THE CFO IN AND MEDIA. #CFOReimagined

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1 THE CFO IN COMMUNICA TIONS AND MEDIA See how the new CFO is adapting to a changing financial landscape, utilizing transformative new technology to disrupt, innovate and generate value for the communications and media sector. #CFOReimagined

2 The finance function is reshaping their organization s vision of the future through strategic decisionmaking, preparing the business for the myriad challenges and opportunities to come. Contents Global message 3 Introduction 4 The new CFO mandate 6 New talent for new 8 ways of working Delivering on 11 the new mandate Move faster or be left behind 13 Actions for C&M CFOs 14 2

3 Now is a pivotal moment for CFOs. Our new research on the dynamic role of the finance function reveals how the CFO is positioned at the center of the organization, side-by-side with the CEO, turning finance into an engine that can power the entire enterprise. CFOs have long been responsible for producing the numbers and managing technology costs. Today, they are continuing to push the boundaries of automation and are increasingly harnessing data to enhance analysis and generate insights. They are also looking beyond the borders of the finance function, proposing and shaping business models throughout the enterprise. Ideally, they are leading the charge in deciding how to invest in digital, guiding their organization into the next evolution. Based on a large survey of CFOs and up-andcoming finance professionals, as well as interviews with leaders from top global companies across multiple industries, the findings uncover the CFOs ambitions, priorities and obstacles. 1 The CFO has an expanded remit to: Create more revenue streams. Manage down total costs. Share insights across business functions. Advise the CEO. Improve risk and compliance. Increase enterprise value. Steward the digitalization of the entire enterprise. But CFOs (and the entire C-suite) must seize this moment. Many CFOs face significant challenges as they take on a broader role. Our research reveals how they can leverage technologies, skills and relationships to ensure their companies can transform and prosper. 1. Accenture carried out a quantitative survey of more than 700 CFOs and senior finance executives, including 60 from communications and media businesses, as well as a separate survey of 200 up-and-coming finance professionals. We also conducted almost 50 qualitative interviews with CFOs, CEOs and CDOs. 3

4 Communications and Media (C&M) companies are operating in a period of tremendous disruption and volatility. The pace of change is unlikely to slow down, and C&M companies must use their resources in new and smarter ways to compete. Accenture s latest research shows many CEOs are turning to their CFOs to sponsor critical digital-based transformation investments and navigate the accelerating changes from new business models. In fact, the research is clear: C&M finance leaders are uniquely well-equipped to thrive in this era of unprecedented disruption. The CFO s financial and enterprise stewardship expertise makes them the CEO s most trusted advisors. Change within the C&M industry is being driven by new opportunities and changing technology. Communications companies that own both connectivity and customer data have a unique opportunity to engage their own and other digital customers across platform-based ecosystems. Customers are driving disruption by demanding improved service at a lower price. New technology drives ever increasing bandwidth demands. The Internet of Things (IoT) has exponentially increased the number of addressable devices. While governments are changing regulatory environments, communications companies are planning massive capital expenditures to build 5G networks. 4

5 Within media, content providers and broadcasters have strategic decisions to make about monetizing their content via their own platforms or other partnership distribution models. New competitors appear almost daily, as new technologies create new distribution channels and lower barriers to entry. For C&M companies, the ability to compete and grow requires an efficient operating model to provide the next generation of digital-based services and immersive customer experiences. 5

