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The New CFO

Anton Dominique, CFO & CMO at London School of Marketing, discusses the challenges facing financial leaders

16Jun

Historically, CFOs have been scorekeepers and have stood in judgment of the performance of the business and the various divisional managers.

Although this is a ‘safe’ option it is no longer tenable in the current information intensive environment. The CFO has to become a core team member and partner with the divisional heads to provide all business participants with a coherent and valuable set of real time numbers, both financial and operational to enable them to steer the business dynamically and in real time to ensure all can take proactive action rather than react to out of date, even by a week, or month information.

Fortunately, cloud-based systems provide a very auspicious environment where all the information from disparate systems can be linked through open API and made visible with simple software like Tableau or Microsoft BI.

What is the finance function’s role in innovation?

The key role of the CFO in innovation is to make sure that the metrics do not inadvertently make innovation difficult or even impossible by discouraging investment and experimentation. This requires identifying and accounting for investment and trial appropriately and allowing some latitude.

In addition, Finance also needs to innovate within its own function. There are very few excuses for continuing to do all finance function in the traditional way be it invoicing, payables, management accounting, treasury, foreign exchange, performance measuring, or corporate funding.

In particular, all human manipulation and consolidation steps should be avoided at all costs as they increase delay, introduce errors or make a detailed drill down impossible.

What are the specific challenges around innovation at London School of Marketing?

The London School of Marketing has created a unique business where it manages and distributes leading Business Degrees from recognized Universities to students around the world involving local providers who provide the physical infrastructure and sense of physical community required to benefit most from education.

This not only requires LSM to streamline its own processes but also to streamline the whole customer service chain involving all participants, while providing each student with a unique tailored service and avoid making them feel they are part of a ‘factory’. We call this: 'Industrialization of service to enable personalization', where all back office processes are streamlined and all systems are interlinked so that all staff can focus on resolving the issues of all our students and partners.

What are challenges of being a finance leader at London School of Marketing?

One of the key challenges is providing the right management information and performance metrics to all departments and aligning the performance metrics to the profit drivers in the business.

Also minimizing the delay between the action and the provision of management information. We are working towards real-time performance metrics.

A further interesting challenge is to change from a batch (i.e. time specific) reporting and operational framework where work, documents, and processes are passed from one department to another from a real-time parallel process. This is vital for efficiency and to ensure all parties work on the same current information at the same time within a single data source. Many historical controls rely on specific hand over checks that do not exist in the same way in real time processes

How has the role of the finance function changed over the last decade?

10 years ago the CFO role was still to ensure the generation of monthly management accounts and performance against budgets. These were produced 3 weeks after the end of the month.

In addition, the Finance Department performed an audit and control function making it distant and often feared by the management of the operating units

Now the CFO has to become part of the performance improvement team and add value to the business at all times by streamlining and improving all information systems and the availability of accurate real-time information across the whole organization. As the finance department has a transversal view of all operations it is ideally placed at leading the migration of the diverse and siloed information systems into a single coherent, real-time and system where all information is not necessarily in one place but each element of information is only in one place and all of them are connected and linked with each other

In addition, CFOs have to monitor the business to ensure it is resilient to possible shocks and have mitigation strategies in place should these shocks occur. It is not eliminating risks, sometimes at high costs, but understanding and managing risks.

Do executives perceptions of finance leaders as accountants still prevent them taking up a role as a strategic partner in their organizations? How can they overcome this?

Accountants produce accounts and audit the accuracy of the records. This is still required but is no longer a sufficient breadth to the role.

The problem is that this role is safe for all the participants in the finance department and that being a judge, evaluator, and even 'devil’s advocate' makes you never wrong. So it is more the Finance Department that has to be willing to be judged and leave the safety of its Ivory Tower than the problem as to how they are perceived by the leaders of the other departments.

They have to understand the key drivers of the business and ensure that these are managed as well and dynamically as possible as a key implementation axes of the CEO’s vision and direction.

It is now way too slow to have a view of 'Have told you so' at the regular management meetings but they now have to be willing to assist and help. Unfortunately, although many organizations and decision makers want this most have still got a culture of apportioning blame and wanting to find the “responsible” person for problems as a way of resolving problems. The concept of internal competition and the “unique individual” has made many C-level executives forget that business is the ultimate team sport.

Which technologies as having a major impact on the finance function in the near future? How do you incorporate these? How important is it for the CFO and CIO to work together?

High-Performance Task Specific Cloud systems with open interfaces make information transparency achievable for any organization even without an internal IT department but with some flexible and task-driven IT support.

Often the CIO is more a block than an enabler as, like most people, they want control so do way too much in-house. Each department should own its information and specific “open” system. Then this information is structured in such as way as avoiding two key activities: The duplication of the information, the manual transfer of the information. Information can be synchronized but the “location of record and responsivity” needs to be clear.

Although clear coordination is necessary it is unclear that IT, which knows very little as how the information needs to be sued should lead this but they should be a purely enabling function.

What is set to present the greatest challenges for finance leaders over the next year? 

Probably by being an asset and support to the business rather than an added requirement and overhead.

Our strategy is to make the Finance Function responsible for its core activities and a support and team member in all others and evaluating its needs without any preference compared to the needs, requirements and preference of the other departments.

You can hear more from Anton, along with other leading financial leaders, at CFO Rising Europe, taking place in London this September 14-15. Register today here.

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