Part 2 in the 4-part “SAP Finance and EY Talk” series by Joel Bernstein of SAP and Tony Klimas of EY
Some time ago, after coming up in various finance roles at SAP and elsewhere, I left finance and moved into operations. I think it was the right move.
I’ve since returned to finance. But I was recently reflecting on this move back and forth during a joint interview with Tony Klimas, global performance improvement finance leader at EY. Tony was asked about the changing role of the CFO. His response was interesting.
Secretary of state
Tony says the role of the CFO is increasingly like the role of secretary of state or prime minister. The CFO, in other words, is like the top diplomat for a company. “A CFO needs to think strategically, communicate well, and interact with many different constituencies and stakeholders – from the board to customers to investors,” he says.
I would add the notion of “internal secretary of state” – where it is equally important for the CFO to establish a broad reach within the company, coordinating with all groups internally. Since the finance function is spread horizontally throughout most organizations, this internal diplomat role for the CFO makes sense.
Important for digital transformation
Beyond the benefits of cohesion, the CFO’s ability to coordinate effectively with groups inside and outside the company plays a critical role in digital transformation. To the extent that a transformation effort involves a change in business model – such as moving to the cloud and charging as a subscription – finance needs to be deeply involved. A digital transformation that doesn’t impact finance is a rarity.
Finance can also drive transformation. I’ve written in the past about the transformation of our own finance function here at SAP. Today we leverage a shared-services and Center of Excellence model that allows for the efficient integration of financial processes for newly acquired entities. This helps speed the rate at which SAP can integrate new acquisitions and realize value. Growth, in other words, is easier and faster. Not bad.
A two-way street
What’s important for CFOs is important for other chief execs, as well. I advocate that we all get out of our silos as much as possible and cross-train, as it were. The digital economy demands that companies fire on all cylinders. This means knowledge, coordination, and relationships across all organizations – including finance, operations, HR, sales, customer service, supply chain, and more. That includes external partners and stakeholders.
Much of this is already happening. Tony cited one data point from a report by recruiting firm Korn-Ferry that shows that when it comes to hiring a new CFO, less than 10% of the senior executives surveyed viewed controllership skills as important, while over 50% viewed strategy and general management as the most important skill set for aspiring CFOs.
This is a good thing. In my own experience, moving to operations did more than broaden my scope of vision. It also helped me better understand the role of finance – just as you better understand your home country after living in a foreign country for a time.
Regardless of how one comes to the CFO role, it’s importance for digital transformation is worth reemphasizing. CFOs are trained to understand almost instinctively that whatever action they take, it will show up on a financial statement. Understanding this through and through can be a tremendous benefit for companies as they transform their way to successful profitability in a digital economy.
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.