Margaret Harrist, Oracle BRANDVOICE contributor, wrote in Forbes about the pressure that CFOs are taking on and what the top four priorities for CFOs should be in 2020. CFOs are taking on a larger strategic role at their companies and are steering their finance departments and the entire business into an uncharted, data-driven world.
In a survey of CFOs conducted by Oracle NetSuite last year, 38 percent of respondents said that juggling too many responsibilities is their top challenge, closely followed by managing cash flow (34 percent) and lack of access to accurate real-time information (29 percent). In 2020, CFOs will likely have to meet those challenges in the context of growing economic pressures.
In Deloitte’s Q4 2019 CFO Signal report, 97 percent of the CFOs surveyed said they thought a downturn had either already begun or will occur in 2020. That sentiment was echoed in a report from Duke University’s Fuqua School of Business and CFO Magazine, which found that more than half of the US CFOs surveyed think the country will slip into a recession by the fourth quarter of 2020, and 76 percent think a recession will arrive by the middle of 2021. To prepare, more than half of the CFOs in the Duke survey said they’re focused on strengthening their company’s balance sheets and/or cutting costs, and 54 percent are stockpiling cash to build liquidity.
To put their companies on solid financial ground regardless of economic cycles, CFOs must focus on the long game. They should concentrate on thee four critical priorities below in the year ahead.
No. 1: Moving from Disconnected Spreadsheets to Integrated Insights
Without understanding the many interdependencies across a company, cutting costs might boost profit margins in the short term, but in this fast-moving digital age, it can create a strategic disadvantage.
Finance teams will never see those interdependencies as long as they’re spending an inordinate amount of time chasing down and reconciling data from spreadsheets scattered across the company. By the time their reports are finalized, the data is old. CFOs themselves spend more time sifting through spreadsheets than doing anything else—an average of 2.24 hours per day, the Oracle NetSuite survey found.
“Making decisions much closer to real-time is an ever-present priority for businesses of all kinds—and those decisions have to take into account larger amounts of varying data. Like all of my counterparts, I’m focused on closing our books faster—and that will take the integration of a range of systems.”
-Howard Morof, CFO of Altair, a global technology company that provides solutions in product development, high-performance computing, and data analytics
Those insights can’t just be reactive. CFOs must come to the table with strategies based on comprehensive, predictive analyses of internal and external data—but connecting those dots requires the right blend of new skill sets, business processes, and technologies.
No. 2: Hire and Build New Skills Sets
As finance departments help develop corporate strategy and new business models, they’ll need to recruit and train staffers with different skill sets, including technology skills such as data analytics, business analysis skills, and the softer skills of leading and influencing people.
Many finance departments aren’t prepared for this shift. In a 2019 survey of finance leaders by Oracle and the Association of International Certified Professional Accountants, only 10 percent of the respondents said their teams have the skills they need to support their organizations’ digital strategy.
To build those skill sets and promote collaboration across departments, 40 percent of respondents said they’re rotating their people to other functions. In order to free their people for such work, finance departments must first automate more mundane processes and tasks.
That’s a top priority for Corey West, executive vice president, corporate controller, and chief accounting officer at Oracle, which has migrated its finance applications—as well as its supply chain, HR, sales, marketing, and other enterprise apps—to Oracle Cloud.
“We are cataloging all of the places where we have human intervention in business processes and working with the Oracle applications development team to identify automation features using AI, machine learning, or robotics to make those interventions go away. Our goal is to create an environment where once a transaction is initiated, it can be completed without human intervention at all.”
-Corey West, executive vice president, corporate controller, and chief accounting officer at Oracle
Today, more than 70 percent of Oracle’s sales deals are “touchless,” meaning they don’t require a human touch to process them, West says, while the company has eliminated 35 percent of manual accounting tasks. Because cloud-based finance applications update numbers in real-time, staffers no longer spend a lot of time tracking down and reconciling data and instead can focus on strategic priorities.
No. 3: See the Business Holistically
What may seem like one business process to a customer is, in fact, a series of processes spread across multiple functions. Even if each functional area is killing its KPIs, the customer experience may be awful—and that will ultimately hurt the bottom line.
Finance has the unique perspective of seeing across all of a company’s operations. It can help identify the disconnects that result in poor customer experience and root out process inefficiencies that drive up costs or put the company at a strategic disadvantage.
This is a key focus area for Derrek Gafford, CFO of TrueBlue, which provides staffing, workforce management, and recruitment services.
Among the technology initiatives that Gafford is focused on is the company’s JobStack solution, which uses algorithms to streamline the process of matching candidates to jobs based on their skills and preferences. Another is its Affinix platform, which uses artificial intelligence, predictive analytics, and chatbots to provide a consumer-like candidate experience and simplify candidate sourcing.
In fact, Gafford and TrueBlue’s CEO are involved in all of the company’s technology steering committees, which he says are vital to its future growth.
“We look at how much the technology costs, how much value it will deliver in terms of key metrics, and how it will contribute to shareholder value. These technologies are real differentiators for us. We think we can cut down the time it takes to get someone through the process by about 75 percent.”
-Derrek Gafford, CFO of TrueBlue
No. 4: Establish the Right Technology Foundation
The siren song of technologies, especially emerging ones such as AI, IoT, and blockchain, is alluring to many business leaders. However, CFOs seem to be more cautious about jumping on the latest technology bandwagon than their colleagues in other departments.
Of the 166 CFOs surveyed by Oracle NetSuite, most of them at fast-growing companies, 47 percent said they have no plans to implement such new technologies in the next three years. Instead, the survey found, they’re laser-focused on laying a solid foundation of financial processes and systems. Among their top priorities in the next two years are improving and speeding up reporting, growing revenue, increasing data visibility, and implementing new financial software.
The new technical capabilities and the business models they enable are constantly morphing, requiring CFOs to explore the financial implications of new strategies, product offerings, and business approaches. Even if emerging technologies aren’t a current priority for CFOs, the tech foundation they choose today can limit their future capabilities.
Another critical concern for CFOs when they evaluate finance technologies is the ever-growing and constantly changing threat of security breaches. Altair’s Morof says his company has been gravitating to cloud-based technology for several years because of its security advantages.
“I don’t know of a single one of my cohorts, public or private, who will tell you they’re not resource-constrained. With the cloud, somebody is worrying about you at the same time that you’re worrying about something else that’s more strategic, more important, and going to ultimately drive more value for your business.”
-Howard Morof, CFO of Altair
Morof also likes the cloud’s elasticity—the ability to scale capacity up and down quickly and pay only for what is needed at a given time.
“In the past, you could make a decision and live with a certain type of system or process for a very, very long time. Today, with the pace of technology, the pace of change, and the ability to deploy technologies much more easily in the cloud, companies can be more flexible in their choice of tools and more dynamic. That’s a really different perspective than where finance was a few years ago.”
To learn more about the top four priorities for CFOs in 2020, check out the Forbes article and additional resources below.