Our past global research discussed how the commercial CFO had emerged as a strategic partner to the chief executive, often serving as the only leader with full veto power over a major decision. Increasingly, they are playing a similar role across the extended leadership team, as they shift the focus of their counsel from compliance and reporting to strategic planning and performance improvement.
Within the federal government, the story has been more nuanced historically, with some federal CFOs content to operate within their own silo instead of actively collaborating. However, this is changing rapidly, as 96 percent of federal finance leaders (vs. 86 percent commercially) have increased the frequency and scope of their collaboration with C-suite partners outside of finance over the past two years. And 93 percent believe that even when conditions return to normal, leaders across their agency will increasingly look to the CFO for insight and counsel, not just funding.
With this in mind, the 2nd role that federal CFOs should adopt to succeed is that of the strategic advisor, by providing targeted insights and modeling to help other C-suite executives improve the performance of their organizations.
Federal CFOs are well-positioned to play this role. They have visibility spanning the entire enterprise and across the full budget lifecycle, access to underlying data and analytics, and a high-level understanding of enterprise risk and operational resilience. By continuing to enhance partnerships with their peers and gaining a deeper understanding of their needs, they can provide actionable insights that drive critical performance improvements.
A couple of ways federal CFOs can further bolster their strategic advisory roles within their agencies’ leadership teams is by playing a more hands-on role in shaping technology agendas and exerting influence across the agency.
Steering the technology agenda
Beyond the adoption of IT within finance, federal CFOs are working increasingly with CIOs and others to set the technology agenda for the entire agency. As a matter of fact, 91 percent (vs. 72 percent globally) say the CFO has the final say within their agency regarding overall technology direction with 20 percent agreeing strongly with this statement. Likewise, 87 percent (26 percent strongly agree) say that they have ultimate authority over data governance for their agency.
The broader finance team is also playing significant roles in technology initiatives. These roles include: implementing new enterprise technology (34 percent) and business transformation initiatives (32 percent) and developing new products and services (45 percent) as a primary strategic focus.
In terms of new technology investments, 62 percent of federal respondents said finance was formally consulted at the beginning and throughout regarding the business case for major initiatives. Specific guidance that they offered included helping other executives structure the pace of their technology investments (53 percent); successfully adopting new and emerging technologies (43 percent); deriving greater value from technology investments (37 percent); and managing cyber-related risks (34 percent).
On a personal basis, nearly all respondents maintain a continuing interest in emerging technologies with more than half actively following their evolution. And roughly one out of five (19 percent) are leading technology discussions across government via public speaking engagements, authored articles, and other examples of thought leadership.
Exerting formal and informal influence across the agency
Federal CFOs recognize (80 percent) that, due to cultural factors, their agencies are a long way from seamless interactions across functions. At the same time, they also believe overwhelmingly (92 percent) that it is incumbent on the finance team "to break silos and enable greater collaboration across the enterprise."
When asked to rate their working relationship with key stakeholders from reactive (1) to proactive and fully connected (7), respondents gave highest scores to OMB (5.70), operations (5.49) and strategy (5.36), suggesting a greater alignment with topline strategy execution. In contrast, near peers, including risk, compliance and procurement, scored lower, as did groups like human resources and public affairs.
To overcome these gaps and exert greater influence across the agency, federal CFOs have embraced a number of approaches “to a great extent” over the past two years, including:
- Providing more advanced and/or personalized analytics insights to C-suite peers – 66 percent
- Seeking additional support from external specialists – 63 percent
- Introducing new metrics to measure finance’s agency-wide impact – 60 percent
- Empowering finance professionals to better support agency-wide initiatives via new tools and training – 58 percent
- Increasing the frequency and scope of C-suite collaboration – 57 percent
Separately, they noted that the top benefit of advanced financial forecasting was strengthening relationships across the agency (51 percent).
In terms of empowering their teams to collaborate more effectively with mission and business peers, principal strategies include embedding them directly into other functions (54 percent); improving collaboration skills (48 percent); and expanding use of automation to free workers to take on more high-value roles (47 percent).
Going forward, CFOs have prioritized additional levers for implementing strategic change, including providing greater access to performance data across the enterprise (39 percent); fostering a better understanding of enterprise risk (36 percent); leveraging their financial authority over investment decisions (35 percent); and engaging more directly with OMB and congressional appropriators (33 percent).
Critical actions for federal CFOs:
- Increase the frequency and scope of collaboration with C-level partners. Establish finance as the source of enterprise knowledge and insight and use it to foster common ground across the leadership team. In addition, CFOs should go beyond regular reporting to facilitate more interactive reviews of strategic priorities, investments, initiatives, and decision-making.
- Provide more advanced and/or personalized insights to senior business partners. Identify your senior leaders’ most critical issues and tailor your insights to provide the context and perspective that they need to operate effectively. Evaluate how you can expand self-service to accelerate decision-making. Take advantage of AI and machine learning to provide more real-time intelligence. Over eight in 10 (83 percent) CFOs that are doing so have increased their influence across the business.
- Break down barriers to creating a more insight-driven agency. Partner with peers, including your chief information officer, chief data officer and chief risk officer, to create an integrated strategy for transforming data into more actionable intelligence.