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CFOs have always provided guidance on company strategy and been a sounding board for the CEO’s ideas, hopes and fears. It’s hardly surprising they are often first in line to succeed the chief executive. Today, they are expected to deliver more value than ever to the business. They need to be as confident in data analytics and financial reporting as they are in computer programming, managing teams, and presenting complex ideas to the board in easily digestible terms.
A recent report from Forbes and KPMG found that six in ten (63%) chief executives predict the CFO’s influence will increase more than that of other board directors in the next three years. According to the report, the CFO’s greatest contribution lies in their ability to boost a company’s performance and growth.
Tellingly, however, almost one in three CEOs surveyed said that their CFO didn’t help them enough with the challenges of running their businesses. A lack of expertise in new technology (in particular, cloud-based ERP software) was a common complaint. CFOs and finance departments should take note if they want to carve out their rightful role in shaping business strategies.
How can CFOs and their teams step up to the challenges of modern business? The answer lies in a new approach to data.
six in ten (63%) chief executives predict the CFO’s influence will increase more than that of other board directors in the next three years.
One of the biggest challenges for businesses today is to make sense of the huge volume of data they collect, both from customers and internally. Finance teams can spend all of their time gathering and analyzing data on the business’ assets. The challenge today is to distill this information into something meaningful, especially as organizations’ performance reports are increasingly filled with “intangible” assets – like brand loyalty and social media reach – that are not so clearly defined.
Achieving this comes down to consistency. In particular, consistency in the way metrics are treated and measured across every line of business.
Consider the various players in a traditional sales pipeline: the sales team will assign value to a deal based commission, the marketing department will treat it as constant currency, and finance will view it in real currency terms. Unless all these teams use the same financial “language” when communicating with each other it becomes nearly impossible for the business as a whole to measure against KPIs accurately or reliably. And when one considers just how many KPIs an organization sets for itself the importance of consistency becomes all the more apparent.
Unless all these teams use the same financial “language” when communicating with each other it becomes nearly impossible for the business as a whole to measure against KPIs accurately
The CFOs role is therefore to bring clarity and consistency to financial reporting so the business can gauge its performance more accurately and make well founded decisions for the future. This is arguably the most important way in which CFOs are modernizing the finance function and delivering significant value to the boardroom. Chief executives around the world are turning to finance leaders to help them run their business more intelligently and more cost-effectively, and by spearheading a more unified approach to data CFOs will be in an ideal position to fulfil these Great Expectations.
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