3 Urgent Responsibilities of CFOs in 2017 – Besides Finance

CFOs are being called on to bring additional value to their organizations – in ways outside the realm of standard finance. In fact, according to a recent McKinsey& Company survey[i], four in 10 CFOs reported that they spent most of their time in 2016 on a non-finance area.

While traditional functions haven’t gone away, methodologies are rapidly evolving, and new responsibilities are being layered on top. Further, these changes are being embraced by many CFOs. The aforementioned McKinsey survey also found that over 20 percent of CFOs believe their greatest value is in strategic leadership – not finance.

Because cash flow and revenue generation remain essential to growing a sustainable and profitable company, CFOs must still maintain a treasury focus. However, as a result of new insights and increasing visibility driven by big data, modern financial leaders are at a professional turning point.

To become a strategic driver for the business and ignite growth in 2017, CFOs must have the ability to understand and pursue these new avenues of opportunity. In particular, three operational areas require the immediate focus of today’s CFOs.

Harvesting – and Harnessing – Big Data

CFOs have always used external data to evaluate their company’s performance. Benchmarks, such as return on assets and investments, and profitability and revenue growth metrics, are fundamental comparative points used by CFOs to measure their company against another.

Yet, until recently, up-to-date and accurate metrics haven’t been available for all aspects of a business. The emergence of powerful analytics – able to capture huge amounts of real-time data – has changed that.

For the first time, CFOs have access and visibility into empirical data, such as sales compensation processes, for example. With the ability to benchmark incentive compensation and compensation plans, CFOs can see if they’re getting the same return from their incentive dollars as their competitors. They can see at-a-glance how their plans compare to other companies their size.

Sales compensation is a huge line item expense for CFOs. If you pay 500 sales people $100K a year in incentive compensation, you’re making an investment of $50 million per year. The ability to see how these dollars are working for you – or how they are not – presents a chance to make a huge difference for the business.

In the past, this information may have been gathered through research or perhaps by calling professional colleagues. You might have gotten a sense about what to pay a given person, at a given level, at a given job function, in a given geography.

By providing a more scientific approach, big data increases data precision and accuracy. This gives CFOs instant and proven insights for comparative analysis and best practices.

Aligning Business Functions

The overall goal of any company is to grow. To do so effectively, all departments must be well aligned across the company.

Data increases visibility between business functions. With insight shared across the organization, different departments can better support each other and use their increased knowledge to effectively drive the company forward.

In the case of finance, CFOs always worry about protecting the assets of the company and keeping control over company spending. Historically, this has created an adversarial role between finance and sales.

The advent of big data changes this scenario. If CFOs realize that their incentive dollars are driving higher sales performance, they start looking at incentive compensation in a different way. If a CFO can see – through black and white metrics – how such payouts move the dial, they can put energies and resources in the right place, allocating money that drives top line performance.

Managing Performance Dynamically

As a CFO, you need timely insight into what’s happening in the business – while there is still time to make a difference. Without instant access to this data, it’s impossible to make the right decisions for the business.

A 2016 survey published in CFO Magazine found that 94 percent of finance executives believe the ability to dynamically plan “in the moment” is critical to react in a fast-changing business world.

Learning about unplanned expenses after a quarter closes damages your credibility. The company counts on the CFO for an accurate picture of the organization’s financial health. Confidence in the numbers is essential.

With access to all the cards in the deck, you can make more confident business decisions. By seeing what’s really still on the books, you can improve forecasting. You can see if your compensation calculations are on target and how close the business is to achieving quota. By looking at data in real-time across different systems, you can alleviate risks and make more strategic decisions for the business.

Tomorrow’s CFOs – Evolving Data Strategists

CFOs now monitor metrics on a daily basis that used to be weekly – and metrics on a weekly basis that used to be quarterly. By using data to get better insight on key aspects of the business, CFOs are leading the charge for operational changes that increase revenue, profitability and cash flow.

With increased understanding, CFOs are strengthening organizational goals and creating a higher-level view of the business on which to make decisions. In doing so, they are bringing additional value to the business and redefining their own role.