The chief financial officer’s (CFO’s) role continues to evolve to that of an architect of business value. It is moving toward driving business growth and managing complexity while controlling costs.
Our 2014 High Performance Finance Study delves deep into the changing role of the CFO—one that has more strategic influence and drives business value by supporting growth and managing complexities while keeping costs in check.
The research, first carried out in 2004, has seen the role of the CFOs continually evolve. This year’s study comprised a survey of more than 600 senior finance executives, as well as interviews with more than 30 CFOs and other senior finance professionals.
Among the respondents to our survey:
Seventy-five percent say that the CFO's role in supporting strategic decision making has increased in the past two years.
Seventy percent think that the CFO's influence over executing business transformation initiatives has grown.
The study highlights that:
Complexity is the biggest challenge senior finance executives face today. However, it can also be an opportunity for them to implement major business transformations to further simplify, standardize and optimize business processes.
Digital technology is having a significant impact on the finance function’s performance. The new digital technologies can help senior finance executives better manage complexities and improve decision making.
The study reveals five key imperatives for CFOs to become the business value architect for the enterprise. These include:
Aligning strategy across the enterprise.
Transforming operating models.
Managing business performance and finding the right measures to do so.
Building digital technology acumen and stewardship.
Continuing to develop advanced finance capabilities.
Our 2014 High Performance Finance Study revealed five key high-level findings:
Finance functions have made significant progress over the past three years in managing some of the external factors impacting performance, including the challenge of permanent volatility. Overall, senior finance executives are more satisfied with the performance of their finance function than they were in 2011 across every dimension surveyed.
Complexity, in its various forms, is the biggest challenge finance organizations face today. But it is also an opportunity. Companies can help manage business complexities by standardizing and optimizing processes to streamline and simplify the organization.
Cost control is no longer the primary emphasis in most organizations today. Instead, CFOs are increasingly focused on investment in growth. In doing so, many are also finding an opportunity to drive broader organizational business transformation, building value for the enterprise.
Digital technology is having a deep impact on the finance function’s performance. It provides a clear opportunity for CFOs to accept and exploit the digital revolution, given their unique position at the intersection of finance, technology and strategy.
Finance leaders at high-performance businesses are more likely to have seen their influence grow in key strategic activities. They report high levels of satisfaction with the performance of their finance function and are closely involved in assessing technology investments.
As the CFO’s role continues to evolve, we see five key imperatives for them to truly become the architects of business value:
Align strategy: The CFO’s agenda and objectives must be more closely aligned to business strategy and those of the chief executive officer. The CFO will be a key player in the formulation of business strategy and will need to lead the finance function to deliver on strategic objectives.
Transform operating models: The CFO will need to continually evolve the operating model as companies scale up or down to address a more demanding business environment. A transition toward a global or integrated shared services model can help reduce costs and quickly gain access to more value-added services.
Manage performance: The CFO needs to be much more forward-looking and track business indicators much earlier in the cycle.
The finance function should take a holistic view of performance, analyzing financial outcomes both in terms of decisions taken in the enterprise and changes in the broader external market.
Embrace digital: CFOs should develop a deeper understanding of the digital technology landscape and learn how to “speak digital.” The technology component of business processes can no longer be isolated, and the CFO will need the capacity within the finance organization to assess the full scope of digital technology considerations.
Develop finance capability: As finance spends much more time interacting with business leadership, there will be an increasing need among finance professionals for skill sets that support advanced data analysis and the use of digital technology. Finance will also need to develop specializations in the financial aspects of specific business processes such as pricing and trade promotion.