Tech investments crucial for supporting expanded roles of CFOs

DESPITE cautious hiring sentiment and stable remuneration policies, 97 per cent of Singapore's chief financial officers (CFOs) find it challenging to source skilled finance professionals, according to a recent Robert Half Survey.

Is it any wonder? As the world changes, so does the role of the CFO. The linear thinking that propelled CFOs to the top corporate financial role in the past is no longer enough. They now need to know how to be strategic partners with the chief executive officer (CEO), to play a larger role in driving corporate strategy, growth, and operational excellence in their organisations, including closer collaboration with other business partners across the enterprise.

Among 178 CEOs, business owners and company chairmen in 13 Asian countries and territories in the region surveyed by Forbes Insights and KPMG, 49 per cent said their CFOs needed big-picture thinking and a strategic approach. This expanding role is being shaped by an intensely competitive and constantly changing business landscape in Singapore with growth a major focus as well as managing the regulatory environment, leveraging technology, pursuing innovation and organisational culture.

CEOs are looking to CFOs to help them drive growth strategies, often inorganic as well as organic, across the organisation - an expectation that makes sense given the unique perspective of the CFO.

In a recent survey, Singapore CFOs identified their top spending and investment priorities for 2017 as spending more on remaining competitive, improving financial returns, pursuing business transformation and innovation, and "entering new markets".

Apart from the CEO, the CFO is also often the only role that has a view into every part of the business. The task for CFOs will not be easy in today's dynamic business environment as consumer behaviour continues to impact supply chains, new business models disrupt the market, and the competition for talent intensifies.

Today, organisations are challenged by a rapidly changing risk landscape shaped by disruptions including market volatility, hyper connectivity, regulatory reforms, environmental and cyber threats, to name just a few. Risk management is becoming a critical capability for CFOs. Managing of all types of risks - strategic, reputational, regulatory and cyber risks - is a growing part of the finance remit particularly in larger organisations, where 66 per cent of respondents to a 2015 EY Survey said it's a critical capability.

Asia-Pacific businesses lost US$81 billion in revenue through cyberattacks in the first three quarters of 2015, versus US$62 billion in Europe and US$61 billion by US companies. According to Prudential, the Asia-Pacific region is also most prone to natural disasters, experiencing 75 per cent of the world's natural disasters in the past four decades, resulting in a loss of up to two million lives, suggesting that risk management in the region needs a broad understanding of potential threats - from cyber to natural.

The regulatory environment is another increasing challenge, and CEOs are looking to the CFO to help them not only adapt to new regulations, but to create more value. CFOs need to think more broadly about how regulatory change can drive improvements beyond compliance, such as streamlining processes or gaining new insights into the business.

Environmental, social and governance (ESG) reporting, for example, has helped many companies review their natural resources usage policy and reduce consumption without sacrificing efficiency and improving the bottom line.

LEVERAGING TECH

A Deloitte China CFO survey this year also showed an increasing awareness by CFOs of the need for the finance department to increase its analytics and decision support ability by providing data metrics, information and tools for more informed business decision and strategy.

According to EY, over the past few years, many organisations have spent millions of dollars on technology to mine and manage data, but achieved disappointing returns. This is often because they spend relatively little on drawing actionable insights out of the data and convincing people to use them - that is, the human element of analytics.

CEOs are looking to the CFO to support functional leaders with relevant data and insights, and advise on strategy. Finance will need to work differently from what it has done in the past, spending less time on processing transactions and more time on analysis and advising.

Many companies are viewing change as an opportunity to continuously innovate and evolve their business models to stay relevant and grow. CFOs and finance teams can support this by providing data and insights that can help identify growth opportunities and inform decisions. Finance will also need the ability to adapt to changes quickly and support new strategies, such as entering new markets or making acquisitions, helping to ensure their success.

Richard Foster, a lecturer at the Yale School of Management, is known for his work analysing the life of American companies. In a study of the S&P500, he found that the average lifespan of an S&P company dropped from 67 years in the 1920s to 15 years today. Mr Foster also found that on average an S&P company is now being replaced every two weeks, and estimates that 75 per cent of the S&P 500 firms will be replaced by new firms by 2027. This suggests shorter life cycles and a continuous need to reinvent to avoid becoming the Polaroid or Kodak of the 21st century.

To keep pace with change, CFOs and finance teams will need to work with a current and holistic view of the business that can help them understand how financial data and other data like talent acquisition and HR data impact each other.

As a result, we're seeing a growth in the number of companies turning to Workday's cloud solutions for financial management. When integrated with our cloud solutions for human resources management, it enables seamless workflow across finance and human resources, and the CFO to extract better whole of organisation insights in real time.

We expect investment in technologies to assist the roles of CFOs and finance teams to produce insights and be more connected to their organisations to continue to sharp trajectory. Our decision to base our regional headquarters in Singapore is partly because we see locally-based businesses as being a leader in adopting these new ways of working.