Part 1 of the “The Finance Leadership Playbook” series
The traditional influence of CFOs is steadily broadening well beyond the bounds of financial responsibility. With the eye of an entrepreneur and a tight grip on costs, today’s finance leader is now also expected to drive strategic growth initiatives, handle regulatory change across the company, improve efficiency and performance, and partner closely with other business functions.
CFOs are indeed handling a full plate. But proactive achievement of this undertaking can yield 2x bigger market share than those who do not, according to “How Finance Leadership Pays Off,” a recent Oxford Economics study sponsored by SAP. In the report, Julian Whitehead, CFO of Airbus Defence and Space, provided a concise assessment of the rise of the business-minded CFO: “If you’re not on the business-winning side, if you don’t understand how you can drive more value out of your portfolio, then you’re not influencing the future, and you’re not influencing the share price.”
How can CFOs make a visible impact on overall business performance while handling such a wide range of responsibility? By paying attention to three foundational pillars that enable the finance organization to collaborate with areas of the company to construct viable new business models and growth opportunities, predict and evaluate outcomes, and flexibly adapt structures and processes to drive efficiency and advantage.
1. Drive efficiency and automation
As finance organizations counter market disruption, business change, and a highly digital world on a daily basis, operational efficiency and automation are a critical part of keeping up with it all. In fact, the Oxford Economics study revealed that nearly one-third of surveyed finance leaders, whose revenues grew by 5.1%–10% over the past year, cite automation as an enabler of finance function efficiency.
Pioneering capabilities with the cloud, artificial intelligence, blockchain, the Internet of Things, and machine learning helps streamline and accelerate activities such as accounts payable and invoice matching that heavily rely on repetitive tasks.
2. Deliver performance and innovation through collaboration
Increasingly, disruption and change are synonymous with the digital economy. This reality is reinforcing finance’s role as a key influencer in business performance and innovation as it leverages mature technology such as Big Data, enterprise resource planning (ERP), and real-time analytics. However, this information is not useful if it is not given to the decision-makers who need it.
Technology such as the cloud, in-memory computing, and enterprise collaboration tools can help turn that insight into action by extending information access beyond the finance silo. According to study results from Oxford Economics, corporate performance improves significantly when finance breaks out of its silo and exerts leadership in a wide range of areas such as supply chain, procurement, and innovation.
3. Manage risk and compliance
Higher expectations for growth and profitability, as well as the speed and impact of evolving regulations, are complicating finance’s ability to manage risk and compliance. By aligning corporate functions with operational, risk, and audit requirements, finance embeds controls within business processes to address regulatory, policy, and other compliance needs while managing enterprise risks and improving cybersecurity.
Oxford Economics research validates this approach by noting that companies with an annual revenue growth between 5%–10%, on average, mandate collaboration between finance and other lines of business to inspire the changes necessary to protect the organization and build brand success.
Technologies provide finance with an opportunity to showcase its ultimate value
Whether it’s process automation, digital transformation, compliance obligations, or moving ERP systems to the cloud, every executive is eager to try something new. To them, the threat of ever-changing customer expectations, a growing skills gap, and economic uncertainty is significant and requires innovative thinking. For CFOs, this challenge is more than a test of skill and influence; it’s an opportunity to be at the forefront of delivering fresh perspectives, higher productivity, and industry-disruptive direction that is critical to the success of every business.
Further explore the benefits of each of these pillars and the technologies that support them. Check for new weekly installments to our blog series “The Finance Leadership Playbook” and read the Oxford Economics study “How Finance Leadership Pays Off,” sponsored by SAP.
Learn how organizations are gaining instant financial insights and using them to make better decisions—both now and in the future. Register now for 2017 Financial Excellence Forum, Oct. 10-11 in New York City.Comments