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"Corefino customers gain quality accounting, professional expertise, and access to a wide range of partner solutions. Customers' CEOs and CFOs can focus on strategic responsibilities with the reassurance that their books are in order and they are ready for any business event, diligence process, or audit."
Source : Corefino
The Strategic CFO
is also known as :
Corporate Strategy Manager
Corporate Strategy Officer
CFO Strategic Partners
Strategic CFO Controller
Consultant CFO Strategic
Review CFO Strategic
CFO Strategic Use
CFO Strategic Management,
CFO Strategic Accelerator,
CFO Strategic Plan,
CFO Strategic Planning,
CFO Strategic Results,
CFO Strategic Company,
CFO Strategic Services,
CFO Strategic Framework,
Designer CFO Strategic,
Article CFO Strategic,
CFO Strategic Goals,
CFO Strategic Growth,
CFO Strategic Processes,
Addressing a Pivotal Role in Flux
The economy continues to take center stage in 2009. Enterprises are looking for any and all advantages that can help them thrive in this environment. With financial pressures straining even the most efficient and lean organizations, forward thinking companies should now to turn to the CFO.
A change in attitude about the value of the CFO, in fact, has been a long time coming. Whether an enterprise faces an economic boom or protracted downturn, the role of the CFO has been morphing. This flux reflects both greater CFO responsibility and corresponding more difficultly. This also translates into financial management that needs to generate real value in the enterprise. It will not happen by accident but by careful assessment and enterprise and business process transformations. Enter the concept of the Strategic CFO.
The Strategic CFO is equipped with the proper tools, plans and fiscal philosophy that will transform the role of CFO into a strategic business asset. Devising and following a roadmap can create a framework for success with strategic methodology that translates into positive bottom line performance via financial information. There are specific processes and stages that allow the CFO to break away from the old paradigm of numbers crunching, get thorough the financial growing pains and ultimately focus on business strategy and competitive challenges.
Today's CFO: Death by a Thousand Cuts
The issues on the plate of the CFO are grander yet grittier than ever before. Consider all high
level activities that CFOs are expected to coordinate: financial information gathering, integration, and interpretation as well as overall business process improvement. On top of that, add ever grown concerns around risk measurement, management and mitigation plus financial controls and compliance activities.
If that isn't enough also consider the more ‘mundane' aspect that need to be addressed such as accounting, payroll, tax issues, treasury, and the ongoing needs around the financial close process. Many CFO's have not progressed past the stage of babysitting ERP systems that only address these basic functions.
There are also added concerns of IT solutions and support that are in reality intertwined with supporting the many financial business processes necessary to run a company. In total, the sum of these issues, both great and small seems overwhelming to many CFOs-and the reality bears that out. In the December 2008 "Survey of Business Conditions," more than 50% of the over 400 surveyed financial executives believe CFO turnover will exceed records in 2009.1 Reasons cited in this survey, by executive services firm Tatum, LLC, are various but include the sputtering economy, weakened corporate earnings and the changing role of finance functions what has increased pressure on the role of finance and the associated role of the corporate CFO. The takeaway is that there is now widespread belief that the role of the CFO is exceedingly difficult to perform therefore turnover will become rampant.
Addressing the CFO Challenge
This belief- that the office of America's CFOs will remain the equivalent of musical chairs-only furthers the necessity for the CFO to become more strategic, marshalling information and not drowning in it. No matter if the enterprise is trying to weather a bad economy or is facing internal or external financial pressures, the CFO needs to see its role as that of information master and innovator.
A Strategic CFO, then, has the foresight, tools and vision to address the processes that fall under the mantle of the CFO and create competitive advantage for the enterprise. To do this the Strategic CFO needs to consider methodology models and IT solutions that improve and transform financial business processes while also taking care of everyday business. But even before that, there needs to be an honest assessment of ‘current state' business functions, IT support and solutions, and enterprise value the role of CFO is providing. This is critical to define where the enterprise is and how far it needs to progress.
