If anything good came out of the Great Recession, it’s that companies developed a healthier respect for their finance executives. As a result, CFOs rose up from the downturn with duties extending beyond such traditional tasks as managing risk, ensuring compliance and providing financial planning and forecasting.
Having gained a more holistic view of the enterprise, finance executives can now provide forward-looking analysis, the key to driving business value. Instead of relying solely on historical reporting, the emergence of Big Data has enabled CFOs to accept the higher-value mission of aggregating and analyzing financial and operational data, using the resulting intelligence to identify the metrics which will guide decision making. By providing accurate insight, they can help steer the business in the right strategic direction.
In an ever-volatile globalized environment, the quality of management information may make the difference between staying ahead of shifting conditions, or getting flattened by everything from commodities slumps to the global slowdowns, such as the underwhelming performance of China’s economy, a longtime engine of economic growth. Armed with the right technology tools and trained in applying their interpretative skills, CFOs are ideally positioned to illuminate the path ahead, leading the way by establishing priorities.
Indeed, CFOs are destined to become Chief Profitability Officers—in effect—for these reasons and others:
The beans can count themselves. By automating many of the function’s more transactional—and tedious—duties, CFOs now have the opportunity to move from being so-called “bean-counters” to serving as business strategists whose voices count. With access to dependable data, finance executives can use it to help assess the company’s financial health and identify opportunities for growth.
Understanding is power. Using their increasingly powerful analytics tools, finance executives can gain a greater understanding of the company’s systems, processes and data—shoring up any weak links to improve and enhance their capabilities in terms of strategic planning, scenario analysis and forecasting accuracy. As they gain mastery over the levers of business value, their perspective will make them critical to the company’s strategy-making machinery, offering authoritative guidance on maximizing profits.
Finance can now act as a partner—and not the silent kind. To sustain its role as a partner in the business, CFOs need to extend their domain well beyond their own function. Their mission to gain a more comprehensive perspective of company profitability will invariably lead them to dig below, say, the business-unit level to determine the profitability of distribution channels, product lines and customers. Gathering reliable profitability data across those dimensions will require finance executives to gain the participation of their functional counterparts. They may also need to ask their management colleagues difficult questions about specific investment decisions, seeking to clarify the strategic context in which they were made. Their goal, as they should state often and openly, should be to supply analysis and insights that will help the units make decisions that are aligned with the company’s overall strategy. By serving as the advocate of profitability across the organization, finance executives will evolve from the score-keepers of yore into the decision making coaches who are confidently shaping a company culture based on performance.