Influencer, listener, visionary the CFO must be a business manager with a vision, and be able to translate it into technical steps in the business.

Transcription

1 CFO The Strategist

2 Influencer, listener, visionary the CFO must be a business manager with a vision, and be able to translate it into technical steps in the business. CFO, Food and Beverage

3 TOTAL DECISION MAKERS researched ONLINE survey The report is based on the responses of 548 finance decision makers of the largest organizations in Europe and Southeast Asia who were surveyed as a part of Management Events Executive Trend Survey. Our latest survey is the 10th in the ongoing series of studies covering strategic development initiatives and investment actions of these organizations. FACE-TO-FACE interviews To deepen our insights, we interviewed the highest decision makers face-to-face to discuss further the trends and issues in finance. 44% 17% 14% 8% 6% 5% CHIEF FINANCIAL OFFICER HEAD OF FINANCE DIRECTOR OF CONTROLLING GROUP/BUSINESS CONTROLLER DIRECTOR OF RISK MANAGEMENT DIRECTOR OF TREASURY 6% OTHER

4 KEY REPORT TAKEAWAYS 1 3 The role of the CFO has changed from being a silent enabler in the back office to a visible frontline strategist of the company. With new technologies, CFO is now expected be the co-pilot of the CEO by offering real-time insights on both internal and external situations for fast, fact-based decision making. From the internal processes, CFOs are now turning their focus out to the market, to business model and product innovations, and to the customers of the business. To react rapidly to the changing market environment, process automation is a priority in most finance organizations. The technology agenda of finance strives to increase the organization s efficiency both in daily processes and fact-based decision making. Currently finance organizations are focusing heavily on data-related projects, especially on data integration across organization and increasing speed and accuracy of financial reporting. 2 4 Due to the change of CFO role, the whole finance function is following the lead to new purposes. New capabilities are required to fulfill the expectations of business. Finance organizations evaluate their capabilities sufficient in the traditional finance processes, but still haven t fully embraced their role in steering the corporate strategy direction and detecting new business opportunities. Moreover, the real time delivery of information is still on an inadequate level in many organizations. In their new role CFOs need to be able to grasp what new technologies can do for the business. Instead of just leveraging the technologies, CFOs are also responsible for finding the right technologies to capitalize on them. In the future, CFOs see increasing potential for organizational value creation especially in 3D printing, automation of knowledge work, and service robotics.

5 CFO a wingman with a vision You re a coach, a negotiator, and a true partner for business in all business decisions. CFO, Industrial Services

6 STEPPING OUT AS A STRATEGIST Finance executives across industries agree that the role of the CFO has tremendously changed. It was just a few years ago when finance was only responsible for finance keeping its distance and not to disturb the business. Now, the focus is on things with actual business value. CFO, Retail and Consumer Today, a finance leader can no longer be that silent enabler hiding at the back of the office. He must be visible and seen as taking ownership of the new strategist role. Most of all, the CFO needs to be a business person who understands what is going on in the market. The CFO is the one who needs to be able to assess the financial viability of new business models and deploy them quickly into the markets. All in all, the CFO must be true business partner in the strategic agenda and become the wingman for the CEO.

7 THREE COMPETENCIES OF THE MODERN CFO By Toljan Mirela, CFO, Coca-Cola INSIGHT A deep understanding and contextualization of the overall strategic priorities the company is trying to achieve. SALESMANSHIP The ability to sell the vision to different parties and counterparts. ADVANCED LISTENING SKILLS Extra-ordinary attentiveness as a tool to get up-close to every part of the business.

