Achieving Financial Competencies In An Evolving World: The CFO’s Perpetual Challenge

Colin Sampson

Over my career, the scope of CFO responsibilities has expanded dramatically. When I was a young professional, the emphasis was more on traditional “bean counting.” Today, thanks to globalized markets, regulatory and market challenges, and growing information systems, CFOs are expected to focus on the larger realm of value creation. In some forward-thinking firms, financial execs are even stepping up to reimagine business performance.

This challenge reminds me of the changes experienced by our own organization, SAP Asia-Pacific-Japan, over the last 15 years. The details are fresh in my mind because of a case study recently completed by Prof. Jorge Sanz from the National University of Singapore. This extensive report details our evolution as well as the new finance competencies our team developed.

Sanz argues that a combination of process, people, and technology components is essential to transforming financial competencies. He identifies six essential areas required to support meaningful change.

  • Shared service centers – Help achieve significant reduction in complexity and deliver higher operational excellence
  • Centers of excellence for controlling and governance-risk-compliance – Centralize expertise needed to cope with increased regulatory requirements; achieve operational, financial, and strategic targets; and address systemic volatility as a source of continuous risks
  • Financial planning and analysis – Develop a strategy that informs core budgeting, planning, and forecasting activities and handles profitability and cost analysis, performance reporting, and tuning of budgets and forecasts
  • Information technology – Offer new solutions that address the digital evolution of decision making, high-level execution, and reporting in finance and accounting processes
  • Talent management – Address the proper cultivation of personnel, including the continuous education of professionals so they can motivate workers, facilitate personal growth, and support new enterprise initiatives
  • Performance management – Define, monitor, and predict business performance by designing key performance indicators that connect operational results with financial outcomes and identifying financial performance issues

We addressed each of these issues as part of the transformation of the finance organization at SAP. Let me share some of the important lessons learned during this transformation:

  • People are key to any transformation. Be sure to have a solid change management and communication program set up from the beginning to get through the “curve of change.” Overinvest in people up front and be certain that you have the right level of skilled resources in place for going live.
  • Systems should produce one version of the truth. But ensure that you transform the business, not just the systems.
  • Processes must be best-in-class, lean, simple, integrated, automated end-to-end, and standardized as much as possible.
  • Partnerships with the most skilled, knowledgeable, innovative partners for your business are essential to success.

Transformation journeys can be rough, and feathers can get ruffled. You need to preempt disagreements and to be able to deal with these difficult situations. Remember that driving efficiency and effectiveness is not always about democracy and making everyone happy!

Here are a few questions you should ask yourself to enhance the success of your transformation. Be as honest as you can with your answers:

  • Have you fully secured buy-in from top management?
  • Are you being sufficiently bold and ambitious to capture all of the potential value of transformation?
  • Are you spending too much time on the business case?
  • Are you over-engineering the solutions?
  • Are you delivering real value or are you merely striving to deliver consensus solutions?
  • Do you have a strong, action-oriented project management office that is capable and has accountability for making decisions, not just reporting?
  • Do you have a very strong data-migration plan in place?
  • Are you promoting wins – both big and small – and thus building trust?

And one more thing: make sure culture, legal, and statutory affairs issues do not disrupt the progress of your transformation. You will face these issues and you will need to deal with them, but they should not be a barrier to your success. Most people will tell you that they (or their businesses) are different and give you a thousand reasons why they (or their particular businesses) should not be part of your transformation. Be wise to this! Are they really different?

Although we’re tremendously proud of the results achieved throughout this transformation, our entire team recognizes that achieving financial competencies is not a once-and-done effort. Especially in a volatile economy with evolving requirements, these competencies cannot be viewed as a fixed target. By treating financial competencies as a continuous improvement effort, we can prepare for the future change as new disruptions inevitably arrive.

To learn more about how companies can step up to the challenges of transformation, reimagining business performance to enable continuous improvement, read Financial Planning and Analysis 2016. More great resources for CFOs are available now at the SAP finance content hub.

Colin Sampson

About Colin Sampson

Colin Sampson is the senior vice president and SAP Ambassador for the Asia-Pacific and Japan region, and a former regional CFO for SAP. He is responsible for building long-term relationships with strategic and key customers across the region.