6 The new CFO mandate The role of the C&M CFO has changed dramatically from the traditional accountant-based chief controller to spending the majority of their time articulating the story of the financial results of the financial results they expect to realize growth. More importantly, C&M CFOs are also spending more time sponsoring and driving value from critical new digital investments in customer experience and shaping the next generation of strategic relationships, joint ventures and acquisitions. An example is the CFO of a large US telco who was a critical C-suite sponsor of significant investment needed in new digital-based talent, advanced analytics, artificial intelligence (AI), service design and modernized IT. The result was new value delivered over two years from increased digital shift (GA, UPG, Call Deflection, Chat Deflection), Increased Digital Revenue (TEP, Accessories) and Increased Customer Satisfaction (SPS). Accenture s latest research suggests that it is the CFO who is stepping up to lead the response to disruption. The role of the CFO is rotating and changing operating focus, confirms Eric Noren, Managing Director, Accenture. The finance function is reshaping their organization s vision of the future through strategic decision-making, preparing the business for the myriad challenges and opportunities to come. 6

7 How are they doing this? Above all, we find C&M CFOs are being driven to reinvent their own finance function. Finance leaders are embracing new leading practices and emerging technologies with more focus on business analytics, integrated business reporting and planning and shared services.be prepared. As finance organizations deliver better decision support information faster, stakeholders across the enterprise will keep asking for more information that is more actionable, more relevant and more digestible. AI and robotic process automation (RPA or bots) are now mainstream. Routine accounting work, such as transactionprocessing, document matching, account reconciliation, statutory reporting and exception analysis can be handed off to virtual accountants who never take time off. As the repetitive low-value work is off loaded to 24/7 bots, the core finance team can better focus on driving value. According to Francesco Venturini, Senior Managing Director, Accenture C&M Global Industry Lead, the race to the top means starting to invest some of these efficiency gains in innovation and experimenting with new business models. New technologies may be critical, but the importance of the skilled human workforce should not be underplayed. Technology has made it easier to forecast and reassess budgets, reassess opportunities and reassign resources, notes the CFO of a South American telco. But getting the right forecasting drivers is a challenge because of competitors, technology, and the micro-economic environment. In the past, those drivers were more stable, but now they are more variable and have a higher impact. 7

8 New talent for new ways of working As the finance function evolves to meet the new CFO mandate, so too must the skills and experiences of its leaders and broader workforce. CFOs are mindful of the need for talent that can move beyond traditional number crunching to execute the more strategic and enterprise-wide mandate of providing analytic thinking and decision support. We are hiring people with skills we weren t looking at before, confirms the CFO of a South American telco. In fact, C&M CFOs are more likely than their peers in any other industry sector globally to be prioritizing the recruitment and development of finance staff. More than a third (38 percent) consider the ability to find, develop and place finance talent as one of their three most important skills. 38% consider the ability to find, develop and place talent as one of their three most important skills. 8

9 FIGURE 1 Those that have adopted predictive technologies to some extent. 85% Comms and media 76% Consumer goods 76% Insurance 75% Banking 72% Retail 70% Metals and mining Moving quickly to build a future-ready finance workforce will be important if businesses are to retain their competitive edge. Predictive analytics technologies so crucial for anticipating and preparing for disruption provide a good example. These technologies include statistical techniques from predictive modelling, machine learning, and data mining. While 85 percent of CFOs in the sector say they have adopted some of these technologies to some extent (see Figure 1), they identify weaknesses in their ability to exploit these tools, as well as in their ability to move towards a predictive mindset. 70% Utilities 68% High-tech 68% Oil and gas 9

10 CFOs in C&M are ambitious about what could be achieved with greater analytics and technological expertise. The chief information officer of a US media business told us that he is seeing the rapid introduction of AIbased technologies in other industries, which is supporting back office functions such as finance, but said this is happening less in his own sector. There is definitely a need in the market for that, he said. Clearly, the talent challenge remains pressing, with executives acknowledging the need to staff their functions and the broader enterprise with a greater number of people who can exploit the potential of analytics. Finance leaders are rethinking their operating models one popular strategy is to pool resources across the enterprise, rather than retaining functional silos. Some 52 percent of C&M CFOs say they plan to create a more agile environment to promote enterprise-wide sharing of insight. If finance is capable enough to understand the data and to make the best business decisions then everything can work, says the chief data officer of a European media business. Of course the whole company needs to adapt to the new era. If half the company is not adapting and the other half is running too fast, we have two different speeds and that is not feasible or viable. Chief data officer of a European media business. 10