8 In many areas, industries are turning into consumer markets, which is really calling for speed, good decision-making processes, and focus on revenue and new business models. CFO, Transportation and Logistics

9 ORGANIZATIONAL PRIORITIES SHARING THE STRATEGIC VIEW CFOs developing role can be seen clearly in their strategic focus. Innovating both business models and company products and services are the number one organizational priority from CFO point of view. Developing customer experience is also ranked in the top3 priorities. It is now clear that CFOs are extending their view to better understand the business, its products, and its customers. CEOs and CFOs are sharing similar preferences in terms of organizational development, although CEOs are clearly prioritizing product and service innovation. In finance a lot of emphasis is given to process development projects. When looking at the finance decision makers, other than CFOs, business process automation rises to the top priority. While CFOs are taking a more strategic role in the company, others in the finance organization are focusing more on the operational efficiency.

10 STRATEGIC ORGANIZATIONAL PRIORITIES CFO perspective CEO perspective Other finance decision makers BUSINESS MODEL INNOVATION PRODUCT AND SERVICE INNOVATION BUSINESS PROCESS AUTOMATION 42% 62% 51% PRODUCT AND SERVICE INNOVATION BUSINESS MODEL INNOVATION PRODUCT AND SERVICE INNOVATION 41% 44% 45% CUSTOMER EXPERIENCE DEVELOPMENT CUSTOMER EXPERIENCE DEVELOPMENT BUSINESS MODEL INNOVATION 39% 42% 41% BUSINESS PROCESS AUTOMATION 36% ORGANIZATIONAL RESTRUCTURING 35% BUSINESS PROCESS AUTOMATION 29% ORGANIZATIONAL RESTRUCTURING 25% ORGANIZATIONAL RESTRUCTURING 35% CUSTOMER EXPERIENCE DEVELOPMENT 32%

11 GROWTH PROSPECTS BY CFOs 24% 38% 38% AIM FOR AGGRESSIVE GROWTH AIM FOR MODERATE GROWTH FOCUS ON OPERATIONAL EFFICIENCY AND REDUCING COSTS 71% GROWTH IN CURRENT MARKET 55% NEW PRODUCTS AND SERVICES 29% GEOGRAPHIC EXPANSION 45% M&A, JOINT VENTURES, STRATEGIC ALLIANCES Growth plans for the next 18 months 62% of CFOs are expecting growth for their organizations as 38% aims to achieve profitability through operational efficiency and cost reductions. A clear majority is focusing on organic growth in their current market, although a significant number is planning on growing their business through M&A, joint ventures or strategic alliances. Product and business model innovation is still the main focus as it is crucial for survival in a constantly developing and highly disruptive business environment.

12 4 WAYS TO SHINE AS AN ACTIVE BUSINESS PARTNER 1 GET EXTROVERTED 3 Aside from efficiently running the organization's finance department, today's CFOs are tasked to play a more active role in business, providing financial insights, analysis, and more. This requires a major mindset change, from introversion to extroversion. MASTER THE FUNDAMENTALS In spite of changing demands, it's still a must for CFOs to master finance fundamentals. It's a matter of authority, as staying on top of the numbers gives them the license to contribute to the business. 2 DEAL WITH DIGITIZATION 4 In multi-national companies, the CFO is already an important stakeholder in the company, taking on the co-pilot to the CEO role. But with digitalization, bigger data, growing metrics and vertical functions, the role is expected to change and expand at an even faster rate. BE A CHANGE AGENT It used to be that CFOs stay at the back-office and play the supporting role. Today, they have to partner with other functions and take a strong and visible leadership role paving the path through change.

13 FINANCE ORGANIZATION in the wake of the CFO The role of the finance function has been transformed from a nitpicker and number cruncher to a challenger, consultant, and an aspiring partner for the channel management and the CEO. Head of Group Controlling, Energy and Resources