Creating a Path to Success
The role of CFO, as mentioned, is changing rapidly but there also basic responsibilities that will remain constant. The CFO will need to address basic functional processes but also juggle new ways of looking at financial metrics that monitor financial performance. Going one step further, this is part of a larger picture to contribute to enterprise business challenges. These challenges vary and include:
- Identifying opportunities to increase shareholder value
- Enterprise cost control measure
- Financial and legal regulatory issues
- Technology needs and spending
- Restructuring costs
- Business acquisitions
- Capital Spending
To handle these issues, and others, the CFO must work to develop a strategic plan that collects financial information for reporting and analysis that positively impacts bottom line performance of the enterprise. Accomplishing this goal will position the CFO to become an equal among Clevel executives in fashioning strategic decisions and policy at the enterprise level.
How to Address a Pivotal Role in Flux
The need for a Strategic CFO in every enterprise is urgent, but this transformation should be done in stages. Developing a methodical plan requires inventorying current processes alongside financial issues that have yet to be addressed or that are on the enterprise ‘wish list.' A
four stage approach to creating the Strategic CFO will take a company from basic transactions processing to strategic business partner.
The four stages of the Strategic CFO are evolutionary steps that expand the domain of the CFO to eventually include all the elements in Figure 1. By following a four-step process, the CFO can turn concepts into the reality of daily process improvement that then trickles up to be used in overall enterprise strategy. These four steps are also defined by the steady growth of value added functions that impact the role of the CFO for maximum strategic value:
- Stage 1: Focuses on non-strategic functions and transactions like basic back office financial solutions (e.g., ERP systems) the financial close period and associated reports and statements, and HR, benefits and payroll administration.
- Stage 2: Greater level of internal controls, audit issues and reporting for financial compliance, legal and regulatory matters as well as other financial areas like tax compliance and process automation.
- Stage3: Increased information gathering solutions to support analysis and Business Performance Management, budgeting and planning, and financial and operational risk management, as well as tax strategies and cash and treasury management strategies.
- Stage 4: Highest level of strategic processes to address M &A activity, strategic and geopolitical risk factors, high-level data analysis, corporate financing/fundraising activities, investor/analyst relations, and overall fiscal innovations that directly impacts shareholder value. Also IT innovation to support ongoing strategic initiatives is a critical element.
The various elements of these four stages can cut across business processes and IT solutions so as to broadly cover, create and provide financial data. This cross pollinations of IT and processes also helps to achieve satisfactory results during any of the four stages. For instance, Business Performance Management, a ‘Stage 3' element, enables businesses in the process of defining financial goals to measure and manage performance against those goals. Core BPM processes include financial and operational planning, consolidation and reporting, business modeling, analysis, and monitoring of key performance indicators linked to strategy. These processes therefore can also impact another Stage 3 element like internal (or external) benchmarking. However BPM can also impact items like strategic risk (Stage 4) while tax strategy and tax provisioning (Stage 2) can directly impact cash reserves and treasury functions (Stage 3). These types of dependencies show the complex nature of the enterprise financial framework. For that reason a phased approach to the Strategic CFO goal line is crucial to properly devise and execute.
Timing is Everything
Another important aspect to remember is that the path to a Strategic CFO is not short. The Strategic CFO timeline -much like enterprise financial transformation work which also involves many financial transactions systems- needs to be thought of in terms of months, not weeks. A reasonable timeframe, as shown in Figure 2, will take the enterprise from Stage 1 "Transactions" through Stage 4 "Strategic Enterprise Partner" in a 20 month time frame and focus on value added elements that greatly benefit both the enterprise and the office of the CFO.
This four step process and timeline may differ in specifics and durations depending on need variations at specific enterprises. However the concepts that need to be followed, along with the financial information streams that must be created, are largely defined by these business and technical elements. Following this methodology and calendar increases the odds of success when attempting to create a Strategic CFO.
