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FP&A Innovation, Issue 11

Where we look at the relationship between CFOs and CIOs

26Aug

The CFO’s role has evolved tremendously over the past few years, but at the heart of their responsibilities remains ensuring the financial stability of their organization regardless of market conditions. And market conditions so far this year have not been kind, with a tumultuous series of events creating an uncertain business environment for finance leaders to manage their company’s prospects in.

In the UK, for example, Britain’s decision to leave the EU brought about a dramatic deterioration in economic activity that has shaken CFO’s plans. Later in this edition, Maisy Hockey discusses how CFOs are dealing with the fallout from Brexit, arguing that not enough had contingency plans in place beforehand. Meanwhile, in the US, the presidential elections have been even more tumultuous than normal, with a bombastic campaign from Donald Trump leading to great uncertainty as to what the outcome could be should he win.

In such a volatile climate, forecasting has become an increasingly complex issue, with much of it having been automated in order to keep pace with the fast-moving business environment. We will look deeper at how cognitive computing is being used in the function, but implementing automation is no easy task regardless of how good the technology is. In a recent interview with us, Scott Sarian, Director of FP&A at Harvard University, noted the challenges they overcame to implement automation, saying: ‘As much as we try to set standards regarding how to forecast, inevitably various budgeters will forecast in their own ways – some being more conservative than others, etc. When we aggregate this information from many budgeters, we have to apply a broad stroke to the process, and see if the aggregate total of many departmental submissions is in line with our expectations school-wide.’

What Sarian says is true across the finance function, and getting the whole organization working in line with the finance function’s goals is vital to seeing that they are achieved. In light of this, data visualization is a necessary tool for cutting through the noise and presenting decision makers with information in a narrative form so they can more easily understand and act on it. We look at how important data visualization has been in this issue, particularly for Dreamworks Animation, who have seen it streamline reporting and help them communicate better with stakeholders.

As the problems facing the finance function grow in complexity, it is going to need such a holistic approach if they are going to continue driving growth, and to recognize and mitigate against the risks that pose a threat to financial stability.

As always, if you are interested in contributing or have any feedback on the magazine, please contact me at  jovenden@theiegroup.com.

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