14 THE BACK OFFICE AS THE FRONT RUNNER With the CFO role change, the role of the whole finance function has transformed. Finance teams are stepping out to demonstrate their ability to provide value adding insights for the business. Traditional finance capabilities are the basis for a successful finance operations - however, new capabilities are required. The quality of people is the most important thing in each financial operation in corporate finance. That starts with the recruitment of competent people CFO, Transportation and Logistics New technologies, especially analytics capabilities and process automation, are essential. To translate data into business insights and delivering it in real-time for business decision making, finance functions must take their information management strategy to the next level. It requires switching to an agile method such as the efficient utilization of shared services to enable focus on value-adding business advisory and then showing the way for the whole organization. Development initiatives in financial management IMPROVING ENTERPRISE RISK MANAGEMENT CAPABILITIES OPTIMIZATION OF SHARED SERVICE CENTERS WORKING CAPITAL OPTIMIZATION 30% CAPITAL STRUCTURE OPTIMIZATION 27% 33% 36% MANAGING ACQUISITIONS AND DIVESTITURES 23% TAX PLANNING AND OPTIMIZATION 11%

15 One of the main issues to focus on is changing the culture of the finance function. Developing people, turning them from a bookkeeping compliance department to a real business partner, encourage them to challenge and work together with operations and commercial departments to facilitate growth and to steer and make innovation successful. CFO, Public Transit

16 CURRENT STATE OF FINANCE CAPABILITIES TOP 3 STRENGTHS IN THE FINANCE FUNCTIONS (EXCELLENT OR GOOD CAPABILITIES) CAPABILITIES TO RESPOND TO REGULATORY CHANGES CAPABILITIES TO CONVERT DATA INTO BUSINESS INSIGHT ABILITY TO DELIVER COST EFFICIENCIES ACROSS ORGANIZATION TOP 3 DEVELOPMENT OBJECTIVES IN THE FINANCE FUNCTIONS (AVERAGE OR POOR CAPABILITIES) REAL-TIME VISIBILITY TO ORGANIZATION'S PROFITABILITY CAPABILITIES TO SUPPORT BUSINESS BY SEEKING NEW BUSINESS OPPORTUNITIES ABILITY TO DEVELOP OVERALL CORPORATE STRATEGY 75% 69% 65% 47% 45% 39% Finance organizations evaluate their capabilities to be on a good or excellent level on traditional finance responsibilities, such as managing compliance and driving cost efficiencies. Moreover, finance decision makers are already confident in their ability to leverage data in business decision making. Although successful in changing regulatory environments, finance decision-makers haven t fully embraced their role in steering the corporate strategy direction and detecting new business opportunities. Even though the capability to derive value from data is perceived as sufficient by most, the real time delivery of information is still on an inadequate level in many organizations.

17 REGIONAL PERSPECTIVES ON REAL TIME VISIBILITY 53% 47% 57% 43% Norway Denmark 27% 73% Sweden 52% 48% Finland EXCELLENT OR GOOD AVERAGE OR POOR A significant number of finance organizations struggle in delivering real-time data for their organization, but the results show big differences across Europe. The Netherlands 38% 62% Germany 37% 63% Switzerland 43% 57% Austria 66% 34% Turkey 68% 32% Finance decision makers in Austria and Turkey are more satisfied with their capabilities to deliver timely information, whereas especially Sweden, Germany, and the Netherlands express substantial concerns. Current state of real-time visibility to organization's profitability by region.

18 INDUSTRY PERSPECTIVES ON REAL TIME VISIBILITY AVERAGE OR POOR EXCELLENT OR GOOD 62% PUBLIC SECTOR 60% SERVICES 55% TECHNOLOGY, MEDIA AND TELECOM 50% HEALTHCARE AND LIFE SCIENCES 47% FINANCIAL SERVICES 45% MANUFACTURING 42% ENERGY AND RESOURCES 39% RETAIL AND CONSUMER 38% 40% 45% 50% 53% 55% 58% 61% Of the different industries, the ones lacking the most in organizational real-time visibility are the public and services sectors. Retail industry emerged as the most developed in terms of delivering decision-makers timely information. Current state of real-time visibility to organization's profitability by industry.

