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How technology transforms the role of the CFO
In this episode of Better Finance podcast, EY dives into the future of finance with Microsoft to uncover how the role of the CFO is continuing to evolve.
Related topics
Myles Corson, Global and Americas Strategy and Markets Leader of Financial Accounting Advisory Services, and Tony Klimas, Global Performance Improvement Finance Leader, were guests on Microsoft’s Connected & Ready podcast. This weekly podcast is a conversation with business leaders about innovation, resilience, and our capacity to succeed.
Learn how CFOs meet changing demands while driving growth as Connected & Ready podcast host Gemma Milne discusses the future of finance with two leaders from Ernst & Young.
Topics explored during include the dynamics behind the shifting role of the CFO.
- How CFOs can equip themselves to meet new demands as they evolve.
- How to balance technological innovation with risk, and short-term growth with long-term value.
Discover how to strike a balance between short-term growth and long-term value, the use of technology, such as Microsoft Dynamics 365, as a competitive advantage, and how CFOs can take a more strategic role within their organizations.
Don’t miss this insightful discussion.
Key takeaways:
- Finance leaders should embrace change and other disruptions taking place today to build for the future.
- As stewards of long-term value for their organizations, CFOs and Finance leaders play a pivotal role in the balance of short-term growth with long-term value.
- Advancing technologies will continue drive enterprise wide efficiencies and effectiveness. Finance leaders who can balance people talent with smart machines, will ultimately help shape the future of their enterprise.
For your convenience, full text transcript of this podcast is also available.
Hello and welcome. You're listening to Connected and Ready, an ongoing conversation about innovation, resilience and our capacity to succeed. Brought to you by Microsoft. I'm Gemma Milne. I'm a technology journalist and author, and I'm going to be exploring trends around how companies are adapting to a disrupted world and preparing for tomorrow. We're going to speak to the innovators who are bringing products, operations and people together in new ways.
Right, because the world has changed so dramatically and so much over the last six months. But, I think kind of piling on some of the things that Myles just mentioned. The collaboration aspect of the role has become increasingly critical. And we saw some interesting trends from the study with two thirds and even up to three quarters of the CFOs reporting that they have good collaboration with operations in it. But the part that we thought was interesting on the HRR in customer marketing side of the business, only about half felt that they had a good connection into the marketing organization. And less than half, 42 percent reported a strong partnership with H.R. and we found that fascinating, given how important it is, especially as we become customer focused and worried about the impact on our people. There's still some work to be done, I think for CFOs, especially in the marketing and in the real world.
I think in general, the pandemic created to, well, actually three problems, one of which was very tactical, and that was cash right early on was the ability to generate cash and find cash and keep the cash flowing. But on a broader scale. As they move to the working remotely and working from home, we learned a lot about business continuity. And this is the whole resilience topic. And we've got some CFOs that were very well prepared and did that, , without missing a beat and others. I think that that we're very much caught off guard and this has driven a lot of change in a bunch of different ways, is the increased importance of unlocking the value of data and driving insights. I talked to several CFOs early on who were completely caught off guard and almost embarrassed that they could not reforecast i in a fashion that was asked for by the board and by the CEO. They were just too slow. All the models and scenarios they had built were not really capable of such a dramatic change to business operations. And so a lot of effort now going into that whole forecasting process. And, of course, things like the cloud are playing a very important role in that as people think about some of the technologies involved.
This is one of the places in our study where we saw some distinct generational differences with sort of the boomer and Gen X CFOs still being very focused on regulatory risk and that being a barrier and trying to sort of navigate through some of those challenges. Whereas the millennial CFOs, I suppose we could even have some Gen Y CFOs.
Right, that people born after 98, although mostly I think it's millennials, but they very much view cybersecurity and information risk as sort of one of the key barriers. To accounting for a long term value and building long term value. We don't know why that is. We're going to actually explore that, and go further. So more to follow on why there's a generational difference there. In any case, I think CFOs in general understand that there are some significant barriers. There's a whole new way of thinking about data and non-financial data, especially that we have to figure out there are new emerging standards. So UI is actually involved in developing some of these emerging standards about how we actually account and value long term value.
Myles mentioned some of the activities with business roundtables and other groups that are studying this. This is an important trend. If you're hearing for a long term value the first time on this podcast, you should go off and study it, because there's a lot going on here and there's going to be some real challenges. And at the same time, you've got to keep the cash going, got to keep the books close. You don't got to keep the business running. And so it's a real it's a real challenge.
