The Expanding Role of the CFO and How Technology Can Help

Are CFOs increasing their influence on strategy and decision-making across the organization?  This was the focus of a panel discussion held by the New Jersey chapter of the CFO Leadership Council titled “The Expanding Role of the CFO.”

The panel members discussed their experiences in expanding the role and influence of the CFO, and Finance, with the CEO.  They also shared best practices and techniques for increasing the value-add of Finance across the enterprise.  Here are some highlights from the discussion.

What new responsibilities are the CFO and Finance taking on?

In addition to the usual CFO responsibilities for Finance and Accounting, the panel spoke about Information Technology (IT) as an area the CFO has increasing focus on.  Technology is integral to the entire business, and it’s a critical component to transformation – along with people and processes.  The panel also spoke about the need to provide oversight on business operations, adding value in areas such as pricing and gross margin management.

The panel also spoke about the role of the CFO changing from compliance and reporting the past, to looking at the future and being a true business partner to the managers across the enterprise.  Line-of-business (LOB) managers are looking for help in running and managing the business.  The panel encouraged CFOs to get involved in setting the strategy with the CEO and board, and in driving the strategy down to the line-of-business level to ensure alignment.

The moderator, Ian Charles, commented that access to data has made Finance a valuable resource to the LOBs to provide analytic support.  This represents a big change in the point of view of Finance.  Many CFOs are embedding Finance analysts into the lines of business and functional areas to provide analytic support while ensuring a strong connection to Finance.

One of the panelists spoke about how Finance has moved from being “overhead” or back-office support – to being lean and efficient, having more responsible for driving growth in the business, supporting new initiatives, and driving investment in people.  Finance can also help the business understand the impact of “digital disruption” and navigate a path to the future.

How has role of CFO changed in relation to the CEO and the board?

One panelist spoke about the need for the CFO and CEO to work independently on different projects, but to coordinate regularly.  Business is changing rapidly, and the CEO’s role has also expanded.  Other panelists commented that the roles have become more blurred over time.  The CFO has strong input into strategy development now, less on pure oversight, and serves in more of a partnering role with the CEO.  This requires a high degree of communication and coordination.

With regard to interacting with the board, the panel’s experience varied.  This included working in a privately held company, where there is no board of directors and the CFO works closely with the owners.  This also included working in a private equity, or venture-backed company, where the board is heavily involved with the business and the CFO needs to be tightly engaged.  Increasingly, board members are interested not only in what is being done, but also how things are being done.

It’s also important to recognize that board members can have varying areas of interest and different points of view, and will hear things differently.  So the CFO needs to work hard to keep all board members aligned.

Role of CEO with LOB executives?

Here, the panel spoke about how line-of-business leaders are looking for business advice, not just Finance advice – and this can extend throughout their ranks.  This requires Finance to have keen business focus and valuable input.  Finance also needs operations teams to have Finance focus.  Where there’s resistance to Finance help, the business leaders need to find an opportunity that breaks the ice, build the connection, and then build on that success.

One panelist commented that, while Sales has been a big area of focus for the CFO, there’s also more interaction now with Marketing.  This includes helping Marketing to focus on the ROI of marketing programs, to manage budgets, and to track key metrics.  This can be challenging as Marketing has historically not been interested in working with Finance or focusing on the ROI of programs and campaigns.  Finance can also help Marketing in contract negotiations and getting the best deal.

Another panelist commented that some functions don’t want help from Finance, but that’s changing.  This can vary depending on the culture and the people who work in Finance/Accounting.  Finance executives and staff need to be able to add value and prove their worth to the business.

The new revenue recognition guidelines create a new opportunity and need for Finance and operations to work together more closely.  This includes creating a new dialogue and relationship with Sales, Customer Service, Legal, and Contracts.  Anticipating the impact of these changes early is critical, as is working together to navigate the changes and minimize the impact on the business.

Leveraging New Technologies in Finance – Cloud, Mobile

Most of the panelists commented that their organizations have been shifting to Planfuled or cloud-based applications to reduce their IT infrastructure costs and maintenance requirements.  This includes Planfuling of ERP systems, using cloud-based CRM systems such as Salesforce.com, as well as cloud-based planning and reporting solutions, such as Planful.  Some of the panelists’ companies are also embracing mobile technologies, especially in empowering managers with information, supporting their Sales teams, and enhancing customer-facing applications.

All panelists recognized that cloud-based systems provide support for growth and expansion, without the typical internal investments in infrastructure.  And they also recognized that, while most Finance executives have had concerns about the security of cloud-based applications, these systems have proven themselves over time. There’s more comfort with them now.