19 KEEPING IN STEP WITH TECH You have to train people how to let go and step back from what they previously had. CFO,Public Transit

20 EXTENDING CFO CAPABILITIES Organizational technology priorities currently and in three years according to CFOs 34% 42% ANALYTICS AND BIG DATA 44% 24% 42% 26% 38% 26% 32% 21% 24% 26% SOCIAL MEDIA MOBILITY CLOUD SERVICES CYBER INTERNET OF SECURITY THINGS 11% 16% ADVANCED MANUFACTURING AND SERVICE ROBOTS 11% CURRENT PRIORITY PRIORITY IN 3 YEARS 16% SOFTWARE ROBOTICS AND AUTOMATION OF KNOWLEDGE WORK 4% 6% AUGMENTED REALITY 16% 1% 3D PRINTING / ADDITIVE MANUFACTURING CFO being the sparring partner of the CEO is not the only thing that has changed in the CFO role. A succesful CFO needs more than that. After all, the initial reason for the new requirements of the financial leader is the transforming environment which is strongly due to the digital technologies rumbling through the markets. Today, CFOs need to be able to grasp what new technologies can do for the business and how to capitalize on them.

21 COMPETITIVITY CHECK WITH TECH Data as the strategic priority in finance initiatives The technology agenda of CFOs strives to increase the organization s efficiency both in daily processes and factbased decision making. Currently finance organizations are focusing heavily on data-related projects. As showed earlier, making data flow smoothly across the organization and delivering real-time information for decision making was still a challenge for most organizations. The ability to react fast to external changes is critical in the turbulent, disruptive business environment and finance organizations are now focusing their development projects on ensuring their company s competitive power. Digitalization and automation of processes are still high on the priority list of finance. Different organizations are in different phases in their digitalization journey which, though, is inevitable when pursuing efficiency and cost-savings in long term. INTEGRATING DATA ACROSS ORGANIZATION IMPROVING SPEED AND ACCURACY OF FINANCIAL REPORTING INCREASING FLEXIBILITY IN PLANNING AND FORECASTING DIGITIZATION AND AUTOMATION OF FINANCE PROCESSES 36% 46% 42% IMPROVING PRODUCT AND CUSTOMER PROFITABILITY ANALYSIS 28% 46%

22 COLLECT DATA EXTRACT KNOWLEDGE EXECUTE STRATEGY

23 DATA AS A VALUE DRIVER Goals for analytics initiatives IMPROVED VISIBILITY OF FINANCIAL AND OPERATIONAL PERFORMANCE The development in the field of data and analytics are escorting CFOs to the frontline strategists of the organization. Data collection to produce business insights is starting to be a rule rather than exception. Still, running an analysis to turn data into usable, valuable information is a challenge, not to mention taking it into the level of strategic decision making. The main goals for analytics investments in finance are to improve visibility, increase the ability to response to the external changes, and to better identify and manage risk. 40% 48% ABILITY TO PREDICT TRENDS AND NEW BUSINESS OPPORTUNITIES 34% INCREASED EMPLOYEE PRODUCTIVITY 56% FASTER RESPONSE TO CHANGING MARKET ENVIRONMENT BETTER RISK RECOGNITION AND MANAGEMENT 33% IMPROVED VIEW OF CUSTOMER ACTIVITIES ACROSS CHANNELS 26%

24 Technology will change everything. So far it s eating our world so that everything that can be digitalized will be digitalized. I believe in the future technology will create a world that s completely different from what we now know. It s going to move from a centralized towards a decentralized world where everybody, anyone, or anything can become a company on its own. Sander Duivenstein, Trendwatcher and Strategic Advisor on Disruptive Innovations

25 Management Events brings together the needs of top decision makers and the offerings of solution providers, generating business opportunities for both parties. The exclusive, invitation-only event concept provides the opportunity to meet the most potential clients in pre-booked face-to-face meetings. The participants of our events are technologically driven leaders of the largest companies in Europe and Southeast Asia. Annually, our 160 invitation-only business events gather leaders and solution providers, generating more than face-to-face meetings. To identify the responsibilities, investments, and projects of the top decision makers, we conduct interviews and receive over online survey responses each year. Share the report managementevents.com