And certainly, the cloud is a platform and the infrastructure it brings, are critical because it allows people to deploy some of these things quickly. But I also think, you know, he mentioned A.I., right? We built a tool called Lighthouse on the power BI platform using some EY specific algorithms. And what this does is improve forecasting accuracy rate. So it uses a combination of machine learning, neural network based artificial intelligence, and ultimately helps our clients do a better job of forecasting. And we've actually found this tool when we take it to clients, we usually run historical data through it and show them the difference and what it could have produced with respect to accuracy. then it becomes a discussion of, you know, if you can be five, 10, 15 percent more accurate with your forecasting, how much is that worth to you? And you can start to have a discussion then around how we're going to leverage that kind of increased accuracy in the way we run our business. And certainly there are cases where that's critically important and you can make better decisions and act on that data in a different way than you otherwise would. Other cases, maybe not so much the case, but it's interesting to we've sort of moved beyond the place where we're worried about getting the right data. Now we have tons of data and we have all these amazing tools that we can apply. And so now it's become a discussion about, how are we going to get the most value out of that? And I would say out of all of these technologies, any of them that support the value or the role of the CFO in unlocking the value of information that's really at the core where finance adds value. So certainly costs are important. rRsiliency and adaptability are important. But at the end of the day, finance really brings value by unlocking insights into the information. They're uniquely positioned to do that. And so I think the smart CFOs in the smart companies have figured that out and they're putting a lot of focus on that right now.
We need better PR people in finance to get there. How cool or how interesting or how useful or how crucial the role really can be.
And I think the reality is most finance executives will understand this, you have to earn your way into the C suite. You have to earn your way into the strategic sort of leadership of the business. And I think if you go back to some of our findings right. In the disconnect between finance and marketing, right on the customer side of the business, for example, and even the H.R. side of the business, which is, a critical part of pretty much every business, I think the answer lies right there. To the extent that the CFO can truly become more collaborative across all of the C suite, not just I.T. and operations and sort of the traditional places where I think finance has always sort of played a role. But if you can bring value to the marketing organization, to the H.R. organization. Some of these non-financial metrics that Myles talked about when he was talking about the long term value and how we measure it, I think then people will start to look at finance and accounting differently. They'll start to look at finance and accounting as someone who has a strategic view of the business, who is thinking about the customer, thinking about the employee and the other stakeholders. And and then I think we'll start to see the perceptions of finance change. certainly in a crisis, this is what you find out, what you're really made of so I think as we move through the last six months, it's been a great opportunity for CFOs to connect into the Organization for Finance, to connect into the organization in a way that maybe it didn't before. If you haven't done that yet, it's still not too late. There's still plenty of crisis left to deal with and plenty of opportunity to add value in new and unique ways. It's going to be in the actual actions and how we how we approach that collaboration across the C Suite.
And I think this this role as the steward of long term value for organizations is a really exciting one. And you're balancing that to the historic mandate for protecting and optimizing value and adding an opportunity to to help grow and create value, I think is hugely exciting for the CFOs of today, but also people coming up through that for the finance organization. So I do think the this point around balance of the Q and IQ is going to be really important. And how we build the softer skills, the ability to connect and communicate across organizations is going to be a differentiator. And, there's a great quote that I read recently that I think really sums it up for me. Know if it doesn't involve judgment, you should automate it, outsource it or forget it. And again, for me, finance organizations really need to focus on where the judgment is and how they advance the business. And the business supports that. I think if we can all focus on those higher value skills, take advantage of automation, taking away the drudge, everyone's going to have more rewarding and successful careers.
