The role of the CFO is changing, and rapidly. While the CFO has always played a critical role in successful businesses, over the last few years that role has expanded beyond traditional finance disciplines to increasingly include broader business strategy and transformation initiatives.
CFOs' own priorities are evolving, as well. Top priorities have traditionally been profitability, cost management, cash flow and working capital, but the cost levers that worked in the past may be less effective in the future because the easy wins have already been recorded. And some CFOs are worried that further cost cutting may endanger growth.
A recent survey conducted by Accenture and Oracle in conjunction with Longitude Research, of 930 global CFOs from organisations of varying sizes, found that the CFO role has become more strategic and influential over the last three years. The opportunity now exists for the CFO to drive change across the entire organisation, not just the finance function.
While the CFO role is becoming more strategic and influential, with 71 percent of respondents saying that CFOs' overall level of strategic influence has increased over the past three years, a number of obstacles stand in the way of CFOs reaching their full strategic potential. The largest obstacle identified was the challenging economic environment (cited by 37 percent of respondents) followed by a shortage of time (35 percent) and the lack of integration between the finance function and other parts of the business (31 percent).
CFOs recognise that technology can help them overcome many of these barriers and fulfil their strategic potential. In fact, respondents ranked technology knowledge second only to industry knowledge when asked how they could improve their skills and capabilities to execute on their cost and growth agendas.
A large majority (84 percent) of CFOs responding also noted that cooperation with their CIOs increased during the past three years, another indicator that technology is an essential tool in the finance suite. Technology innovations provide CFOs with an opportunity to shape IT in a way that supports broader business goals. Cloud computing, big data, analytics, mobile, and social technologies are having a dramatic impact across almost every business function and activity.
Among survey respondents, 57 percent agreed that investments in big data and analytics will be a key source of competitive advantage. To achieve business objectives such as increasing efficiency, improving collaboration and visibility between finance and the business, increasing organisational agility, and fostering innovation, CFOs may need to work closely and effectively with CIOs to implement these technologies.
In fact, CIOs have an opportunity to influence decision makers by helping CFOs understand the potential return on investment from things like analytics, big data, and cloud, especially with emerging technologies increasingly at the heart of new CFO strategies for overcoming the challenges they face.
Cloud computing, for example, can offer CFOs opportunities to drive additional efficiencies, both because it can reduce the need for up-front capital expenditure on hardware and software licenses, and because it can minimise the uncertainty associated with investing in new technology. This may free up capital that could then be allocated elsewhere.
Unfortunately, while there is considerable enthusiasm about the potential of IT and new technologies to support strategic issues, many CFOs are still bogged down in IT maintenance and integration concerns. Survey respondents pointed to the cost of maintenance, the cost of integration and the lack of integration between systems as their top concerns about their own company�s technology, followed by data quality and integration.
Dealing with these legacy problems consumes a disproportionate amount of time according to respondents, and also prevents CFOs and CIOs from focusing their attention on exploiting more innovative technologies that can help improve competitiveness and drive growth.
So while CFOs are poised to become more effective change agents, fewer than one in three CFOs among our respondents plays a leading role in business transformation, with just 32 percent playing a leading role in building the rationale for business transformation, and only 18 percent managing the transformation process. But, given their experience in finance transformation and cost management, and their unique perspective across the business, this is an activity that many CFOs are extremely well placed to lead.
As the CFO agenda broadens, finance officers are leveraging back office processes, controls and analytics to provide insights and priorities for transformation, with 79 percent of survey respondents viewing access to information as a key driver of organisational agility.
The right information and analytics can help CFOs successfully step up and be agents of change. Respondent CFOs also recognise the importance of robust analytics capabilities that deliver the insights to underpin performance management, inform senior leaders and foster innovation to stimulate growth. As further integration proceeds, analytics along with mobile, social media and other technologies can help CFOs fill this broader strategic role.
Technology does not provide all the answers for CFOs seeking to expand their role. Becoming an effective change agent may also require CFOs to demonstrate strong leadership, commercial and strategic insight, and the ability to overcome organisational resistance. These attributes, when combined with innovative technology and a close working partnership with the CIO, can help CFOs realise their potential within the organisation.
- Scott Brennan is a managing director responsible for Enterprise Performance Management in the Finance & Enterprise Performance Management consulting group at Accenture, a global management consulting, technology services and outsourcing company.
- John O'Rourke is vice president of product marketing at Oracle, where he is responsible for enterprise performance management solutions. He frequently blogs on the Oracle Enterprise Performance Management blog.
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