contributed to the rise of enterprise performance management (EPM) solutions that enable finance to gain a near real-time, holistic view of the company’s performance across every function and line of business.
A third factor, and one that might not immediately spring to mind, is the evolution of cloud and SaaS solutions. While traditionally technology strategy has fallen solely under the purview of IT, SaaS solutions have made an impact on finance including everything from payroll and human capital management, to procurement, transaction accounting, budgeting & planning, reporting and improving efficiency and transparency across the company.
Admittedly, in recent years, finance has been one of the last functions to move to the cloud and adopt SaaS solutions, largely out of concerns about performance and security. However, a recent survey by Host Analytics shows that businesses are getting used to the idea, with 88 percent citing they are more comfortable today with the cloud than they were two to three years ago.
Given the influences that have changed the role of finance, in our 2016 survey, we tapped into CFOs and finance professionals to get their perspectives on current priorities and how they anticipate their roles will shift yet again in the near future.
Key Priorities for Today’s CFOs
As the CFO role continues to expand, the top priorities that have emerged are improving efficiency, driving profitability and growth, and capitalizing on the latest technologies and business models. To do this requires CFOs to consider the following three recommendations.
The first, and most important, is to collaborate more closely with business unit leaders and the C-Suite, especially the CEO. Just as the CFO needs to fully understand the key initiatives, processes and functions across the organization, business unit leaders also need to understand how their initiatives and processes impact financial plans and forecasts. With a greater understanding of each other’s roles and priorities, finance becomes more of a strategic partner and eliminates any misconceptions of being viewed as a roadblock.
Second, CFOs need to strengthen their non-finance skills and adopt a more customer service-oriented approach to the job. This includes communication skills, with the ability to ask the right questions in order to better understand business drivers and internal customer needs, and to provide advice and guidance to line of business executives as they evaluate new business opportunities. It also includes distilling issues down to a few key bullet points, and the artful use of storytelling to drive home an important message as it relates to the business.
Third, CFOs need to provide line of business executives with timely insights and KPIs so that all stakeholders can have a better understanding of the company’s performance across the board. This enables improved strategic decision-making because stakeholders are able to see the big picture, and look back at past performance as well as into the future. To achieve this clarity, many finance organizations are turning to cloud-based and distributed EPM solutions. As the recent Host Analytics survey shows, EPM adoption is on the rise as 41 percent of survey participants indicate already having a cloud-based EPM solution, 29 percent in the evaluation phase, 23 percent planning to move to the cloud next year, and five percent making their move in the next two to three years. That leaves only two percent that reportedly have no intentions to move to the cloud.
It’s clear that the CFO’s role will continue to evolve and expand. This is the result of internal factors such as organizational changes, new business priorities, and strategic direction, as well as external factors including new digital technologies and shifts on a global stage. To lead and affect positive change in their organization will require CFOs to shift their focus from counting and score-keeping to considering the possibilities. To accomplish this, CFOs and their teams need to continue to build on their analytical skills, adopt softer and more strategic business skills, as well as have a solid technology foundation that aligns with their current needs yet is flexible enough to adapt to planned and unexpected changes in the future.