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The role of the CFO has developed with tremendous speed over the past few years. As finance teams have moved out of the back office and onto the front-lines of decision making, their responsibilities have expanded from being number crunchers reporting into the board, to taking greater responsibility for company performance and direction. Modern finance teams have access to more company-, performance- and operational data than ever before, and in many organisations it is down to the CFO to bring it together, make sense of it for their colleagues, and chart a course for success.
I recently spoke with Nick Castellina, Research Director for the Business Planning and Execution practice at leading independent analyst house the Aberdeen Group, to learn more about his understanding of modern CFOs and their relationship to technology. Nick has been with Aberdeen since 2010, and leads annual studies on Enterprise Performance Management, Business Process Management, Professional Services Automation and Project Management, and has a great understanding of how the relationship between finance professionals and technology is changing.
As finance teams have moved out of the back office and onto the front-lines of decision making, their responsibilities have expanded
Nick told me that in the last five years he has seen the CFO become the key source of quality data for decision making purposes, not just at board level but throughout the business. Not only does this mean CFOs have to manage and understand vast quantities of data, they must also ensure that the information is clear, accessible and understandable for the wider organization to create what he calls “the same version of the truth”.
There is something else about “all this data” that Nick says is important. The organization needs to be able to work with it in real-time. This seems to me to be absolutely critical. It is simply unacceptable to have to wait while someone interrogates spreadsheets (and may have to find and fix – or hide – errors within them) to answer important questions.
Much of what Nick says is echoed by Oracle’s latest research into the changing nature of modern finance departments which polled over 1,900 finance decision makers in EMEA. The study found that nearly 40% of finance leaders admit the finance department is becoming more accountable for the success of the business, and three-quarters (74%) believe the use of financial software in the cloud is critical for them to realise their broader digital transformation goals.
This expanded role for the CFO is closely linked to the growing use of sophisticated, cloud-based business applications providing finance teams with up-to-the minute information on overall performance. Nick confirms that cloud technology is a vital asset for the CFO in meeting the demands of their role, and pointed out that “CFOs now need to allocate a higher priority to understanding the tools available to them.”
The reasons for doing so are not limited to the well-known time and cost saving benefits associated with new technologies (especially true for the cloud); they can also improve the CFO’s standing in the boardroom and involvement in the decision-making process.
It is simply unacceptable to have to wait while someone interrogates spreadsheets (and may have to find and fix – or hide – errors within them) to answer important questions.
Making this transition may seem a daunting task for those that have been happily relying on spreadsheets for many years, but according to Nick moving to cloud-based EPM could be a game-changer for organizations of all sizes.
Not only would businesses overcome some of the common pitfalls of working in spreadsheets – namely that they often include outdated information, are easy to break and lack sufficient security – but they would also enjoy the significant upsides of working in the cloud.
Nick noted that “organizations that have cloud-based EPM solutions are statistically more accurate when it comes to budgeting and forecasting, and they complete these processes significantly more quickly as well”. During our talk, and also in previous research, he returns to the phrase “Beyond Spreadsheets”. It deals with the transition from “old fashioned spreadsheets” to more modern EPM applications that deliver the same familiarity and functionality offered by spreadsheets, but in a secure, shared and typically cloud-based environment. Here data is manipulated in a real-time multifaceted way, which can clearly be presented to decision-makers and drilled down into as required.
CFOs now need to allocate a higher priority to understanding the tools available to them.
My talk with Nick adds to my belief that there is a clear and unbreakable connection between the modern CFO and the advantages and benefits cloud-based technologies offer. This connection is integral to the CFO’s expanded role as the custodian of an organization’s company-, performance- and operational data. The CFO should embrace this connection, and use it wisely in the pursuit of organizational development and growth.
Nick and I covered a lot of ground when we met and a more detailed summary of my discussion with him will soon be made available.
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