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Recently I read a report from CFO Research Services (in collaboration with SAP) called “The Superstar CFO: After the Crisis” and I thought it brought up a few compelling points from a Business Intelligence perspective.

Subtitled “What it takes for Finance executives to excel in a changing and uncertain world,” this report really highlighted, to me, some changes that the winning CFOs are making to their own roles and the changes that a BI team must make in support of that.

The CFO’s New Role

The first change is that the CFO needs to know EVERYTHING about the business.

Not that long ago the majority of CFOs only had to understand debits vs. credits and how to get banks to lend the company money. In this day and age that just doesn’t cut it anymore. Obviously you have to have that solid finance background to do the job (and perhaps more importantly, to get the job), but it’s just the tip of the competency iceberg. Now your CFO needs to understand the key drivers of the business, how the operations actually work, what makes your customers successful, where your opportunities and threats are; the list goes on.

Why is all of this knowledge necessary? Because they have far broader responsibility than they used to. Personally I think it’s largely a long-term title shift. Used to be that a company would have a CEO and a President, then most of those got combined into a CEO/President that had all of the other CXOs reporting under that one office. I think eventually the CEO/President is starting to get a little tired and would like to offload some of that work, but can’t give up the title without giving up some paycheck.  Enter the new CFO, who appears to be taking over a much more presidential role. Some of you are probably thinking “Hey, I thought the COO looked like they were going to take over as the new President.” You’re right. It all depends on the organization and the individual, but I think the CFO is, generally speaking, in a powerful spot right now because of the global hard times. When everyone is making money, Marketing has the power. When cost-cutting alone wins the day, the Operations department is in charge. When you aren’t making any money and no one will lend you any, Finance gets the square.

The end result is now a CFO who needs to know every day how every aspect of the organization is performing as well as how it will perform in the coming days because they are now everyone’s key business partner.

The CFO’s New Office

As a result of having to know everything about everyone all the time, the CFO is going to spend a lot less time behind a desk. The need for mobility is obvious across the industry, but the CFO’s needs are huge not only because they require a lot of work, but because they also give you a great excuse to build up your mobile support infrastructure.

There are tons of great, easy to use tools that allow you to leverage your existing SAP Business Intelligence investments on certain mobile devices (check out SAP’s offerings here and those from SAP partners like Roambi). Those, quite frankly are the easy part. Licenses for those aren’t out of reach, and setting them up isn’t that hard either. The hard part will be getting your organization ready to handle the mobile device onslaught. Policies, procedures, security concerns, mobile device management — all of these become a whole lot more complicated when you want people to look at anything besides email on an iPad. A goose from the CFO “needing something” is the perfect excuse to push them on these issues.

A lot of BI shops have “gotten around” that issue by simply delivering reports, dashboards, etc. into an email. Unfortunately, that no longer meets the needs of your new CFO. Corporate level information from every department is now necessary, and it needs to go all the way down into the nitty-gritty of each data point. Emailing that around is unmanageable and not nearly as secure as the security that can be built into enterprise BI tools. Seriously, use your CFO’s needs (and associated budget) to figure out the “meta-mobile” issues at a corporate level because it can be tough to justify it based just on BI.

The CFO’s New Data

So we know the superstar CFO needs more data, and we know it needs to be accessible from anywhere. What we haven’t talked about much is just how different some of that data really is compared to what is being delivered now.

The biggest difference is data quality. The CFO office has historically dealt with far more complete, accurate, and validated data than most other departments. In fact, the biggest pain for most companies (month-end close) exists largely to clean up data your organization has spent all month muddying so the CFO can use it. Not everything Finance looks at has always been clean, but it has always been cleaner than what operations works with day in and day out. Some technologies, like SAP HANA, will make daily operational data much more available and correct, but that isn’t quite ready-for-primetime.

The next great hurdle is what data is available. Lots of businesses run on spreadsheets. Spreadsheets are great for lots of things; reporting isn’t one of them. Your organization is going to have lots of data your CFO is going to be interested in seeing on a daily basis that currently only exists in a spreadsheet or on a dry erase board, or in a notebook, or in someone’s brain. I highly recommend using this opportunity to scoot the data from some of those places into a more formalized process that ends with the data in some sort of database somewhere.

While the pocketbook is open, I’d try to get some push behind a master data management project. Your CFO is going to be comparing sales, cost of goods sold, marketing spend, etc., and it would sure be nice if the product information and organizational structures and vendor names all lined up nicely.

Conclusion

It is very clear that the office of the CFO is changing not only in its scope of power but also its breadth of responsibility. This means that CFOs will need a lot more data than previously, AND that they’ll need to be able to access it from everywhere. A smart BI team will take this challenge (along with its accompanying executive focus and budget) to drive the need for a true organizational mobility infrastructure, the formalization of data gathering, and a master data solution if one isn’t already in place.

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12 Comments

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  1. Greg Myers
    The CFO would also ultimately be responsible for captial budgeting as well, and good data is critical to calculating which projects will make the firm more money and which will not. That’s Analytics, right?
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  2. Dennis Howlett
    @jamie – I don’t know who the heck wrote that but to say that all a CFO had to know is debits and credits is hogwash.

    I spent 20+ years in various ‘F’ roles, 10 of which as a partner in a firm of British Chartered Accountants. I never met any ‘F’ colleague in senior positions that could agree with that view.

