Point of View

CFO Vision 2025: Driving growth now and in the future

December 8, 2021

The Bottom Line: From CFO to “Chief Performance Officer,” finance leaders are developing an ambitious role for finance, built around growth

The finance function cannot survive as a back-office function, spending most of its time operating manually intensive transactional processes rather than focusing on driving strategic objectives. At a recent HFS digital roundtable in partnership with Genpact, we discussed with a diverse mix of 27 finance executives the evolving nature of the finance function and the challenges of the accelerated digital transformation the pandemic forced. While many CFOs are articulating their future direction as building a growth-driven and customer-centric finance function, in many cases, the reality on the ground is very different. The growth vision is not easy to achieve and will require sustained and coordinated efforts on multiple fronts: developing data, eliminating process debt, busting silos, and creating OneOffice mindsets.

Enabling enterprise top-line growth is now the top priority of F&A executives

In our recent research, we asked 250 senior finance executives about their three business objectives for finance. Driving operational cost reduction and improving data quality remain key objectives in Exhibit 1, but an overwhelming majority of executives ranked enabling enterprise top-line growth as the number-one objective. The role of the smart CFO is evolving from being the bottom line and compliance enforcer to a trusted business partner driving profitable growth.

Exhibit 1: Top-line growth was ranked #1 by 75% of CFOs who participated in the survey

 

Sample: 250 F&A executives across the Global 2000
Source: HFS Research, 2020

We saw resounding agreement from the roundtable delegates on this theme and that Vision 2025 for finance was to become a partner for growth to the business.

It is necessary to create a finance environment where innovation and growth can happen.
– SVP & GM Finance Shared Services

Prakash Hariharan, Finance Transformation and Growth Head at Genpact, shared an insightful observation from his interactions with finance leaders in the last few years, “The [CFO] role has changed and is continuing to change rapidly. As we engage with finance leaders across industries, what makes this more complex is that the outcome of growth is not uni-dimensional. There’s growth, cash, cost, and margin. The trick is, how do we get to the right balance, maximize one but not at the expense of another? It requires different functions to come together to move the agenda forward.”

The Head of GBS (global business services) at a global CPG company shared their journey about the role of finance shifting away from a cost focus. “As a part of the overall expansion plan, we had our GBS roadmap approved by the board to double in the next three years. The plan is to bring more services into our organization. The big discussion is making it clear to my colleagues that this isn’t a cost-driven process. Consolidating the backend is nice, but the real value is in improvements in our systems and in processes for building a more agile organization that is more adept to changes in our environment.”

Data, digital mindsets, and technical and process debt are still holding back finance functions

It does not come as a surprise that the top three challenges in Exhibit 2 are preventing finance executives from achieving their digital transformation goals. A majority of the finance leaders attending emphasized the need for prioritizing and then moving at a fast pace to overcome these challenges.

Ruthless adaptation will require ruthless prioritization.
– VP Finance

Exhibit 2: Lack of data quality and digital talents remain the top challenges

Sample: 18 Finance Digital Roundtable delegates
Source: HFS Research, 2021

During intense breakout sessions, our delegates offered up a wealth of experience and stories on how to tackle these challenges. The following themes resonated strongly within the discussion.

#1. Talent: Upskill and create an ecosystem of multi-disciplined finance talent

  • There is a realization that the future skills required to drive finance transformation will be in high demand but with low availability in the next five years.
  • Having clarity on which digital skills and proficiency levels are needed for each role is a first step in developing a successful talent development strategy. This will enable the creation of more efficient custom training and learning programs. But re-skilling is not always so straightforward. As one Head of Finance Change shared, “Trust employees in the upskilling journey and empower them to define their learning path.”
  • Building the necessary competency within the team is very important, but when skills are difficult to develop internally, F&A teams need to augment their capabilities by incorporating deep expertise from outside using strategic partners.
  • Managing expectations from digitally savvy resources, such as data scientists, also appears to be a big challenge. Ensuring that these resources have a good understanding of their career path is paramount.

