The Australian CFO Forum 2014 White Paper

Transcription

1 The Australian CFO Forum 2014 White Paper From Gatekeeper to Strategist: The evolving role of the Australian CFO as an enabler of transformation Produced by:

2 Key findings from the Australian CFO Forum The role CFOs play in providing input into enterprise strategy has grown in scope and importance. The CFO must champion the value of big data and analytics to the rest of their organisation. Effective organisational strategy requires greater collaboration between CFOs and CIOs. CFOs play a vital part in helping CMOs improve the customer experience. Australia faces a shortage of people with traditional finance skills, analytical capabilities and the ability to think across the enterprise. 2

3 In June 2014, more than 30 senior and board-level finance executives from organisations across Australia participated in IBM s CFO Forum at Shared Services & Outsourcing Week Australasia. The CFO Forum provided a platform for CFOs to share their thoughts on the latest challenges and opportunities facing their businesses. This paper summarises the conversations that took place during the forum, which focused on three topics: big data and analytics, operational agility, and talent and leadership. 3

4 Using Big Data and Analytics to Create Competitive Advantage Will Duckworth, Consulting Services Leader at IBM, opened the forum with an overview of CFO insights from IBM s 2013 Global C-suite Study. Most notably, he said CFO input into enterprise strategy had steadily grown in importance since the previous study in Attendees agreed that their ability to harness big data and analytics to generate meaningful business insights was essential to keeping their business competitive. As their C-suite colleagues were strongly influenced by the CFO in most business decisions, they felt a strong duty to advocate the importance of big data and analytics to enterprise strategy and generating profitable growth. As one CFO said, It s my job to bring the rest of the leadership team along on that journey to open up opportunities. The discussion moved from application to implementation. Attendees agreed that big data and analytics played a vital role in their ability to provide real-time business advice and influence strategy, but this was only possible with the right tools. As one attendee said, We can t just have a tonne of people sitting around going through real-time data and trying to make sense of it. We need a reliable, effective tool to pull relevant information out fast, so we can act on it quickly. We price and reprice our product offerings every 90 seconds. Another participant said his company, a major utility organisation, was building its predictive analytics capability to deploy condition-based maintenance programs on its grid infrastructure and prevent failures, saving time and money. Forum participants agreed that predictive analytics played a strong cost-prevention role in other industry sectors as well, citing many examples where it enabled smarter allocation of capital expenditure. 4

5 From here, the debate turned to responsibility who controlled strategy at this intersection of technology and finance, the CFO or CIO? Attendees agreed there was a clear delineation of responsibility. The CIO was responsible for data collection, aggregation and distribution, and the CFO played an equally critical role in data analysis and use, and in communicating business insights to the rest of the organisation. The impact if you get it wrong is absolutely critical. Ultimately, it s still the CFO who carries that risk. Another key topic was the role of big data and analytics in risk mitigation. Has the rise of the Chief Risk Officer meant CFOs were no longer primarily responsible for the governance of risks and related opportunities? Attendees unanimously rejected this notion. They acknowledged that while the buck still stopped with the board of directors, CFOs who advocated the use of analytics were ultimately accountable for business decisions based on insights gained from analytics. 5

6 Entering New Territory One of the major challenges for CFOs is how to pull together data and insights from internal and external sources. Participants in last year s CFO Forum noted a strong shift in focus to external data (for example, customer behaviour and customer sentiment communicated through channels such as social media) from internal data (such as financial and operational information). Attendees acknowledged the focus on external data had resulted in CFOs playing a more important role in helping CMOs improve customer experience, particularly in fastpaced industries such as retail and transport. Attendees agreed that their main challenge was dealing with volume. One participant said his company, a travel organisation, processed more than 18 million transactions a week, resulting in more data than they knew what to do with. Everyone agreed the most viable way of dealing with big data from external sources was to use analytics tools that visually represented data in dashboards, making the findings easier to access, understand and use. Participants shared examples of how they were collaborating with their marketing counterparts to control costs and increase top-line revenue. One attendee explained how his company, a large retail organisation, analysed customers sales history data to contribute to the ordering and allocation of stock in-store. The same data was also used to design targeted marketing campaigns, special offers and discounts. At the heart of these marketing campaigns is the close collaboration of CFOs and CMOs evaluating the marketing and incorporating information from social media sources to identify new revenue streams and opportunities for business-model innovation. Attendees all agreed that analytics was crucial to the future of their business. One participant said his company, a telecommunications organisation, had created a Finance Centre of Excellence focused purely on using predictive analytics to contribute to strategic and financial decisions. 6

