Part 2 in a series. Read Part 1.
It’s a volatile world out there, with new technologies and young, hungry startups disrupting industries left and right. In this uncertain environment, the traditional ways of finance are in danger of being driven into irrelevancy. How can CFOs drive their companies to stay competitive and dynamic? On Financial Excellence with Game Changers, a program presented by SAP on The Voice America Business Channel, three experts tackled this challenge.
The program was moderated by Bonnie D. Graham, with a panel comprising David Axson, managing director at Accenture Strategy and lead of the Global CFO Strategies Practice; Bo Lykkegaard, associate VP for the Software Tracker, Public Cloud Services Tracker, and European Enterprise Applications Research at IDC; and Birgit Starmanns, senior director for product marketing, SAP S/4HANA and SAP Fiori, at SAP. The following is an excerpt from the Feb. 2 episode.
Bonnie: Let’s talk about the new CFO agenda: driving growth in our increasingly volatile, global, digital marketplace while helping to ensure compliance and delivering ever more enterprise value. David, why don’t you take us through that?
David: I really do believe we’re on the cusp of a true transformation in the value of finance and the CFO. Our most recent Accenture research talks about the increased role and relevance of the CFO in strategic conversations and in board-level conversations. You know, trying to understand disruption opportunities and the financial implications on the P&L and balance sheet.
We’re also seeing CFOs who understand that digital means a lot more than just mobile, cloud, analytics, and social. We begin to think about the technologies that are truly transforming businesses.
The fundamental question is this: how do we capture the opportunities digital provides without destroying our existing business? How do we coexist and manage that transformation in the face of a changing environment? Are there opportunities for incumbent players and not just new entrants disrupting existing marketplaces? Incumbents have a phenomenal opportunity to be part of this transformation, and the role of the CFO is to find cash and capital to fund this transformation.
It’s a tremendously exciting time. We’re seeing CFOs who are much more digitally aware and connected. They know what’s going on in the marketplace, what their customers are demanding, and what their competitors are investing in. They’re asking themselves all the right questions: How do I measure success? How do I predict and forecast behavior? How do I make smart capital allocation decisions in the face of uncertainty?
It’s exciting, but at the same time, it’s increasingly demanding on finance. We can’t channel all of our energy playing with spreadsheets and processing accounts payable if we’re, for example, trying to understand what the impact of 3D technology could be on our inventory. What happens when our customers start printing our products rather than ordering them?
It truly is a transformational age. It creates a lot of opportunity that we should be looking to capitalize on.
Bo: I think finance has to pick its battles. One of these battles is to lower the ambition in terms of the technology that they’re using. Birgit was talking about the sharing economy with companies like Uber and Lyft. I think there’s going to be a sharing economy with finance applications as well. Finance departments will use and share with cloud applications, but that’s not going to be the differentiator. Are you using an on-premises, deeply customized application? Use this as an enabler. Use the application that you can take ownership of and work on business models and performance management initiatives with that application.
Birgit: I agree with both of them. Finance should be a part of looking for new opportunities, but we still have our current business to focus on. One of the things that we have to evaluate is the cannibalization of products as we move into these new models. We need to make sure that we can continue to fund the growth of the company without cannibalizing existing business too much.
I’m also seeing that CFOs are not just looking at internal information anymore. They’re also looking at external information like market trends and competitor activities, and using this to assess their company’s performance. It’s definitely more strategic and you can bet that’s something they’re sharing in the boardroom.
Analytics tools are going to be very critical for this, so I completely agree with Bo. Let’s not pick battles in a deeply ingrained system, but let’s look at where finance can provide the most value. I think it’s really in that whole predictive, forward-looking space. That’s something that finance can get more involved in.
Before, CFOs would just look at management accounting information, GL accounts, etc. Then they started to expand to more operational activities – information from manufacturing and sales and marketing were considered. Nowadays, CFOs are also looking at market information, industry trends, and global economic health. All of this requires a larger vision on the part of CFOs.
The final topic in this series:
- Balancing Innovation, Risk, Security, and Privacy: Walking The Tightrope
For more insight on this topic, please read the latest Accenture research, Finance 2020-Death by Digital and Architecting the High-Velocity Finance Organization.
To learn more about how finance executives can empower themselves with the right tools and play a vital role in business innovation and value chain, review the finance content hub, which offers additional research and valuable insights.