Steve O’Neill on the strategic CFO and 2014 predictions

 

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2014 will be the year of the strategic CFO, with CFOs making the transition from book-keeper to a broader strategic adviser and even the CEO-in-waiting. Managing this scale of corporate transformation requires many of the skills CFOs have. In fact, few are better placed to bridge the line of business siloes and support the CEO in assessing and analysing new risks, building business cases for transformative investments, and performing ‘blank page’ planning for the future, relatively unencumbered by attachment to legacy investments and infrastructure.

CFOs sit at a crossroads, and have an opportunity to evolve their roles significantly. Before even considering the volatility in the wider macroeconomic context, the change and transformation catalysed by modern technology are becoming key factors to a business’ survival. Disruptive technologies, particularly those based on the Internet, cloud computing, social media (the “Third Platform”) and Big Data analytics, are forcing long-established businesses to rewrite their business models and go-to-market strategies. Look at the businesses that have struggled and had to change in recent years: Blockbuster video, Kodak cameras, Woolworths and Jessops are just a few that didn’t catch the technology wave that fundamentally changed their respective industries. The changes in IT that are enabling this Third Platform and driving new data analytics is the next new technology wave impacting businesses, so it’s critical that they prepare to ride the wave rather than be engulfed by it.

Although still crucial to the CFO role, governance, compliance, stewardship and fiduciary responsibility are not the only ingredients necessary for business growth. Innovative CFOs are recognising this transition and looking to support the business with the broader challenge of building a platform for growth and future competitiveness.

Consider a fairly standard conversation between a CFO and a CIO. The CIO says, “I need approval to invest in additional infrastructure to support our growing data storage needs.” Does the CFO simply sign off the investment or challenge iterative spending? Is there a way to reframe the way the organisation evaluates its storage requirements? Does increased spending position the business for future growth or improved profitability the CEO has been asking for? Does it help manage the wider challenge of meeting eDiscovery or other requirements that the General Counsel is concerned with? Or in lowering the overall risk profile that the CRO has been asking for? Or in addressing the broader challenge faced with data centre space, power and cooling needs that worry the CIO? Do we need to spend more in the short term to make greater long terms savings?

In 2014 CFOs must look to understand the “why” of their business in order to focus on the strategic “what”, that ultimately will assist in the transition to a business enabler and a more strategic and fulfilling CFO role, a far cry from the ‘CF-no’ of old.

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