The success of a business depends on the timing of a decision taken. This is where a dedicated chief financial officer (CFO) comes into play. A strategist, CFOs also assist chief executive officers in making key business decisions. In conversation with SMEFutures, Pradeep Agarwal, Senior Director, Cloud, Oracle, talks about how CFOs must find new ways to sustain performance and grow the business and how it’s time for small businesses to invest in a CFO.
Tell us about the role of a CFO in today's world.
The roles and responsibilities of a CFO have changed over the years. Catering to just the finance function isn’t enough anymore. They are now taking a strategic role in the organisation. It is now required for a CFO to develop skills beyond the traditional responsibilities, like business planning and address the challenges faced by the organisation during crisis. However, in today’s competitive global economy, finance must collaborate with marketing and operations in the planning process to understand the market conditions from their angle as well. Long gone are days when consumer experience (CX) used to be the responsibility of marketing department alone. Now, the whole organisation needs to come together to deliver a holistic experience to their customers. For example, something as simple as giving access to past invoices and payment history seamlessly while registering a service request through any channel, mobile, chatbot etc., can result in a great experience for a customer. The dynamics and competitiveness of today’s market require CFOs to constantly think about not only how to minimise the cost of operation by increasing efficiencies, but also how to effect steady revenue growth.
How can a CFO contribute in decision making for other departments like CX or human resources (HR)?
The finance department’s unique cross-functional perspective can be key to developing strategies and performance metrics, which in turn has a positive and far reaching impact on the customer satisfaction score. The customer must be at the heart of an organisation, and this must be true across all departments. To achieve this goal, look to finance as they can be the perfect ally for all functions to identify various pain points and help the organisation do efficient business. Technology is the only factor that can deliver this ability. Finance office can free up available bandwidth by automating most of the repetitive tasks and focus on analysis, providing better insight and service to other functions in the organisation.
HR and finance are two pillars, which provide the critical support that any business needs. Historically, the role of these two functions have always been intertwined, but today they are converging. Many companies run separate, disconnected HR and finance systems from multiple vendors. This not only leads to integration challenges, but to a lack of insight since each system has its own record of workforce-related costs, and the two don’t always reconcile. Better communication between HR and finance lies at the core of a modern approach to talent and resource management and this includes closer alignment between both departments’ systems. By unifying these systems in the cloud, companies can gain a single reporting and analytics resource as well as a common data model across the board, not to mention a consistent user experience for all. Of course, this stronger relationship between HR and finance begins in the boardroom so it is up to CFOs and chief human resource officers to lead by example.
How can a CFO leverage technology to his or her advantage?
The digitalisation will enable greater collaboration across the enterprise. Already CFOs are benefitting from cloud solutions that provide a single source of truth for important data and enable secure collaboration. The CFOs will use digital tools to ensure that everyone in the business has access to the data they need, when they need it. This will enable better decision making based on deep real-time insights.
Cloud will change how CFOs bring the business together. Cloud applications for enterprise resource planning, enterprise performance management, supply-chain management, CX and HR are easy for everyone to use and will support diverse members of the company in participating in tandem toward a common goal. With more collaborative planning and reporting processes, the CFO and the business can more easily achieve business goals. Cloud will also change how CFOs analyse information. To make full use of the vast amounts of data available, CFOs will need to embrace adaptive intelligence applications which use machine learning to analyse the data and derive actionable insights. The role of the CFO will therefore change – from performing data analytics and compiling reports, to using technology to uncover actionable insights from data. Overall, the role of the CFO has, and will, become much more strategic as they’re tasked with choosing the appropriate steps to take based on what the data reveals.
Cloud technologies will also enable greater control. CFOs will benefit from greater financial transparency and be able to assess and mitigate risk as appropriate, helping the board to make better informed decisions.
When is the right time to hire a CFO in small businesses? How to determine if a small business needs CFO, bookkeeper or a controller?
There really is no right time to hire a CFO considering their roles have transformed completely. CFOs have become catalysts for change within an organisation and do not perform the role of a bookkeeper any longer. Today, CFOs must find new ways to sustain performance and grow the business. They are expected to be strategic thinkers and business partners, as well as have a mastery of numbers. As their influence has grown, increasingly it falls upon the CFO to not only manage disruption, but to also identify and invest in the business models, products and services that will lead to sustainable, profitable growth. Thus, most organisations, irrespective of their size, cannot undermine the requirement of a CFO for success. CFOs have become catalysts for change
The success of a business depends on the timing of a decision taken. This is where a dedicated chief financial officer (CFO) comes into play. A strategist, CFOs also assist chief executive officers in making key business decisions. In conversation with SMEFutures, Pradeep Agarwal, Senior Director, Cloud, Oracle, talks about how CFOs must find new ways to sustain performance and grow the business and how it’s time for small business to invest in a CFO.