CFO’s Role in Corporate
Management
Keynote address for
Aubrey Joachim FCMA; CGMA
CIMA Global President 09/10
Transforming the Finance
Professional
The role of tomorrow’s finance professional
must change from scorekeeper to value
adding business partner.
What are business leaders expecting
from their finance teams?
Contributing to strategy and
good decision making is vital
(Leading Big4 research finding)
The pressures on the CFO & the
finance function
Transformation of finance is essentially driven by pressures on the
CFO coming from two directions:
• Changes in the external environment such as new competitive
success factors, the regulatory environment and shareholder
demands.
• From managers within the business demanding for better
information and support to cope with the challenges of a more
competitive marketplace and changing customer needs.
If finance professionals are not faced with these challenges, then it
is cause for concern! But, the question is; Are they prepared?
The required shift in finance and
accounting
The roles of finance and accounting have changed over the last
few years and will continue to change over the future.
In place of the tradition scorekeepers and tabulators, both
accounting and finance personnel now find themselves operating in
cross-functional teams working to identify:
• new business opportunities
• streamlining operations
• contributing to decision making
• improving profitability
This change in the finance space is described as a partnership
between finance and operations. In other words the emerging role
shift is from financial controller to financial business partner.
The expanding field of play in finance
Reporting
(Financial Accounting)
Finance transformation and the
opportunity to take on a broader role
The challenges for finance
What is preventing
Finance moving to the
front line?
Too much
Involvement in
Detail!
The strategic role of
the finance professional
Finance role in driving and influencing
organisational strategy
One of the core capabilities that finance professionals should
acquire in order to move towards world-class performance is
developing skills and competencies to provide strategic insights to
the organisation.
Business leaders are expecting this and the finance professional
must move into this space.
Finance role in strategic management
and corporate strategy
As well as getting the numbers and controls right, finance should help to
develop strategies for managing value and growth. Strategic
involvement includes developing:
• robust strategic processes
• advising on major investments
• product developments
• asset and infrastructure investments
• working with operational and business managers
• advising on issues such as current and expected business mix, capital
structure etc
• risk return profiles
• analytics
Finance professionals and decision
making
Decision making is key to superior organisational performance
The performance management
role of the finance professional
Strategic questions that must be
answered
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Which parts of the business are creating value?
What are the real drivers of our performance?
Which customers and products are profitable?
How are we performing relative to the competition?
Which customers are delivering the bulk of our profit?
What is driving cash generation ?
What organisational decision makers
are looking for
•
•
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Information to assess risk and uncertainty
Better market analysis
Better competitor analysis
More accurate customer profitability analysis
Improved understanding of cost behaviour and drivers
Improved cost control and management
More accurate cost information for product costing / pricing
Finance needs to provide more insight
INFORMATION
INSIGHT
PAST
PRESENT
FUTURE
What
Happened?
(Reporting)
What is
happening now
(Alerts)
What will
happen?
(Extrapolation)
How / Why
things
happened
(Modeling / Var)
Next Best
Action?
(Recommend)
Best / Worst
that can happen
(Predict/Optimiz
/ stimulate
The analytical role of
the finance professional
Developing new skills and competencies
within finance to deliver increased value
If the finance function and the finance professional are to
significantly transform to add value to organisations and become
true business partners a new set of skills and competencies. It is
essential to acquire the following:
• Excellent analytical skills using not just financial analysis but also
customer and market analysis, statistical and also sophisticated
modelling techniques
• Use of multi-disciplinary team approach to inform key decision
making as well as the ability to integrate inputs from diverse nonfinancial sources
• Strong commercial acumen characterised by strong product,
process and market knowledge
The concepts of business analytics
WISDOM
KNOWLEDGE
INFORMATION
DATA
The transition from data to wisdom
WISDOM
MANAGEMENT REPORTING
& DECISION MAKING
KNOWLEDGE
INFORMATION
DATA
DATA CAPTURE
& ANALYSIS
The transition from data to wisdom
WISDOM
HUMAN LEARNING,
TOOLS & TECHNIQUES
KNOWLEDGE
INFORMATION
DATA
SYSTEMS &
PROCESSES,
TECHNOLOGY
The transition from data to wisdom
WISDOM
KNOWLEDGE
INFORMATION
DATA
APPLICATION OF
MANAGEMENT ACCOUNTING
AND ANALYTICAL
TOOLS & TECHNIQUES
Analytics & Performance improvement
ANALYTICS
Decision making is key to superior organisational performance
CFO’s / Analytics must provide a
future view!
Finance professionals as
business partners
Effective finance business partners
Effective finance business partners are:
• Managers for value – those who understand how to deliver
sustained shareholder value
• Keepers of the business model – ensuring that the whole
organisation understands key performance drivers
• Pursuers of efficiency – from the investment base in areas of
capex, working capital, brands, R&D etc
• Executors as well as strategists – understanding that flawless
execution is as important as strategy
• Confidence providers to stakeholders
They must:
• Understand the key business drivers
• Develop influencing skills
• Be proactive
The Management Accounting toolkit
Finance professional today are moving out of their traditional finance
roles and financial views alone and becoming analytical
• IT
• Software
• Digital space
•Social media
• Kaizen
• 6 Sigma
• Lean
• BPI
• Change Mgt
• Fin Management / Ratios
• ABC/ABM / Rolling Forecasts/ EVA / Costing
Moving up the finance value chain
‘Chartered Management
Accountants are
financially qualified
business leaders’
ICMAB Members
should also strive to
become business leaders