Can data-driven decision-making help CFOs to cross the expectation gap?

19th October 2016

There is often a gap between where we are and where we want to be – and where others’ expect or would like us to be. Our personal and professionals lives are a series of journeys from ‘A’ to ‘B’ to ‘C’ and so on. However, for the CFO and for other senior finance people, some of these professional expectation gaps may be widening and getting more difficult to cross, says Lesley Meall, FSN writer.




FSN research among the 47,000 members of its Modern Finance Forum on LinkedIn highlights this. Many senior finance executives who participated, in its “Future of the Finance Function Survey” in June 2016 indicated that they were struggling to balance their traditional and long-established roles as finance steward and guardian of corporate assets, with their newer roles as business partners, strategic advisors and technology influencers. 

“Our research indicates that the CFO role is being overhyped by reports telling us what the CFO should be doing and what the CFO can be,” says Gary Simon, FSN chief executive. “We found that the finance function and the CFO’s role in particular is full of contradictions. CFOs want to do a lot of things but they are finding that they are unable to deliver,” he explains. 

Our research results found that: only 48% of CFOs are more actively involved in strategy development now than they were three years ago; two thirds lack the time to focus on process improvements and innovation; more than half want to do more business partnering and a third believe that their organisations rely too much on ‘gut feel’ rather than hard data for decision-making. 

Technology has the capacity to help the CFO and others in the finance function to overcome many of these barriers but it can sometimes seem like a double-edged sword. Our survey found that 52% of those in the finance function feel threatened by the increasing role of technology, because they don’t like the idea of more automation and more de-skilling of finance processes. 

It may be that more automation and de-skilling of some finance processes is necessary, if those in and at the helm of the finance function are to evolve and close the expectations gap between where they are and where they (and others) want (them) to be. There are certainly signs – in our research and at the coalface – that some software and systems can be a significant enabler, especially those in the cloud, which the research finds helps businesses accelerate process standardisation. 

At Mayo Clinic, financial analyst Robert Scrimshaw has seen the adoption of a cloud-based corporate performance management (CPM) system (Adaptive Insights) enabled finance to be more strategic and a more effective business partner. However, it’s worth noting that this is not only about data, but the role that delivery and presentation can play in its accessibility. 

“When we started to display data to our physicians their eyes lit up. They were used to looking at dry numbers, but this was something different,” says Scrimshaw. “Now they can look at trends, look at a graph and see a trend over time, and it’s easier to understand the numbers when they are a percentage of a KPI.” 

Scrimshaw reports an improved relationship between finance and other parts of the organisation. “I think the clinicians almost love us for the numbers we give them now,” he says, adding that being able to understand the numbers has made them more important to physicians and clinical people. “It changes how we are perceived as a finance function,” says Scrimshaw. 

Presenting the numbers in a way that the physicians and clinicians can more easily understand isn’t the only thing that has had a positive impact on perceptions of finance. Planning has been transformed. “We’re done the minute we are asked, because we have rolling forecasts,” he says, and those forecasts are accurate. “We are within two to three percent of actuals every month.” 

A CPM system can pull data in from multiple sources such as enterprise resource planning systems, operational databases and data warehouses, so that this data can support more informed decision-making by individuals and departments across an organisation – and help finance to make that leap across the expectation gap. However, so can other types of software. 

At Avid Technology, a specialist in professional video and audio production, FinancialForce Professional Services Automation (PSA) has allowed finance and other parts of the business to access the data they need to improve decision-making. “Previously, we had a system that was difficult to interact with so adoption was fairly low,” recalls Tony Callini, SVP finance, Avid. 

This made it difficult to gauge how well professional services and individual projects were doing. Improving the quality of data and reporting has rectified this and reduced organisational tensions. “It’s no longer down to guessing or anecdotal stories about whether a project is doing well or not,” he says, so Avid is able to balance its resource management more effectively. 

Despite such potential benefits, it can be a struggle to get high level agreement on software investment. “A lot of people have no idea what modern software and data analysis can do,” says Sean Fox, a member of FSNs Modern Finance Forum, but in his last CFO role he found a way around this, by arranging a demo for some of his colleagues. 

“Getting senior people in front of software, seeing what these system can do, gets you over a lot of the hurdles,” says Fox. And once they’d seen what was possible there was no holding them back. “After the demo, the first sentence out of the mouth of the sales and marketing director was ‘How soon can we have it?’”