Navigating the new paradigm

From managing finance to driving strategy: Exploring the changing role of the CFO

It is no longer surprising to see CFOs drive strategy. Most organisations now expect the CFO to help determine the CEO’s agenda across the organisation. Digital technologies, expanding data sources and a new mandate for finance are combining to change the shape of the finance function. But CFOs seeking to step into this expanded role are restrained on several levels. PwC’s Finance Effectiveness Benchmark Report estimates the finance effort focused on value-adding business insight activities staying constant at a low 24%. So what’s stopping CFOs from effectively driving strategy as per the expectations their new role brings? And what can be done to help CFOs proactively influence business decisions?

A major pain point is the challenge around data analytics—key for CFOs seeking ways to drive strategy. Research by PwC (PwC CFO Agenda: Making Data Work) found that 35% of respondents are challenged by the quality, accuracy and completeness, while 46% worry about the timeliness of the data. In addition, CFO’s face challenges from a poorly integrated organizational strategy, a focus on performance measurement instead of management, and inadequate or misaligned resources such as multiple departments for data gathering, reporting and analysis.

Current CEOs while being excited to deliver are sometimes being held back by certain hesitations. Having spent a major part of their career dedicated to the critical function of finance, many find it a challenge to use emerging technologies to determine strategy. Many CFOs also refrain from making or advising on strategic decisions. Again this is mainly due to the unavailability of the right tools which can accurately interpret data to provide actionable insights.

For CFOs and finance leaders to take a more dynamic role in their new roles, finance as a function will have to be redefined on new principles of Navigation, Mediation, Resilience and Connectivity. Easy Navigation with real-time data and analytics through advanced technologies for swift decision making; smart Mediation to create a comprehensive environment for effective management of customers, regulators and shareholders; dependable Resilience to build a sustainable framework to withstand unforeseen challenges; and seamless Connectivity between all functions to work as one unit through people, process and technology integration.

By proactively leveraging these functions with intelligent platforms, CFOs will be able to effectively drive strategy and lead their organisations to become more resilient, streamlined and agile.