11 Delivering on the new mandate Comms and media High-tech FIGURE 2 CFOs engaged in real-time monitoring to prepare for future scenarios. 43% 38% Managing risk in a rapidly changing industry. One interesting example of the new finance mandate to drive value is rethinking how CFOs manage risk. Traditionally, risk management was typically driven by historical results or intuition. Today, leaders are demanding a data driven approach. The challenge in a fastmoving environment is to build monitoring systems that can pick up rapid change highlighting internal and external developments in as close to real time as possible. C&M businesses are leading the way in this critical area. Nearly half of C&M CFOs surveyed say their finance teams are engaged in real-time monitoring that is enabling the business to prepare for disruption and volatility in the road ahead a higher proportion than in any other sector (see Figure 2). Insurance Consumer goods Utilities Retail Banking Oil and gas Metals and mining 30% 28% 25% 23% 22% 22% 20% 11

12 FIGURE 3 Proportions that believe identifying and managing risk is a top-three skill for CFOs. C&M CFOs are focused on providing their colleagues with early warnings of risk. Well over a third of CFOs in the sector say the ability to identify and manage risk now needs to be one of their top priorities (Figure 3). Almost nine in ten CFOs are focusing on identifying and preparing the business for volatile future scenarios. Modelling volatility is just half of the battle: finance teams also need to persuade the organization of the need to change, and to collaborate on finding a solution to disruption on the horizon. Comms and media Oil and gas Consumer goods Insurance Retail Banking Metals and mining High-tech Utilities 40% 36% 36% 32% 32% 30% 30% 28% 27% 12

13 Move faster or be left behind The ongoing disruption of the C&M industry requires businesses to not only embrace digital-based transformation but to also execute on change more swiftly than ever before. CFOs recognize these imperatives and are taking on greater responsibility for strategic and enterprise-wide renewal. Progress has been made, says Eric Noren of Accenture. CFOs are focused on sponsoring strategic decisions and real-time monitoring that provides the means for the function to identify emerging risks and opportunities much more quickly than in the past. However, technology is just one part of the story. To make full use of analytics, CFOs must solve the talent problem, equipping their functions with the capabilities required to drive change. 13

14 In this environment, we believe there are three priorities for C&M CFOs to embrace: Serve as the innovator and a disruptor that harnesses data to unleash new value and integration across the C-suite Business analytics, enterprise-wide risk management, and scenario planning will form a core element of the finance function s data-driven capabilities in the future. CFO focus on the critical business outcomes and economics are critical to enabling differentiated customer-oriented business strategy and digital-based transformation investments. Focus on hiring and retaining the right talent Finding top finance talent will continue to be difficult. In the very near future, data interpretation and analytic thinking will be a core finance skill. CFOs need to focus on optimizing how staff are hired, utilized, and upskilled. In many cases, it will make sense to outsource or automate work to free up the next generation of talent. Continue to drive investment in process simplification and automation Technologies like robotic process automation (RPA), Blockchain, and cloud ERP systems provide unprecedented opportunities to shift the work from low-value transaction processing to highvalue decision support activities and increased enterprise collaboration and action on data-driven insights. 14

15 Contacts Eric Noren Managing Director, Communications, Media & Technology Industry Group, Enterprise Value Practice, Global Lead Boston, MA Joel Vander Weele Senior Manager Communications, Media & Technology Industry Group Enterprise Value Practice Chicago, IL Merrill Wade Senior Manager Communications, Media & Technology Industry Group Enterprise Value Practice Atlanta, GA About Accenture Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions underpinned by the world s largest delivery network Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 449,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at Join the Copyright 2018 Accenture. All rights reserved. Accenture, its logo, and High performance. Delivered. are trademarks of Accenture. This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.