7 Designing a Fit-For-Purpose Operational Model The environment in which CFOs operate is increasingly disrupted. Participants agreed that big data and analytics had created game-changing opportunities and challenges and, as such, building agility into the operational model was vital to maintaining profitable growth. More than 80 percent of forum participants said they were currently using shared services and/or outsourcing their financing and accounting activities. The 2014 State of Shared Services and Industry Report conducted by SSON indicated that Australian businesses are regionally focused. A high percentage of respondents indicated that their operations were predominantly based in Australasia (78%) with relatively low numbers for overseas locations (13% indicated Indian centres, and 10% indicated centres in Central and Eastern Europe). From here, discussion turned to how CFOs contributed to operational decisions about shared services and outsourcing how do you decide what s right for your business? One participant said that finding the right mix depended on whether the organisation wanted to preserve value, through cost reduction, or create it by moving staff and processes up the value curve. Other participants from organisations using shared services noted the importance of imparting the business s cultural values with its shared services providers to enhance staff performance. One attendee s business made it mandatory for all its employees, including shared services provider staff members, to spend one day each Christmas working in-store in a customer-facing role. This experience at the coalface dramatically improved the performance of its shared services employees. The discussion then moved to performance management, particularly how to encourage staff to perform activities not normally regarded as a responsibility of the finance team. One attendee noted the importance of semantics in integrating front- and back-office functions. He rebadged the company s finance team from Finance Group to Finance and Strategy to break down silos between finance and other business functions, and emphasise his team s role in identifying opportunities for revenue growth. Another participant followed up by suggesting that he had empowered his team members to see themselves as strategists rather than gatekeepers by providing his finance team with greater autonomy and removing approval processes for their operational expenses. This simple act had created trust between Finance and the rest of the organisation that the CFO could build on to engage in more strategic initiatives. All organisations sit somewhere on the spectrum between control and trust. We have created some processes which now allow for a higher level of autonomy. 7

8 Conclusion: The Evolution of the CFO Finance leaders who attended the 2014 Australian CFO Forum clearly understand the challenges and opportunities they face as key enablers of business transformation. In 2005, IBM s Global CFO Study found that while 35 percent of CFOs considered it vital to combine information from across the organisation, about 16 percent believed they were doing it effectively. In 2013, IBM s C-suite Study asked the same question and found that while 82 percent considered it vital to integrate enterprise-wide information, only 24 percent thought they were up to the task. All attendees agreed with the majority in these findings and acknowledged the complexity of their role as CFO has increased markedly in the last eight years. However, they are ready to face this complexity by focusing on three initiatives: Integrating enterprise-wide information Using that integrated information to drive competitive advantage and manage risk Finding and hiring people with the skills to adapt to rapid changes in finance roles and responsibilities. As the finance organisation s responsibilities continue to expand, Australian CFOs have a larger part to play in maintaining profitable growth by embracing their roles as strategists. Visit to find out about the 2015 CFO Forum. Sources: 1. Pushing the Frontiers, CFO insights from the IBM C-suite Study, IBM and SSON, A Brave New World: How the CFO s Role is Changing in Digital Australia, The Australian CFO Forum 2013 white paper. 3. The agile CFO: Acting on business insight, IBM Institute for Business Value, Pushing the Frontiers, CFO insights from the IBM C-suite Study,