The vital role of a CFO

October 28, 2020

Leading members of the finance industry explain how businesses can transform and maintain performance levels through the pandemic. Financial leaders are playing a vital role in managing businesses through the pandemic and associated economic challenges. A recent study by CFO Research combined with FTI Consulting interviewed 325 chief financial officers and senior executives to get a better understanding of how finance is supporting and driving business value. The results presented five core themes:- 

-The work of CFO’s during the pandemic has shown what impact financial leaders can have on the wider business strategy. Covid-19 has emphasised the ability of financial leaders to manage what is often an overlooked part of a business: corporate scenario planning. 

-With significant changes to the economy, CFOs have managed to maintain productivity via remote teams. The survey indicated that over 70% of finance professionals worked in a remote workforce model. 

-continues to progress and while many CFOs are adapting and utilising automation tools, the survey indicated that automation is yet to reach its full potential in many businesses. The general corporate finance service delivery model is transforming. Over 40% of the respondents stated that their finance work was performed by a shared services organisation, nearly 50% said they used business process outsourcing or alternative hybrid models. Looking to the future, CFO’s are in a position to manage lead strategies and value development of a business. Finance has the capability of delivering insights on predictable measures in a volatile market, a vital asset in helping a business determine the cost, risk, working capital and overall capital structure. 

CFOs transforming into strategic leaders During the pandemic, CFOs have demonstrated the potential to generate models based on various scenarios, the ability to transform, make informed decisions and most importantly, lead their business through the pandemic. Respondents of the survey indicated that finance executives view their CFOs as vital members of strategic leadership, planning, analysis, technology and automation and detecting risks. Approximately 90% of respondents indicated that their CFO’s core functions include:-

Overwhelmingly, the surveyed finance executives portrayed their chief financial officers and finance teams as rising to the task across the domains of strategic leadership, planning and analysis, use of technology and automation, and identifying risks. More than nine out of every 10 of the survey respondents said their CFO and finance functions: 

-Important roles in guiding the overall strategy, making key operational decisions and supporting enterprise values across the entire business. 

-Driving value by detecting areas and leading plans to reduce and optimise business costs. 

-Applying innovative technologies i.e. predictive analytics and automation to generate accurate and relevant information. 

Remote working 

As with all business leaders, CFOs needed to adapt to remote working conditions, the cultural changes and the overall talent challenges. The survey findings suggested that CFOs were well prepared with automated-driven tools and were capable of responding quickly to specific priorities, processes and the preservation of talent and culture in the business. 

The main priority for CFOs in regards to the pandemic was enabling a remote workforce, according to the survey results. Over 40% of the respondents stated that finance teams adopted a remote working system, with nearly 30% transitioning to predominantly working remotely. The challenges from this transformation included the implications on cost management, financial planning, analysis, budgeting and forecasting (40%). Over 40% of the respondents claimed that risk management, working capital management, adopting new technology, and accounting and financial reporting were largely impacted. 

Automated Technology CFOs have progressed in regards to applying robotic process automation to specific finance functions, but there are still opportunities to enhance this further. Most CFOs have adopted automation to a certain level, with nearly 80% of the respondents indicating that at least one of the members of their finance team was ‘virtual’ i.e. they were using RPA and other automation tools. The survey findings indicated that for smaller businesses, the number of virtual workers was significantly smaller, suggesting that automation hasn’t reached its full potential in many businesses. Over 50% of finance executives indicated that eliminating and automating manual tasks was a top priority. Cost containment continues to be a key concern for CFOs. Over 30% of respondents stated that they intended to increase the use of captive shared services, BPO, GBS or an alternative hybrid model to utilise cost models during a disruptive business environment. For many senior finance executives, the CFO is regarded as a finance and accounting leader. The survey highlighted that finance professionals also regard CFOs as a business leader, value creator and someone who drives efficiency and effectiveness within a business. Nearly 90% of the respondents indicated that the CFO had the talent and expertise to enhance enterprise value for the business. In the short term, CFOs have proven how a business can survive during the initial phases of the pandemic. In regards to the long term, CFOs will examine initiatives that focus on cost savings. Finance executives believe that improving planning, scenario modelling and forecasting are top priorities for CFOs over the coming year or so. To achieve these strategic goals, over 80% of the respondents believed this required evaluating, implementing or focusing on existing planning, forecasting and budgeting technologies.

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Financial businesses need to secure their position in the data industry

September 16, 2020

In the finance world, legacy systems have represented the foundation that has maintained a business in its traditional activities. Making the decision to move away from legacy systems can be complicated, from a technical and business culture perspective. Many analysts believe that while it may be a challenging move, it is something that must be faced, particularly at a time when organisations are accelerating their business transformation plans.

There is a range of complexities that need to be considered with this move away from legacy systems. From a technical point of view, it can be difficult to extract data from traditional systems and the associated applications that are operated on these facilities. CIOs emphasise the complicated dependencies that have grown over the years as a consequence of implementing a number of various databases and other systems. Nevertheless, ignoring the problem will result in gathering additional IT technology issues for the future, especially as businesses actively seek to find talent to manage the older systems.

