Do you consider yourself to be a CFO or a business strategist? The answer should be both. As CFOs we are being pushed to take a more strategic, future-oriented view of our role. When your CEO and the rest of the board are deciding whether to say, make a capital investment, purchase a company or introduce a new product, we are the ones sitting in the hot seat, and must have the timely insights at our fingertips to assess the associated financial risk.
Pretty much every modern finance department already relies on IT systems to deliver the data we need to report on financial performance and financial planning, but it’s not being used nearly as effectively as it could. A recent CFO Research survey found that just twelve per cent of finance teams are able to respond to a request for financial reports or analysis from a line of business manager in real time. Fifty eight per cent of CFOs could respond in a day but not in the right way. As a profession, we need to be able to do better than that. So why aren’t we?
It seems the problem, in part, is the need for industry-specific data that finance departments typically do not access. For example, although finance has long used analytics, it has never really used the information that analytics generates to drive better operating performance. Historically, this is because there’s been a gap between the kind of information that is available to analyse and what is actually useful for decision making.
The good news is that the gap between information needs and availability is narrowing. CFOs can now connect information from financial systems with data from other business functions, as well as cloud-based external sources for better finance analytics. And thanks to technology, we can do so faster at unprecedented speeds.
I think we’ll see more change in the next few years than in the last few decades as CFOs make a much faster and more effective link between information and strategic decision making. As the role of the CFO becomes more strategic, so too do the expectations on what value a CFO can and should deliver. If you think your role is simply producing a correct set of accounting numbers, then think again.
According to Harvard Business Review, in the past two years alone, seventy three percent of CFOs have influenced, challenged or supported strategic decision making in their company. Effective use of new technologies certainly plays its part, but IT now needs to be the facilitator, not the owner, in supporting CFOs in their strategic mandate. Sophisticated technologies that are capable of making business data more useful and relevant to finance organisations are readily available. However, to fully take advantage of the opportunities they create, CFOs must access them, and apply them as part of their own strategic skill set.
Meeting compliance requirements and daily transactions, while providing strategic advice to the business and evaluating potential consequences of different actions means CFOs must walk a fine line. And it’s only going to get more complex as the pace of business and return to growth increases. Successful execution requires instant insight and enterprise-wide consistency, as well as a strategic mind-set.