    Quite the opposite. Some of us became business experts in different industries precisely because we needed to understand what goes on in order to make sensible assessments of what we saw in the numbers.

    And from a training perspective, those of us wo qualify under the UK regime have to know WAY more than Dr/Cr

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    1. Gregory Misiorek
      it still won’t hurt to know DR/CR today which are like 0’s and 1’s in IT, its younger brother. understanding what’s behind them and the ability to see through them is as much needed today as it ever has been. IT only adds additional complexity but in no way replaces the acumen needed for any CXO position, IMHO.
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    2. James Oswald Post author
      Dennis,

      You are absolutely correct that isn’t all a CFO had to know (and I admittedly became a victim of my own hyperbole) but the point is that the role of the Superstar CFO is moving to include a lot more about the full business – and not just the finance side – than they used to (the average CFO’s role is actually moving that direction as well, they just aren’t as good at gaining that new knowledge and utilizing it, which is why they aren’t “superstars”).

      I think honestly that you and your colleagues who went out in search of that business expertise were on the front wave of the movement that this paper highlighted.

      In the end the point isn’t exactly what an “F” needs to know, just that in today’s environment they need to know way more than they used to, and that will provide BI teams (and whole organizations) both opportunities AND threats.

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      1. Dennis Howlett
        @jamie – I appreciate what you are saying but in my eyes it perpetuates the myth that accountants (as a class of people) are only bean counters. It’s a bit like me describing IT folk as little more than plumbers.

        It may be funny and I meet plenty who might fall into that category but it’s not been true for a very long time among the hundreds and thousands of professionals I’ve addressed over the years.

        When I think of the thousands who are signing up for the professional accountants’ version of cloud software in the UK, US, Aus, NZ and many other countries I think you’d find them to be offended by that suggestion.

        ‘We’ were never ahead of any curve – we were (and continue to) define it, doing our own invention around BI.

        In my world that’s been the case since 1973. 

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          1. James Oswald Post author
            Dennis,

            Thanks for mentioning this piece on the JD-OD show. http://www.jd-od.com/2011/08/09/jd-od-show-7-a-mobile-special/

            I’m also posting my comment below to keep the conversation spread as thinly as possible.

            Thanks for the shout, guys. Any publicity is good publicity, right? – You could have at least put the link in your show notes – The CFO’s New Role and What It Means to BI 🙂

            I do think we agree a lot more than you let on on this topic. Good finance folks have always been more interested in the details of the business than the bean-counting, and the need for that knowledge is only increasing with time and with the availability of data. I think we mostly disagree on the percentage of finance folks that qualify as “good.”

            In any event, it was clear that I didn’t do the best job of putting my perspective to paper since I agree with most of what you said.

            Again, as always, thanks for the feedback. I will keep my day job, so I’ll file this under “constructive.”

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  3. Pierre Leroux
    Interesting topic for BI!

    I have worked with CFOs of public and and private companies in the past and it’s true that some of them were more akin to controller http://en.wikipedia.org/wiki/Comptroller
    with a strong focus on financial reporting and less on business creativity, but I would say  most CFOs were not in this position because they were excellent bean counters. They were CFOs because they’ve mastered the quantitative aspect of the business AND they had the business creativity to support the business needs or priorities set by the CEO.

    What I think has changed their role significantly and perhaps contributed to the ‘bean counter’ image more than anything is the SOX era where CEOs and CFOs had to sign their financial statements with their blood and a gun to their head (sort of speak, of course).

    This era seems over or at least for the most part behind us so maybe the CFO is going back to supporting creative initiatives and mitigating the risks instead of worrying about SOX.

    Have a look at the post from my colleague Richard
    The Superstar CFO: After the Crisis – http://www.the-decisionfactor.com/the-superstar-cfo-after-the-crisis and
    the SAP-commissioned reseach paper http://cfoknowledge.files.wordpress.com/2011/06/sap_superstar_cfo_after_crisis_060111.pdf
    for the CFO ‘new’ agenda.

    Pierre Leroux
    @pileroux

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  4. David Hull
    In a somewhat unusual change, our CFO swapped roles with the head of our largest business segment about a year and a half ago. The story can be read here:
    http://www.bizjournals.com/pacific/stories/2009/11/09/daily43.html

    And here’s an interesting answer from our CEO in an interview with the Wall Street Journal on why he made the change:

    WSJ: In the past year, you’ve made many changes in top management. What did you hope to accomplish, for instance, by having Tom Staggs and Jay Rasulo swap jobs as chief financial officer and head of parks and resorts?

    Mr. Iger: They looked at me initially like I was out of my mind. I said, “You each need to learn more about the company, because in doing so, you’ll be better executives, and this company will benefit from that.”

    I’m the result of bosses that continued to move me into places that didn’t necessarily fit a pattern or wasn’t necessarily what everybody expected me to do next. But they took chances with me. I was a sports executive, and I was made head of entertainment at one point.

    Believe me, I thought for a moment, “Wait a minute. Am I making a mistake in my career?” Which was going pretty well up until then. It quickly wore off, and I thought, “This is just an adventure. I want to prove that I’m worthy.”

    http://online.wsj.com/article/SB10001424052748704580304575600134000523928.html

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