Agile and flexible platforms, equipped with data-focused business models and lower overheads are positioning themselves to challenge the traditional corporate models. The financial industry is highly competitive and businesses need to utilise every possible part of agility and information they have to compete with other names, as well as newcomers to the marketplace. There are a number of new organisations capable of disrupting the financial industry. For those companies that contain high volumes of data and lack the modernised approach, there is a likelihood that they lack the ability to assess all their data and respond effectively to new demands and changes in the market.

Innovative business leaders in the finance world understand this challenge but may be struggling to implement the required changes. As a consequence, a business experience considerable fragmentation of their data across various platforms. Many CIOs are making the move to the cloud to attempt to improve the situation, but issues of data fragmentation can continue. While there are multiple benefits in moving to the cloud, many businesses experienced data fragmentation across clouds, making the overall situation actually worse. Fragmentation results in less secure data and the potential for infrastructure costs to spiral.

Taking a more modern approach to data management

The solution to all of this lies in taking a more modern approach to data management. Financial industry businesses to utilise a more software-focused platform approach to managing their data. This will focus on consolidating and managing workloads and data through one singular system. 

FInancial businesses should explore other opportunities to enhance compliance through utilising applications that are located on the platform. These applications measure personal data and play an equally important role in data governance. Businesses can also introduce other applications to improve security or use analytical systems to enhance the overall customer experience. Applying these techniques can help businesses stand from newcomers to the market that is not hindered by legacy systems but lack the volume of data and customer bases.

The financial market is relatively unique in that it still consists of businesses that have existed for many years. However, in order for these traditional companies to survive, they will have to adapt and modernise. The first place to focus on, and probably the most valuable resource they contain is their data.

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How data is transforming the role of finance professionals

December 3, 2019

The significant rise of data has created a number of new opportunities and as a result, the role of finance professionals is expected to change. In order for the industry to be continually viewed as a value-added service, finance professionals must continue to change and maintain pace with changing technologies. Laura Timms, representative of MHR Analytics highlights a number of significant changes we are likely to see in the years to come.

Rise of business consultancy in finance
Finance professionals have conventionally had to rely on historical data to generate insights. This technique created certain limitations and lacked a clear insight into how our decisions would shape the future. Predictive analytics has enabled finance teams analysis to progress from a stage of asking ‘why did it happen’ to focusing on ‘what will happen next’? The availability of richer insights has allowed finance professionals to monitor customer information in real-time and progress further than just maintaining records to deliver in-depth data analysis. The role of finance professionals has progressed beyond the days of working on numbers in the background. The future of the finance role is likely to see more individuals using new systems and analytics to position themselves in a more strategic and stronger position within a business. The power of information will enable finance teams to measure and interpret anomalies and patterns within a business. This information can be communicated within internal management to enable important decisions to be made.

Remote Working
The rise of cloud computing has significantly transformed opportunities for finance professionals. Traditionally fixed to the office space, the cloud has enabled more flexible working and remote work opportunities, creating a number of benefits for employees and further cost savings for businesses. Further security within cloud systems will allow finance teams to measure and share insights from any location without having concerns about handling sensitive information outside of core office locations. In the not so distant future, finance teams will be capable of sharing and analysing information with their colleagues simply by clicking a button and generating a real-time portrayal of business activities to multiple locations.

Implementing Non-Financial Data
For years, financial data has been the core focus of finance activities. This represented the data where patterns were identified, reports were generated and general observations were made. In reality, financial data only represents one part of a business. As data availability continues to rise, there will continue to be other sources of information capable of using to expand on financial data. For example, customer data on behaviour patterns can be used to identify fraud and suspicious activities. Finance professionals can use other data sources such as employee performance data to assess the ROI that each individual can provide for a business.

Implementing this type of data into the general assessment of business supports revenue generation and provides greater value for financial information. Studies have proven that finance teams that use non-financial data sources with their standard financial data are able to create forecasts with accuracy levels exceeding 90%.

High standard of service
The continued rise of data analytics is enabling an augmented work environment, enabling simpler tasks to be completed by machines rather than people. Augmented analytics will enable many administrative duties that have traditionally been part of a financial position to be replaced and swapped for other important duties, creating a more efficient way of working. This will enable finance professionals to work closely with data, generate leads and insights for their business. Data will leverage the skills of finance teams, allowing them to focus on creating a high-value service. Overall, data analytics will enhance industry performance, with both businesses and clients recognising the influence these roles can have on business profits.

Developing data-focused positions
Augmenting traditional positions will lead to the creation of data-focused alternatives to conventional bookkeeping and accounting jobs. As data becomes more important and embedded in finance, businesses will become even more reliant on financial insights to improve their strategy and the relationship between finance and data will become even more clear.

In the future, most finance professionals are likely to require to have some understanding of data analytics. Before this transition occurs, we will likely experience a rise in data science roles, created out of demand for data specialists in the business. Finance professionals that are training to become more skilled in data analytics are likely to be the type of talent in demand over the next few years.

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