Avoiding the Pitfalls
For CFOs, mastering the basics of their job role is not enough to be considered a true and equal partner at the C-level. Traditional data processing and control functions will not provide the insight to successfully work across the customary executive level boundaries. The Strategic CFO will throw off the shackles of a mere controllership role to become and enterprise leader. For this reason, becoming a fully formed Strategic CFO is crucial to become a master of your perception-and your true value to other C-level executive and to the enterprise. However, creating the Strategic CFO office can be fraught with dangers that produce failed results. Many CFOs may be damning themselves to the ‘road to hell' with good intentions but bad execution. The reasons for failure vary but many times include:
- Lack of enterprise sign off and commitment-The CFOs ownership of business process improvement has not been ‘sold' to the rest of the enterprise or finance personnel
- Underestimating the change required-Change will come from both new
finance strategy but also change from technology usage, corporate and
employee buy-in, and process and workflow redefinition
- A disconnect between finance initiatives and IT-New or improved finance redefinitions
will need some level of IT support (either internal or external)and how it is valuable to finance processes to succeed
- Budget constraints- Finance reality sometimes takes the guise of budget cuts that can
negatively impact the requisite change that is required to create a Strategic CFO environment.
Yet another important factor is a lack of dedicated resources. Businesses need to dedicate the best and brightest to CFO initiatives; otherwise the Strategic CFO initiative is not a business imperative. Quality resources help make the Strategic CFO process successful and achieve stated objectives.
This important element of success is, in many cases, not within reach of many CFOs. The talent pool for many areas of finance is thin, in the best of times, and nearly non-existent for specialty areas (such as tax, cash forecasting) Therefore many enterprises will need to look elsewhere for resources to fill the gaps in talent and processes that need to be in place for the Strategic CFO to succeed.
Different elements of business process outsourcing (BPO) and
Software-as-a-Service (Saas) will make sense for many enterprises. And now there is also a third, hybrid approach that promises to bring the best aspects of BPO and SaaS together with cloud computing concepts to address both needed software solutions and with domain expertise in financial services.
One such vendor, Corefino, has created a financial solution set that packages just such an offering to address core accounting, payroll and tax functions that most CFOs face. This hybrid approach offers enterprises a way to address daily finance process needs, through an outsourced solution in conjunction with actual finance personnel on call and provided by Corefino. A CFO, who is looking to create a more strategic position for finance and for the CFO role itself, will be able to concentrate on higher-level business functions with supplemental help in this type of scenario.
By utilizing an IT solutions/service provider, like Corefino, for basic yet necessary ERP type functionality, an enterprise will be able to enjoy benefits through this model such as:
- Up-to-date best practices for accounting and other financial processes
- Cost and time efficiencies in finance
- Instituted internal financial controls
- Uniform business reporting
- Compliant financial reporting
- On-demand financial expertise
- Removal of IT security issues
- Potential headcount reduction for daily activities
- Reassignment of resources to strategic processes
The vendor that offers outsourced solutions in tandem with best practices and domain expertise in all things finance is a valuable resource to any enterprise. However going forward, this hybrid will prove more valuable to companies that are not only looking to create the framework for the Strategic CFO, but also for enterprises that want to move beyond the old ERP paradigm of buying, installing and upgrading software. That model keeps many companies fettered and unfocused on improving finance processes and only makes them caretakers of existing software solutions. New approaches to these old problems, such as that offered by Corefino, will help enterprises realize the vision of the Strategic CFO.
The Strategic CFO Initiative Will Depend on Quality Support
In most cases, the CFO will need to juggle new processes, old employees and longed for IT services and solutions while also being the project champion for a Strategic CFO project to succeed. Many times the CFO will also need to import some level of financial expertise or financial IT solution during the project to bridge and create the ‘before' and ‘after' state.
Because of this reality enterprises now need to strongly consider the new breed of application/service providers that can supply these types of hybrid solutions in finance for all types of industries. Going forward, these vendors will carry the load for many types of financial functions and can create great value. It is this type of forward thinking solution strategy for finance that will enable the reality of the Strategic CFO.