I was at a finance leadership roundtable recently, with other CFOs. As the evening wrapped up, it occurred to me that we hadn’t talked about finance at all. Instead, our focus was what each of us was doing to impact change and help our prospective companies grow.
That discussion reflects the changing role of the CFO at a macro level.
When I think back to the beginning of my career, the CFO was in a control function focused on accounting tasks and closing the books. Years later, in my work at many tech companies, especially SAP, I’m experiencing how the role has changed. The CFO is now looked upon as one of the primary leaders within the management team.
Reality backed by science
The CFO is often the last person in the room with the senior leaders to help make decisions to drive growth and enhance performance. A recent Oxford Economics study backs this premise. In a global survey of 1,500 finance executives, 94% of North American CFOs said they are increasingly involved in strategic decision-making outside the finance function. The study also shows a clear correlation between a highly visible finance function and rapid revenue growth. North American CFOs are twice as likely as finance leaders overall to expect revenue growth above 5% in 2017/2018.
It’s in a company’s best interest for finance to spend less time on control functions and more time driving strategic growth. In my experience, much of that shift is being enabled by technology.
Bearing witness to tech-enhanced finance
Digital tools can make all the difference in enhancing effectiveness and collaboration. My first six months with SAP bears witness to this. We’re using technology to work more efficiently through shared service centers that give us much better economies of scale so we can optimize our finance resources. This frees us to collaborate with peers on decisions to drive performance.
Cycle time is much faster than ever. Our peers in other business units are looking for instantaneous decisions. They want to evaluate scenarios in a meeting and walk out with an action plan. Finance must provide the data points in real time to make decisions
The power of real-time insight
As a relative newcomer to SAP, I’m impressed by the power of in-memory computing in making real-time decisions. We’re able to move much faster than what I’ve experienced in other companies. Information that could take many weeks to assemble, correlate, and review, we do in real time. That gives us a significant advantage when spotting a trend or identifying opportunities. It allows us not only to make decisions more quickly, but monitor them to make mid-course adjustments as needed.
I’m not alone in my fondness for all things digital. The Oxford Economics study says my peers in North America are ahead of the global average in their commitment to technology. Yet many lag significantly behind those that qualify as finance leaders, suggesting a real opportunity for improvement. Finance leaders say technologies such as cloud-based applications, Big Data, and real-time analytics are critically important to the finance function’s successful performance, and predict they will remain critically important in the future. These executives understand the importance of technology to the success of their function.
Finance leaders, whether they’re board-level CFOs, divisional CFOs, or finance managers, are expected to be transformation agents and business partners. The control functions are still important; if you don’t get those basic control functions down, you don’t earn the right to be at the table to help make higher-level decisions. Those who can’t make this transition will most likely remain in control functions. The requirements of the role are changing too rapidly. To be front and center as a leader, CFOs must change too.
To explore this topic more fully, download the North America version of the Oxford Economics report to learn how financial leadership is paying off across the continent.
And be sure to check out this infographic to see how finance leaders are setting the pace for the industry and reaping big rewards for their businesses.