The CFO role is often to be considered as purely financial, looking at spreadsheets and looking over budgets. The reality today is much different.
CFOs now have a role that requires them to be strategically in tune with the company and helping to drive strategic change within the organization. They are doing this through a number of ways and have become more than just the chief scrutinizer for spend, they have become key strategic cogs in the company machine.
Maintaining strong control of financial matters is not only a necessary financial role, but in terms of strategy has a clear benefit as it means that strategies that are being implemented can be easily assessed and their performance effectively evaluated. In fact, the financials of a project can be key to identifying the reasons for its success or failure. For instance, if it is being sold predominantly in one area and not in another, the differences could be explored and variations added to a product or service to appeal to additional markets.
Another important aspect of strategies is the ability to acquire the right companies to fulfil objectives more quickly or with better effectiveness. The CFO has one of the most important roles in this assessment as the financial information for the company will be one of the key factors to determining how successful or questionable any one acquisition may or may not be.
Within the acquisition of companies there is also the importance of new market entry. The CFO will play the key role in this, allowing companies to assess the viability of any new market and the strengths of competitors within it. This kind of skill is important in the ways that a company chooses to invest and which projects to support and fund. In this context it is not unheard of for the CFO to be asked for the best markets to move into before any investments are made, therefore setting the entire strategic agenda for expansion into other areas.
As well as working externally in identifying new strategies to adopt, they have a key role to play in the ways that the internal strategies are performing.
For instance, many CFO are now waking up to the capability that data science has in helping with forecasting and planning. Many have realized that by allowing data analysts and data scientists who may have a deeper understanding of data, to work alongside FP&A teams, the outcomes are often incredibly accurate predictions. Improved accuracy means that strategic projects can be initially assessed well before they are a success or failure, meaning that tweaks can be made to them.
However, the most important aspect that a CFO has in the strategic process is budgeting. Allowing divisions to have a level of budget flexibility is key to allowing divisions to be flexible within their strategies and reactive to change. Finding ways to create flexible budgeting options is going to give a company the opportunity to be agile and adaptive, which is when strategic goals can really be achieved.