Few senior executive positions have been or will be subject to as much change as that of the CFO. Thirty years ago, when I began consulting with global organizations on the role and functions of finance, the definition of “chief financial officer” was very different. In the last 10 years, there’s been a major shift in what companies need from the office and what defines an effective CFO.
Gone are the days when compliance, number-crunching and sign-off on budgets were enough.
A CFO must now contribute strategically to business growth. Today’s CFO is expected to streamline all aspects of traditional finance as well as work dynamically by using data and intelligence to influence decision-making and create more value for the company.
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The reality, however, is that most CFOs are still spending too much time on compliance and control and do not have access to the right resources and tools needed to own this emerging role.
Building a usable foundation of information is a journey that involves implementing and connecting business management and information systems. Whether it is from a reluctance to invest or a gross underestimation of the impact of automation and centralization, some businesses have been hesitant to enable their teams with the right systems. When an organization is small, it can start this journey with spreadsheets; however, once an enterprise requires scale, investments in these systems are essential.
Finance leaders who are slow to leverage technology simply cannot rise to the same level as those who are fortified by it. Business information architecture is fundamental to a CFO and enterprise success.
The path to becoming a model CFO cannot happen overnight. There are three steps every CFO should consider to modernize the strategic management functions of the finance role:
1. Determine what’s needed to automate traditional finance functions
The journey to becoming a model CFO starts with freeing up time and resources. This means leveraging technology and automation for traditional finance functions, for not only the CFO, but the entire finance team and any stakeholder groups involved in decision-making.
Automation starts with an assessment of the current state of business and information systems as well as what is needed for growth.
Today’s CFO must demand investments in new financial systems for enterprise resource planning (ERP) and corporate performance management (CPM), and often technology for business intelligence/reporting and data warehousing.
2. Start tracking your customer’s journey
Having the right information on who the business attracts, what is being sold to whom, customer touchpoints and opportunities for retention or up-selling is critical to business success.
This requires investments in demand-planning or customer relationship management (CRM) technology to track business sales, marketing, account touchpoints and the entire customer journey, as well as reporting and business intelligence systems to uncover trends and insights.
3. Define KPIs that will drive growth
The third and parallel step in this journey is understanding your company’s key performance indicators (KPIs). The easiest way to do this is by asking: “How would you know your business is successful and creating value if I were to take away your profit and loss (P&L) statement and balance sheets?”
If a CFO presents business performance in just dollars and percentages but is unable to provide insights about the business of that variance and what can be done about closing the gap, they are missing the opportunity to add strategic value.
Becoming a model CFO is a journey that can start today. Automate traditional finance functions, understand your data and customer journey, and define and track KPIs. The insights you need to add strategic value will speak to you.
When stakeholders demand, “Take us further and faster,” a model CFO’s only response should be, “I am. Hold on tight.”
Vijay Jog is the founder and president of Corporate Renaissance Group (CRGroup), a Quisitive Company (QUIS) and Ottawa-based firm dedicated to transforming business management and performance. He has led CRGroup’s growth in areas of strategic finance, corporate performance and dashboards, strategy design and execution and helping clients bridge the gap between technology and finance. Dr. Jog consults with organizations around the world and is a leading author and speaker in the areas of corporate performance and the office of the CFO.
For additional resources, visit crgroup.com/model-cfo
For CFOs and financial leaders looking to become more strategic in their role, we invite you to join Dr. Jog for a complimentary two-hour webinar on Wednesday, April 15. Registration is limited. Learn more and save your seat at crgroup.com/cfo-bootcamp