Finance transformation, Series 2: As the CFO embraces the strategic side of the business, the role is becoming less about collecting data and reporting, and more about providing foresight and being able to predict outcomes. That was one of the points of agreement from a positive and engaging CFO round table event in Kuwait last month.
Finance leaders attended, from industries ranging from healthcare, banking and automotive, to petroleum, construction, transport and logistics.
The event started with a discussion on finance transformation and of the current role of the finance department or head; most of those present feel it has moved away from custodian of records and numbers to more of a strategic position.
One delegate said the role of CFO should be as a partner for the CEO, to provide the right kind of information for decision making. As the finance function takes on a more strategic aspect, it will need to change from focusing on collecting data and reporting, towards being able to predict events and help the business to take the right kind of positions.
For example, the car trading company had seen a slump in global car sales early, and delayed procurement in order to help inventory.
Becoming a strategic CFO is still an aspirational goal, and the group agreed it’s a struggle to take the role to the next level. The major global reporting requirements around IFRS 9 and IFRS 15 are a challenge. The changes in the regulatory environment are making it difficult to provide predictive information.
As the discussion moved on, there was more agreement around the extent of financial and operational data that exists within a business, as well as external information. The group agreed that it’s essential to look at the right metrics. CFOs need to come up with a clear data strategy in order to know what data points to look at and to ensure the right information is being pulled out of the data.
The CFO should have good sense of being able to sort out the signals from the noise – that is, the large volume of data that is irrelevant. Some of the finance leaders that attended the event already use Adaptive Insights in their business. They said Adaptive’s toolset has helped them but they also need to bring in more data.
Everyone in the room agreed on the benefits of a cloud-based system because it’s easier to access data and be sure that it’s the right information. Cloud also puts the finance function, rather than the IT team, in charge of the numbers.
As the event drew to a close, there was a clear sense that the CFO role is now strongly in focus as never before. Though challenging, it is an opportunity for driving business growth and improving the perception of a CFO’s value and contribution.