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CFOs shape their possible

Finance execs leverage stronger roles, incremental innovation to move forward

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Conference room with city skyline CFOs’ responsibilities have broadened to provide leadership, innovation and strategic vision as COVID-19 has accelerated the need for them to take on more decision-making and to drive change within their organizations.

CFOs are up to the challenge, embracing their roles as strategists and change agents, as Grant Thornton’s 2020 CFO Survey Report shows. They are also empowering their teams and advocating for increased innovation and the adoption of new technologies.

These insights were discussed during an online event featuring three Grant Thornton professionals, who discussed CFOs’ evolving duties. They concurred that the pandemic has heightened the need for CFOs to be more innovative and visionary and take a greater leadership role in their organizations.

“CFOs have been tasked more organizationally with responding to the pandemic, addressing more personnel matters, dealing more with technology, and less and less involvement on the day-to-day operations of the finance function,” said Nick Vellani, Grant Thornton’s National Managing Principal, Financial Transformation. “CFOs are playing a more and more significant role in both decision-making and implementing change within their organizations.”

Expanding roles of CFOs Research culled from four Grant Thornton surveys identified the expanding roles of finance executives, whose duties have been made more important by the health crisis and economic recession. CFOs said their duties fell into four key categories:

  • Strategist – Responsible for analyzing the business to support crafting of corporate strategy; focusing resources to deliver on corporate strategies.
  • Change agent – Duties include business value generation (i.e., cost and profitability) analytics; measurement/management of process and performance (financial planning and analysis).
  • Guardian – Establishing standardized control and compliance processes; embedding preventive controls in systems and processes.
  • Producer – Tasked with standardizing, simplifying and automating transactional processes (order to cash, procure to pay, etc.).

The CFOs said they were most interested in the roles of strategist – crafting and driving corporate strategy – and change agent – moving the business forward by adjusting behaviors and driving new outcomes. Their interest in these roles increased as the pandemic spread.

“The shift toward these roles really took hold at the onset of the COVID-19 pandemic in March and April,” Vellani said. “What we know from working with our clients is that this has continued – with a renewed focus on the sustainability of long-term operations and the prospect of continuous disruptions.”

This is not to downplay the importance of the role of a guardian, which involves risk and regulatory matters as well as compliance and control, and the duties of a producer, which includes managing the back-office, standardizing processes and financial reporting.

But guardian and producer responsibilities are increasingly delegated to others as CFOs strive to empower the team, particularly junior team members. Innovation and automation also play a part in this transformation, with the CFO’s role in digital transformation being particularly important to drive innovation forward.

“One of the questions I have around this data and the results of our survey is whether or not this is a long-term shift in mindset, or a temporary flux, given the crisis. I believe there will continue to be a heavier focus on the strategy and change agent roles, and a necessity to further leverage other team members and resources to drive the guardian and producer outputs,” Vellani said.

CFOs see need to invest in innovation As an indicator of their eagerness to focus more on strategy and to be agents of change, CFOs continue to express a willingness to invest in innovation.

The majority of executives were bullish about innovation during a recession and incremental innovations were a key element. “This is contrary to what we anticipated, since capital spending tends to halt during a recession,” said Jacqueline Schuh, Grant Thornton Senior Associate, Financial Management. “Almost 86% of execs were bullish about innovation during a recession, and that includes either incremental innovations, breakthrough innovations or possibly a combination of both.”

CFOs also indicate an interest in investing in technology for current operations and future innovation. Surveys show that among the more popular technologies are advanced analytics, optical character recognition (OCR), machine learning, distributed ledger technology and artificial intelligence (AI).

Importance of tech Certainly, some of these investments are addressing the immediate need to streamline operations. For example, Grant Thornton helped a client introduce OCR technology to help the company scan and organize complicated financial documents. The documents, which had 120 different data points, originally had to be individually read and keyed into a contract management system. That function was handled by 80 employees. The introduction of OCR technology allowed for greater accuracy, and the team was reduced to a dozen people now reviewing the documents after they have been scanned. The turnaround time has also been cut from four weeks to less than a week.

CFOs seem keen on longer-term technological innovation as well. A majority of them said that they would not change the timing of technology implementation despite the COVID-19 crisis.

“These results help support the fact that innovation is going to keep happening,” Schuh said. “As these tools are implemented, they will allow organizations and teams to perform those producer and guardian processes a lot more efficiently - to allow an increased focus on strategist and change agent roles.”

Technology for today and tomorrow “Even CFOs who haven’t yet invested heavily in technology can reap short- and long-term benefits by making investments now,” said Jess Parisi, Senior Manager, Financial Management at Grant Thornton.

While there may be a reluctance to incur additional costs during a crisis, technology investments may cost less during a recession. “In the long- and short-term, digital technology can help trim overall costs, and companies may explore more self-funded transformation projects that address pain points more immediately, such as automating certain tasks,” Parisi said.

While there may be a reluctance to incur additional costs during a crisis, Parisi said technology investments may cost less during a recession. “Together with creative implementation strategies, buyers may have more negotiating levers during a recession,” Parisi said.

“Technology today enables more transparent data, more flexibility and efficiency; and improved analytics can help you understand the business and how COVID-19 is affecting it,” Parisi said.

Investing in people In addition to making investments in technology, CFOs will continue to make investments in their people.

As CFOs gravitate more toward strategy and change agent roles, they should identify staff members who can become more involved in handling the daily operational duties. This offers employees new opportunities and possible career advancement, and it also empowers the team.

“This is an opportunity for the newest and most junior people in the finance organization to raise their hands and to engage in those efforts,” Parisi said. An additional benefit is that the more junior employees may have deeper knowledge and comfort level with the technology.

“The newest, most junior people may have some of the most advanced understanding of these technologies you’re looking to implement, and you’ll offer it as a pathway to professional and personal development,” Parisi said.

Facing the future As the abrupt social and economic shutdown of this past spring has now settled into a fall slog, CFOs must re-evaluate their roles. History has shown that a crisis can spark dramatic change, only to have things revert back to the old ways once the crisis abates.

This pandemic has given CFOs a more prominent seat at the boardroom table. Will that become permanent?

“Institutions are facing unparalleled uncertainty. And the challenges that we have today are at a time when CFOs have already begun the process of becoming more agile and resilient,” Parisi said. “So a change in mindset will ultimately drive how CFOs spend their time and energy. You have to ask yourself: Am I spending time doing hands-on financial reporting, or leading change and collaborating on the overall strategy?”

Contacts:

Nick Vellani Nick Vellani
National Managing Principal, Financial Transformation
T +1 832 476 3780


Jacqueline SchuhJacqueline Schuh
Senior Associate, Financial Management
T +1 312 754 7176


Jess ParisiJess Parisi
Senior Manager, Financial Management
T +1 312 754 7171