Finance exerts new authority to guide business during a crisis.
by Anne Ozzimo, February 2010
Influence—how to get it and how to increase it—was a key theme of the CFO track at Oracle’s Leaders Circle, held this past October at Oracle OpenWorld 2009 in San Francisco, California. The event, hosted by Oracle Executive Vice President and CFO Jeff Epstein and sponsored by KPMG, brought together CFOs and senior finance leaders from around the world to discuss how to increase their influence over the business side of their organizations and how to provide the right guidance to senior management as the economy starts to recover. Wells Fargo Senior Executive Vice President and CFO Howard Atkins and eBay Senior Vice President and CFO Bob Swan were among those sharing their finance strategies and best practices with attendees.
In his opening remarks, Epstein noted that boards, investors, and employees are all looking for CFOs to provide clarity and reassurance that their companies can respond quickly and effectively to market challenges and opportunities. “Many CFOs have never lived through such uncertain times,” Epstein told the group. “Those of us who succeed—who execute the right strategies and make the right investment calls—have the opportunity of a lifetime to broaden our influence over the business and become trusted advisors to senior management.”
A recent KPMG survey echoed Epstein’s comments. The firm queried 500 senior finance executives to determine which strategies CFOs were adopting to more effectively partner with their counterparts in the lines of business since the 2008 credit crisis and global economic slowdown. The results showed that top performers have been expanding their sphere of influence beyond traditional finance functions—such as accounting and compliance—to advise senior management on business decisions across the enterprise: mergers and acquisitions, human resources, information technology, legal, procurement, cost optimization, and capital-raising activities.
During her keynote, Lynne Doughtie, national managing partner for Advisory Services at KPMG, told Leaders Circle attendees that research indicates that most CFOs want to extend their influence over the business, having a say in setting targets, supporting decisions, and measuring results across and within business units.
“The challenge we see for CFOs over the next few years is to move beyond their traditional comfort zones and get closer to the functions that drive the most value through the organization, such as R&D, sales, and marketing,” said Doughtie. KPMG’s survey results, published in a 2009 report entitled Thriving, Not Just Surviving: Insights from Leading Finance Functions, pointed to real-time business intelligence (BI) and a skilled, motivated finance team as two of the most important business levers CFOs can use to increase their strategic influence and drive greater value for their organizations.
Research from KPMG’s report Thriving, Not Just Surviving: Insights from Leading Finance Functions (2009) shows the CFO’s influence over key functions of the organization— and functions such as marketing and R&D where finance can still add value.
Real Business Intelligence Is Rare Top-performing CFOs have learned that influence over the business has to be earned by continually meeting or exceeding business expectations, especially in today’s challenging environment. Trust must be earned by providing robust decision support information to senior management that can positively influence key business decisions. Business intelligence systems that can provide accurate, real-time data to decision-makers are essential to earning that trust.
“There is severe pressure on the finance function to provide timely and reliable information to the business, especially on the impact of market changes on sales, EBITDA [earnings before interest, taxes, depreciation, and amortization], liquidity, and cash flows,” noted KPMG’s Doughtie. “Yet many finance functions are struggling to provide the required level of business support, hampered by complex system architectures, poor-quality data, nonstandard processes, and nonaligned business metrics. Real business intelligence is still rare, even among organizations that have invested heavily in business intelligence solutions.”
The key isn’t to stop investing in BI and enterprise performance management (EPM) solutions, but rather for finance executives to partner with IT leadership to improve the speed and quality of BI and more clearly map and align global data sets to key business metrics. “Finance leaders are in a unique position to understand the business value drivers and know the sources of data that are needed to support them,” Doughtie told the audience. “Top-performing finance functions are now seen as the custodians of businesswide information and are pivotal in structuring data sets that align robust information to key business metrics. Leveraging real-time business intelligence can help CFOs meet or exceed business expectations, earning them the trust of senior management and the right to influence key business decisions.”