The role of the finance department and, in particular, the CFO is changing fast. Against a backdrop of rapidly evolving technology, business leaders are expecting more from their finance executives.
In the past it was good enough to be the steward and controller, the trusted finance reporter and the technical expert. Now CEOs want their CFOs to play a more integrated role, moving from the back office to the front line where decisions can be expected to influence the strategic direction of the company. The CFO’s task is to become what can be described as an ‘integrated business partner.’
If the pressure isn’t clearly coming from the top, then there is even more reason to step out of your comfort zone. Being a finance professional, as you exchange ideas with your business peers, traverse publications, browse the digital world, it’s almost impossible to not understand the importance of this change in role.
The question then becomes, how can you as a CFO get the best possible support on that journey? What type of decision support capabilities are needed so that you can be at the heart of the business; scanning the horizons, looking for opportunity, mitigating risks, on the pulse of past, current and future performance?
And how quickly can you enable the business to respond to these ‘business moments’?
These two questions provide a challenge for most CFOs and businesses. Previously there was a lot of latency in key business decision support processes. I budgeted once a year for a year, I reported back once a month and I analysed in my ivory tower when I thought necessary. Traditional technology and approaches reflect this outdated view. In many businesses, too many applications (including the ever present Excel) service this spectrum of decision support. I plan, report and control through separate and often very disparate systems built around separate perspectives, stakeholders, interfaces, and timings – what I call “floating islands of truth”.
Does yours looks like an archipelago?
The new CFO needs the ability to work with his business partners, to report, plan and analysis, in that single instance, on demand. Platform technologies that deliver this don’t just exist, but they are transforming everyday businesses, enabling the CFO, and the business, to succeed. Suntory Australia is one business doing just this.
Given our experience and exposure to high performing businesses, what can Professional Advantage pass on? Here are five things to keep in mind:
1. Deal with the reality
Many CFOs find themselves lost in a sea of lengthy reporting processes and struggling to manage it all. Compounding the problem is a lack of technology tools to support finance’s activities and procedures. The bottlenecks this creates is often just seen as too difficult to overcome. I am aware of some CFOs that had this on their urgent improvement list for years. They never have time to look up. The CFO and finance team are buried.
Other businesses have said enough is enough and stepped up and challenged that reality. Within the same period, similar businesses have been transformed to the point that finance is seen as a strategic asset to the organisation.
Why? Because technology has significantly changed the game for finance and for the CFO. It’s very easy for a business to set expectations and horizons around familiarity with older technology. Things that were complex and involved large hoops to jump through are no longer the barriers these days. Indeed, having been the brave, ambitious sponsors of such improvements, we have often heard the hindsight judgement that clients were surprised by what was possible so quickly.
2. Don’t just focus on low hanging fruit
I often hear CFOs say that, when it comes to improving processes, they just want to focus on the low hanging fruit; the ‘quick wins’. Although tempting, this should be avoided in favour of giving proper consideration to real long-term change.
While tweaking has its place, if that’s all you do you’re just spinning your wheels. The major issues will remain there, waiting to be addressed. The key here is to prioritise. Make whatever minor changes are necessary but maintain a big-picture perspective. Plan for the major changes that are needed and roll out a strategy to bring about significant operational improvements.
3. Prioritise to succeed but have a vision and the technology to support the vision
With any major change, a good first step is to create a vision that is centred around your organisation’s strategic goals. The case for change is often found in the corporate vision, for example as presented in an organisation’s annual report (in particular the directors’ statements). This is because, ultimately, that’s what you’re there for, to deliver value and improve decision-making beyond the back office.
In pursuing this it’s best to create a roadmap that includes the technology you’ll need to support the process. Again this is all about maturing the role of finance into that of business partner.
4. Make a winner (and user) out of the CEO
The needs of an organisation’s most senior executives are often overlooked when it comes to making improvements to budgeting, forecasting and other finance-related processes. Beyond the requirement to produce a report or make a presentation to the CEO, they are typically not actively involved in the process and do not experience the benefits of the improved way of doing things.
This is something that needs to be challenged. To successfully transition the role of finance to business partner, the CEO needs to be engaged. It is finance’s responsibility to actively pursue the case for change and execute a strategy that the CEO can see the merits of.
5. Think outputs for everybody
Finance needs to think in terms of for everyone. I’ve seen many instances where a change process results in a series of financial statements and very little else. This represents a lost opportunity. The task here is to produce change that enables better and faster information management, deeper insights and an enhanced ability to achieve long-term organisational objectives. By moving beyond traditional budgeting and forecasting processes finance will cement its place as a critical strategic asset.
While many organisations have a history of failure when it comes to process improvement, advancements in technology can put a stop to this. And if you’re committed to making genuine change, move it beyond the efficiency discussion. Make winners out of everyone, and always stay focused on the vision and on the strategic goals of your organisation. Follow these steps and you’ll expand the role of finance to that of genuine business partner.
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