#2. Data: The key to smarter finance processes

  • Data and systems are very fragmented in most organizations. Finance teams have started to effectively use self-service data analytics tools to create their own custom reports and ultimately get access to better reporting capabilities. But the lack of data consolidation and integration across siloed processes continues to be one of the most important impediments to getting all the necessary intelligence from a single source of truth at the click of a button. Manual data aggregation and consolidation remain time-consuming and error-prone processes for many F&A teams.
  • One CFO explained, “We currently have data ponds across the business, and we can’t wait to have all data in one business warehouse.”
  • In their attempts to break data silos, more organizations are launching holistic data governance initiatives to identify data that really matters, optimize data pipeline execution, and ultimately improve data accuracy for better decision making.
  • A Vice President of a Global FP&A CoE wants “less time cleaning and more time getting insights.”
  • Focusing on the little steps makes it easier to have small victories along the way, which leads to more confidence in achieving the goal of a data-centric organization.

#3. OneOffice: Busting functional silos will require finance to consider an unconventional metric, customer experience

  • Most delegates acknowledged that moving to the OneOffice organization could be a big game-changer where instead of functional silos, the company drives better internal alignment across functions to serve end customers and employees better. But it is crucial to clearly understand what tangible benefits the OneOffice is going to bring to the finance function. Way too often, finance fails to articulate the value proposition in a compelling and customer-focused manner.
  • A VP of Finance explained, “[Finance] organizations became very inward looking—always start with the customer in mind. Looking at the end-to-end process is not only internal, it should also be driven by the customer journey and value chain.”
  • Managing different business models with different capabilities, particularly for global businesses, remains a big challenge. Business practices might be significantly different in different parts of the world. Tensions between functional heads and segment leads can distract finance from success.
  • “We need to reach over time a high degree of commonality around business service models,” suggested a VP of Finance.
  • It is paramount to have finance operations running efficiently before looking at opportunities identified upstream elsewhere in the business and working toward applying innovative solutions to those. However, organizations tend to look at GBS as the solution to all their problems, but they don’t have the resources to cope with the increasing demand.
  • An interesting point shared by delegates was that often, a crisis would reveal people’s best. Finance functions have delivered a lot during the pandemic, and keeping the “COVID mindset” is key to continuing to overcome the challenges of the accelerated digital transformation.
Advanced analytics and “profit with a purpose” are expected to become critical strategic finance priorities down the line

For our roundtable delegates, some factors are going to stay relevant and are truly part of a multi-year transformation effort. But what is interesting to see is the big surge in the use of advanced analytics and the prioritization of ESG (environmental sustainability, social, and governance) goals within finance.

Survey results in Exhibit 3 from the digital roundtable show that enabling advanced analytics to achieve deeper intelligence, more accurate and agile planning, and faster, better decision-making will be the biggest strategic priorities for finance executives in the next two years to achieve their Vision 2025. But reliable and sustainable analytics require effective data standardization in order to get the right outcome out of the technology.

Transparency is key, bringing enough transparency to customers, vendors, and employees. You can’t break silos if you keep secrets. Having reliable information available is a critical enabler for transparency, and investments must be made around information systems.
– CFO

Exhibit 3: Analytics, ecosystems, and ESG are the most critical priorities in the next two years

Sample: 18 Finance Digital Roundtable delegates
Source: HFS Research, 2021

The focus on ESG will drastically increase in the next two years. Delegates agreed that a well-executed sustainability program brings cost savings and a competitive advantage. As a part of the roundtable, Genpact’s Chief Strategy Officer, Katie Stein, held an engaging fireside chat with the CFO of an Asian fruit and fresh produce company. Their discussion about the future strategic priorities for finance tied directly into the sustainability agenda. The CFO shared the way to build a mindset for ESG in the finance organization, “The way to approach sustainability is, how do you make it an opportunity? Consuming less fuel and water is good for the planet but also good for the P&L. Finance is not about reporting but supporting the company strategy. ESG is becoming a core part of how organizations compete in their strategy.”

Key takeaway

Future-ready CFOs are shaking off the constraints of uncertainty to firmly focus their businesses on innovation and growth. Delegates describe the role of finance as strategic, working closely with the business as a partner that can deliver actionable insights and value-added initiatives (see Exhibit 4).

Exhibit 4: How delegates describe the future role of finance to the organization

Sample: 18 Finance Digital Roundtable delegates
Source: HFS Research, 2021

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