The CFO Expanding Role

How CFOs Are Driving Strategy

June 14, 2017

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Agenda

• The new role of the CFO

• Shifting from an functional to a strategic orientation

• The new strategy model and the portfolio approach

• Key threats to the CFO and the finance organization

• What’s next for the CFO

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The message

(CFOs) shape business strategy

through a deep understanding of

financial drivers and seek

opportunities for long-term success.

The Changing Role of the CFO: IMA & ACCA: Page 2

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The start

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Basic organization chart

President / CEO

Chief Customer Officer

Marketing Sales

Customer Service

Chief Operations Officer

Manufacturing / Production

Technical Support

Chief Financial Officer

Finance Human Resources

Information Technology

Purchasing

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Leadership team shifting roles

President / CEO

Chief Operations Officer

Chief Financial Officer

• In some cases President / CEO is blending and blurring with the COO

• Decline in the COO role

• CFO is being elevated to be a close confidant of the CEO

• CFO reports directly to President / CEO and Board

• CFO is shifting from the cost control role to a strategic player role

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Shift in thought process

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Areas of concern

Regulations

Financial Management

Risk Reporting

Talent & Capability

Technology

Information Technology

Data & Analytics

Real Estate

Strategy

Trans-formation

Stakeholder Management

PortfolioManagement

Procurement

Investments

Global Markets

Cybersecurity

M&A

- 9 -

A case study

http://marketplace-images.trainzauctions.com

Hard Skills

• Finance / Accounting

• IT / Technology

• Human Resources

• Investment

• Risk

• Global Focus

• Analytics / Big Data

Soft Skills

• Management

• Owner / Investor Relations

• Risk Manager

• Portfolio Theory

• Talent Management

• M&A: Leadership & Integration

• Leadership

• Vision

• Communications

• Engagement

• Cultural Alignment

Skill sets required

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Role of the CFO in strategy

• Roughly one-third of CFOs in the survey play a major role in strategy development.

• They are significantly more likely to have a strong relationship with the CEO and other C-level colleagues.

• They are more likely to measure their own performance on improvement to the organization’s financial metrics.

• There is no distinct relationship between the strategy developers and size of organization.

• They tend to be slightly older and more broadly educated but are less likely to be chartered accountants or PhDs.

The DNA of the CFO: http://www.ey.com/gl/en/issues/managing-finance/the-dna-of-the-cfo---the-cfos-contribution-to-strategy

Areas where EY CFO survey respondents believe they play a leading role in corporate strategy (percentage)

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The accelerated continuous

strategy cycle

Foresight

Insight

Strategy

Plan

Execute

Measure

Foresight/Insight

Strategy

Plan

Pilot

Execute

Measure

• Strategy requires a 12 – 18 month payback

• Market, competition and technology evolving very fast

• Product and service life cycles have shortened considerably

• Implement a portfolio approach

• Pilot test, pilot test, pilot test

• Challenges with organization adoption and burn-out from moving too fast

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CEO tenure at large companies is

short

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Change skills

Communications

• Master story teller

• Address WIIFM

• Keep it brief

Project Management

• Delegate

• Create accountability

• Build buy-in

• Anticipate issues

ChangeManagement

• Sponsorship / leadership

• Engagement

• Training

• Business case

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Getting to the core of the message

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Digital impact on CFOs

Nearly Half of Chief Financial Officers Believe Digital Technologies Will Fundamentally Change Everything Finance Does, According to Accenture Strategy, March 08, 2017

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1st IR 2nd IR 3rd IR 4th IR

1700 – 1800s 1870 - 1914 1980s - ? Now

IronTextiles

SteelOil

Electricity

DigitalTechnologies

RoboticsNanotechnologyBiotechnology

SteamEngine

TelephoneLight Bulb

Phonograph

Personal ComputerInternet

Communications

Artificial IntelligenceInternet of Things

3D Printing

Industrial revolutions

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Industry 4.0 / Smart Manufacturing

Source: Deloitte, Skoda Minotti

Monitoring and Issue Detection

Sustainable Manufacturing

Smart Distribution

Ecosystem

Other

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Advanced analytics and

visualization

Graphic courtesy of Microsoft corporation

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Advanced analytics and

visualization

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Watson as a service (WAAS)

https://www.youtube.com/watch?v=P18EdAKuC1U

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Artificial intelligence speak

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What’s next for the CFO?

• More, more, more

– More responsibility

– More skills

– More influence

– More ….

• However, it’s not always a given that this will

come to every CFO!

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Q1:

What are the key barriers in your organization to

you moving forward?

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Q2:

What are the internal and external resources you

can draw on?

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Q3:

What skills do you need to develop?

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Q4:

What external threats do you see that will cause

you to move?

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Q5:

What should you do to get started?

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What can you do first?

• Reduce costs

• Build a strong relationship with your president / CEO

• Develop a clear plan to develop new skills and repeat

• Adopt business analytics

• Tune staff

• Innovate

• Cultivate an eco-system

• And REPEAT

Remember this is a journey, not a destination!

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Questions