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How Can A CFO Become A More Strategic Business Partner?

September 26, 2016

 

 

Two years ago, I blogged about the switch from CIOs to CFOs as the new influencer in technology spend decisions. Fast forward to today, and there’s a lot of talk about how CFOs can become a more strategic partner to the business by adding more value. There are a couple of approaches that companies take to achieve this objective, but, alone, these tactics don’t achieve the desired outcome.

One thesis, as described in a recent SandHill article, is that companies need to implement different software to capture and integrate data from multiple sources so the CFO will have the framework for data-driven opinions to present to the C-suite. In the context of the CFO role, what is strategic? It’s a CFO being able to spend time on planning and on driving impact, not on data hygiene. It’s getting to the level where the CFO has the time to recognize what the right issues are. It’s having the data to identify and understand root causes. It’s having the business intelligence sourced in financial data to take action on insights and identify opportunities or lead change.

 

The Technology Factor Isn’t Enough

Time, issue recognition, data and ability to lead change. But how can a CFO get to that level? Some of these factors are technology enabled. So, yes, the SandHill article’s advice about having the right technology systems that ensure access to decision-making data is a part of the answer. But I believe this technology solution alone won’t allow CFOs to become more strategic.

Another approach is to change the tool set, and automation is a great tool. An issue many CFOs face is the amount of time they must spend administering data from the ERP,Oracle ORCL -0.42% or SAP system. In addition, large finance departments do routine work to either input or analyze information and build executive dashboards. CFOs can spend a lot of time overseeing those teams. An effective strategy enabling becoming more strategic is to automate much of that rote/routine work.

 

We now have highly effective technologies such as cognitive computing and Robotic Process Automation (RPA) that automate many workflow tasks. These technologies can be deployed quickly. The technologies effectively digitize much of the workforce. In doing that, there will be fewer people for the CFO to oversee and the quality of the work will be more reliable. After all, people are inconsistent and make mistakes; computers are not inconsistent and don’t make mistakes unless people code them incorrectly.But, again, I believe this technology solution alone won’t allow CFOs to become more strategic.

 

The Reorganization Factor Isn’t Enough. One reason CFOs lack the ability to drive results in today’s world is because organizations have decomposed their accounting function into individual disciplines; so no one sees the whole story. In order to get the whole story, it’s necessary to establish to a cross-functional team that looks at the end-to-end process (record to report, purchase to pay, etc.) and drives the end result. This is very difficult to do in large functional-structured teams. But this objective can be achieved through automation.Automation and robotics are disruptive technologies that change how services are delivered by shifting from FTE-based models into automated machine-based delivery. The shift to automation is ideal for finance and accounting processes. But many CFOs view it primarily as a cost-cutting play and miss the more strategic aspects.Let’s look at automation with a more strategic intent. Digitizing part of the financial workforce gives the CFO the opportunity to restructure the remaining workforce into a small, cross-functional team that can focus on results and outcomes.The current shared services construct is an enemy. When services are organized by functions rather than by service lines, it forces CFOs to focus on functional excellence. So the CFO must spend time driving out costs and orchestrating between the functions. Reorganizing by service lines into an as-a-service model collapses the functional boundaries, making it easier to align services with the business and focus on outcomes.Automation removes people and compresses cycle times. It will enable a CFO to drive faster, but not necessarily in the right direction. Being strategic is about doing the right things, not just doing things faster. For the CFO to get to “the right things,” the fundamental flaw of presiding over functional-led services must be eliminated; an as-a-service construct enables better alignment with the business to address strategic needs.

 

When a business puts automation and organizational restructure together, it gives the CFO the ability to be strategic. Doing one without the other is very difficult. If the business automates and doesn’t reorganize, the CFO will still be spinning wheels because of having to spend time in the orchestration mode. Conversely, it’s very hard to work in an as-a-service construct without embracing automation because, quite frankly, the cross-functional teams become too large and unwieldy. So the business needs to do both: automate and reorganize in an as-a-service model.

As a result, the CFO could focus on procurement results or reporting results, rather than on the mechanisms to get the reports out. It enables the CFO to pay attention to the impact of what the business does rather than trying to make the business work better. It enables the CFO to take strategic actions that affect business outcomes rather than being an administrator. And with a cross-functional team covering the end-to-end processes, the CFO can identify the real issues and take action against them. This is how a CFO can become more strategic.

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