There’s no such thing as a perfect CFO

17th June 2016

The requirements of a modern CFO are as wide as they are deep. Constrained by financial governance, limited by ageing technology, swamped by demands to broaden their financial stewardship into business partnering, technology and strategy, CFOs can’t do it all. At least, not all at once. 

 

 

 

Time is the crucial factor holding CFOs back. Despite their increasingly complex and strategic obligations, CFOs remain bogged down by the traditional accounting and reporting processes. 

Over 50% of senior finance executives surveyed for the FSN Future of the Finance Function Survey 2016 consider they spend too much time on transaction processing, 42% feel they spend too much time on management accounting and 32% feel statutory reporting takes up too much of their time. 

Transforming the finance function takes time and CFOs have precious little of it to spare. Perhaps that’s why a significant proportion of CEOs are underwhelmed by CFO performance.  For instance, a KPMG study “A view from the top” says that even though two-thirds (63 percent) of the CEOs they surveyed in 2015 believe that the CFO's role will increase in significance over the next three years, as compared with other C-suite roles, almost one in three CEOs feel their CFO is not up to the challenge.  

It’s a catch 22 that’s holding CFO’s back? 

CFOs are trapped between a rock and a hard place.  Speaking bluntly CFOs need to invest in process standardisation and automation in order to release time but they face significant opposition from their colleagues on the board.  Scarce resources are often channelled into revenue-generating sales technology, while the productivity and profit advantages of overhauling out-dated back-office systems are overlooked. 

Customer-facing gadgets and apps grab the newspaper headlines but who has ever won praise for replacing their consolidation, budgeting or ERP systems?

CFOs are setting themselves up for failure 

Many CFOs are not managing to convince the rest of the C-suite to find the necessary resources to fund investment in back-office technology. Companies are increasingly risk averse amid the continued economic uncertainty and are unwilling to part with cash for projects that don’t have an immediate or tangible effect on revenue. 

Where little is done to standardise and automate, CFOs are still expected to step up to the demands of the modern finance function, but without the tools to empower them.

Which is why only 48% of CFOs consider they are more actively involved in strategy development than they were 3 years ago, according to the Future of the Finance Function Survey 2016. This despite the media hype around the role of CFO as strategic partner.

Breaking the cycle 

Ironically, this impasse could be broken by the further widening of a CFOs remit to include technology evangelism and by using what I call “Land and Expand” tactics (see earlier article here).  From their standpoint as financial stewards, CFOs already have a panoramic view of the internal machinations of the company, and are in a good position to spot inefficiencies, within or outside their own department, that can hamper productivity. 

From here they can argue that a standardised, automated finance function improves productivity and buys them and their team time to engage in value-enhancing strategic input. These days this task is made easier by the prevalence and variety of cloud-based systems that lower implementation costs and accelerate the transition to up-to-date systems.

In the last decade the CFO’s role has changed beyond all recognition. The modern finance leader is variously depicted as strategic advisor, business partner, operational manager, performance leader, technology evangelist, innovator, growth champion and of course financial steward.  But it is misguided to expect one person to embody all of these lofty ideals - especially while the future of the finance function is in a state of flux. Instead organisations, especially the CEO must support their CFO in transforming the finance function with standardised, efficient technologies, giving equal prominence to front and back office development. 

The perfect CFO doesn’t exist but a perfectly good CFO will start to build the modern finance function around them.  

By Gary Simon, BSc, FCA, FBCS, CITP

A "Top 10" PowerProfile “Most viewed LinkedIn leaders UK” 

CEO of FSN and leader of The Modern Finance Function Group on Linkedin with 46,000 members.

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