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The impact of globalization and digital revolutionaries challenges the way business operates today.  At a macro level, we are witnessing the economic power shifts from west to east with the growth of Brazil, Russia, India and China and the rise of emerging economies such as in South East Asia.  This has created significant changes and impacted a broad range of areas including fluctuating energy prices, new fiscal policies, large currency fluctuations, environmental challenges and more.  This new environment is the new reality where our next generation finance leaders will operate.

On this blog, Thack Brown – Global General Manager, Line of Business Finance at SAP, has spent many years in the CFO role, and I would like to jointly share our views on how business and regulatory environment will shape the future role of the CFO.

1. Business partner to address real-change, in real-time, to deliver growth

Forecasting future performance based on real time insight will be a key enabler for tomorrow’s CFOs. Deloitte recently published Finance Insight report which investigates the challenges and opportunities faced by CFOs in relation to Decision Support and Business Partnering.  Only 8% of organizations interviewed see Finance as its primary source of insight for decision making.  This poses a big question on the level of readiness for CFOs to provide analytical insight to drive the business against an increasingly competitive operating climate, increased regulation, greater risks and more complexity. 

As business continues to change, CFOs need to be a step ahead, utilizing the latest technological developments to drive business intelligence in real time, in order to support effective business decisions and identify new market and profit opportunities.  This also means less time spent being the financial gatekeeper on day to day transactions, but rather taking a greater role as a strategist and business partner.  As technology has caught up with the ambition for integrated solutions, where finance departments can now run their mission-critical processes in real time, many viewed it’s just the beginning.   Technology will continue to be a key driver to realize business transformations for CFOs and the function they lead.

2.  Operational Excellence to drive finance transformation

Improving efficiency, reducing costs and becoming a better partner to business are the typical aims for finance transformation. However, the overarching objective for tomorrow’s CFOs, and the demands being placed on them by the Board Room, is to be a catalyst for change across the business in order to drive long term performance instead of short term financial results and cost cutting measures.

To drive efficiency, many CFOs have started looking at alternative delivery models such as tapping into the offshore or shared services model. However, the days of mere labor arbitrage are coming to an end.  These moves must now be accompanied by process standardization and transformation in order to achieve real business efficiency. Playing the role as a strategist, CFOs are also mapping out programs that can integrate the finance function to the business, which includes business restructuring, talent/capability development, effective risk management, stakeholders and relationship management.

When Zurich Insurance Group transformed their financial system globally to align with their strategic group priorities, they also opened up an opportunity for many to look deeper into financials innovation that delivered higher performance into the finance community. Amongst many other benefits, Zurich observed key performance improvements such as 65% accelerated reporting close processes and 50% faster runtime for foreign currency revaluation. This signifies the importance of insight, speed and agility for many finance leaders in driving business transformation today.

3.  Compliance and Risk Management to drive business performance

In order to drive efficient and effective methods to promote successful change, CFOs need to consider the possibility of new compliance requirements and expectations.  Six years ago, I co-authored a book titled SAP GRC (Governance, Risk and Compliance) for Dummies to help companies untangle the web of regulations and its complexities that can put their businesses not only at risk,  but also prevent fraud and bolster company reputation by staying compliant.  While regulatory environment has evolved, many of the fundamental issues remain relevant.  By now, I figured all large companies had automated the basis of compliance by investing in segregation of duties and internal controls until I recently visited a large financial institute that was just going through a software selection to automate the basics of compliance and risk.  I realized in the past 6 years that the topic of compliance and risk is still part of the financial transformation journey.

For tomorrow’s CFO, there will be even a greater scrutiny on risk management processes.  There’s a greater need of transparency especially access to capital market to assess risks and opportunities faced by business. The future CFOs take the lead as internal safeguard to better corporate governance, compliance policies and risk management while keeping up with the constant regulation changes.

The financial leadership of tomorrow is shapedby the changing role of the CFOs.  The changing structure of global economic and finance operations shape the new directions and demand for financial leaders who can demonstrate not only technical but also business and leadership capabilities.

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