In the era of digital transformation, organizations aren’t just demanding more from their technology investments; they are demanding more from their leaders. And the role of the CFO is not exempt.
Whereas once it was sufficient for CFOs to be the custodians of financial performance, pressure is mounting to expand responsibilities beyond their bubble of specialization.
An opportunity now exists for CFOs to take a more active role in their organization’s growth agenda, and provide a forward-facing perspective that guides its strategy into a future where the impact of digital technology is generating greater uncertainty.
Yet despite their evolving mandate, many finance professionals are struggling to translate their quantitative analytical capabilities into operational and strategic insights that deliver improved corporate performance, and ultimately, higher growth.
In 2017, Oxford Economics surveyed 1,701 finance professionals across multiple industries and four global regions, including 300 leaders from Australia & New Zealand, to uncover their attitudes towards their function’s changing requirements and challenges. Questions focused on business performance, efficiency, and GRC (governance, risk, and compliance), and finance’s use of technology.
Within the global community, a group of 11.5% emerged who demonstrated six attributes that saw them classed as being finance leaders. These included being a driver of strategic growth initiatives, collaborating regularly with other business units, and having strong influence beyond the finance function as well as foundation capabilities relating to effectiveness in core processes, improving efficiency, and handling regulatory change. This group was almost twice as likely as non-leaders to report their company’s market share increasing in the past year.
Australia had the highest proportion of leaders worldwide, at a staggering 12%. However, the gap between those deemed “leaders” and those not is prevalent, and it is clear that CFOs must take action to work towards achieving the attributes that ensure strategic growth.
Bridging the gap between true leaders for ANZ
While it seems ANZ finance professionals desire—and in many cases achieve—tight integration into their organization’s strategic planning, they are struggling to bridge the gap to being true leaders. While most respondents believed finance was increasingly involved in strategic decisions across the organization (88% for Australia and 78% New Zealand), when asked about their role in driving strategic growth initiatives—a critical attribute of leaders—only 38% of Australian and 42% of New Zealand respondents ranked this among their top three priorities. Instead, they reported their top priorities as traditional core finance functions such as optimizing risk management, optimizing working capital, and improving efficiency across the organization.
Become the influencer
ANZ respondents appeared to be lauded for their technical skills, but not their vision. While the task of evaluating the financial viability of strategic growth initiatives was ranked as one of the top three business goals by 25% of Australian and 24% of New Zealand respondents (slightly behind global respondents at 29%)—ANZ respondents lagged 20 percentage points or more behind when it came to their influence in activities such as advising on new business partnerships, M&A activity, entering new markets, and changing business models. However, the gap closed when it came to involvement in innovation and new product development.
Being equipped to meet demands
For a finance professional to truly step up to the demands of a transformed organization, they must be equipped with the necessary technology and systems needed to achieve their business objectives. Happily, Australian respondents were, however, more engaged in the purchasing of technology specific to the finance function, being on par with their global counterparts at 98% involvement. However, New Zealand respondents were less engaged, reporting only 88% involvement.
Australian respondents also reported a higher general regard for the role of emerging technologies within finance. For example, 82% reported cloud-based applications as important (above the global average of 73%), but this fell to 62% for New Zealand. When asked about the importance of cloud-based applications two years from now, 94% of Australians marked it as important (ahead of the global average of 86%)—still well ahead of New Zealand respondents, on 84%.
The path to technology transformation within finance is not necessarily an easy one. Australian respondents reported their biggest challenge to making the finance function more efficient was the difficulty of updating technology without disrupting daily activities, as reported by 64% (compared to 48% for New Zealand). For New Zealand respondents, the greatest challenge was a lack of workforce skills, as reported by 60%, compared to 57% for Australia.
Finance professionals in ANZ also appear to struggle when asserting their influence on overall technology purchasing decisions across the organization. While globally the result was 97% involvement, this fell to 91% for Australia and 82% for New Zealand.
Becoming a finance leader
Becoming a finance leader means overcoming these challenges and taking a more active role in designing the information architecture needed to deliver the insights that will better guide the organization’s strategy. That means fostering the capabilities needed for better collaboration and forward-looking analysis, and then investing in the technology essential to delivering that.
These may seem like desirable qualities. But in fact, they are more than that; they are essential. The speed with which digital technologies can create new opportunities for emerging and existing competitors alike means organizations must do everything they can to ensure that all functions can meet new challenges that arise more rapidly than before. For finance, this means stepping beyond current roles to embrace a more forward-looking and collaborative future.
Download the Oxford Economics CFO study to get all Australia and New Zealand survey results.
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