Gemma Milne
On today's episode, I'm being joined by two guests to talk about the future of finance and the role of the CFO. Myles Corson is the Global and America's Strategy and Markets leader of financial accounting advisory services at Ernst and Young. And Tony Klimas is the Global Performance Improvement Finance Leader. Also at Ernst and Young, we talk about how the role of the CFO has shifted over the last few years and of course, the recent months how CFOs are balancing the demands of short term growth with long term value and how technology is enabling enterprise wide efficiencies alongside the increasing needs to focus on people skills and a more culture centric mindset.Milne
Myles, Tony, thank you so much for coming and joining us on the show. I wonder if you guys could start by telling me a little bit about your rules and what you've been working on of late.Myles Corson
Thanks, Gemma. Great to be here. And thank the opportunity to talk to you say with any way I have a leadership role and obviously spend time serving clients. But beyond that, I work closely with Tony on our DNA of the CFO research and also host of Better Finance podcast.Milne
Brilliant. And Tony.Tony Klimas
Yeah, thanks, Gemma. It's great to be here as well. And so I'm a finance partner within UI, within our consulting practice. Most recently, I was leading our finance consulting practice globally and I recently came out of that role. And I'm involved with some of our big global accounts. And as Myles said, he and I have coordinated the development of our DNA study over the last several months. We went out and talked to 800 plus finance executives around the world, a very good cross-section of industry as well. And we're really excited to have a chance to share that with you today.Milne
I'm excited to hear some of these findings, particularly considering the last year that we've had, of course, 2020 being what it has been. But before we get into that, I want to zoom out a little bit and talk about the role of the CFO, because this is obviously the core thing we're going to be focusing on today. And I think we need to start pre pandemic to some degree, thinking about some of these shifts. So how has the role of the CFO within an organization been shifting? You know, what's preempted the shift that we've been seeing over the past year, a couple of years, and how has accelerated over that time to what we're going to go to year?Klimas
It is worth going back in the pre pandemic times because we already had significant changes happening to the way CFOs were functioning and operating within the organization. And we had a couple of trends that were already starting. One is we saw a larger number of CFOs somewhere in the range of 60 percent rate coming from other outside the organization. Right when they were hired. So outsiders, CFOs who were basically brought in to bring a fresh perspective, I think very important as companies have grappled with all of the changes caused by this digital age that we're now in. The other trend, I think that was very prevalent and it has accelerated as the value of having significant business experience outside of finance and accounting. So roughly two thirds to even 75 percent of the CFOs have had spent significant time in H.R., in operations and marketing in other parts of the business as they come up through the ranks. So these are very well rounded individuals with a broad business perspective. And they're placed into a very challenging role because the other trend that was already emerging was the tenure of CFOs was decreasing. It's a very challenging position. And dealing with all the changes that we're all dealing with today has been tougher than, of course, all of that has been accelerated over the last six months.Milne
Yeah, Myles, I want to come to you and build a little bit on some of these trends around skills, this idea of being an outsider. What specifically is that bringing in terms of skills or insight? And when we're talking about having experience in other departments, of course, we can talk about this idea of just having a more general understanding of business. But what is it that these, different kind of skills beyond finance are really bringing to the role?Corson
I think it's really about that diversity of skill set now that the role requires. And, you know, we've been doing the research now for over 10 years. We first run it back in 2008, 2009. So we have pretty interesting data of how the role has changed. And clearly, one of the common themes has been the need to be increasingly strategic. And what does that actually mean? I said previously CFO played a role, sort of funding and financing strategy. But increasingly what we've seen is that now playing a role setting strategy and have a seat at the table. And again, I think to your point around diversity of skillset, the ability to connect these diverse experiences and join the dots across the organization is really appreciated and valued by senior leadership. And as you look now, specifically in terms of what has really accelerated the change, what's been interesting with the survey this year is I think there are three key themes that really come through in terms of disruption. It's technology and the ever accelerating pace of change of technology. It's the increasing pressure on business model disruption and so other sources of competition. And then clearly this evolving trend around long term value and how organizations are being expected by investors and a broader stakeholder community to communicate a much broader track around how they create value, the impact they have more broadly, both financially and on the financially.Milne
I'm going to build on these on these specific themes a little bit later on, because you bring up a lot of interesting questions there. But sticking with your e-mails, what do these, I guess, shifts these trends? What does that mean in terms of barriers to successful transformation? And what is it the CFOs are doing to overcome these challenges? Is it just that they have this more, diverse outlook and so they're able to just be more resilient to change? Or is it something more? And when we talk about overcoming the challenges of recent times.Corson
I think resilience is absolutely a key attribute. And I think the other attribute I'd really point to is agility. And again, the pace of change, the disruption, particularly what we've seen this year, once the dust hopefully starts to settle and we look back, I think the organizations that have been able to really demonstrate that agility, the ability for senior leadership to come together, respond to the challenges, look at how the business drivers have had to change in how they look at the business. The speed cycles of is going to be really important. And to do that effectively, the soft skills, the communication, the collaboration, I think is going to be a clear differentiator. And this business partnering ambition that all finance organizations have to actually drive faster and better real time decision support, I think is going to be an attribute that is very highly valued going forward.Milne
So obviously, agility and resilience has been a theme we've been exploring on this podcast ever since it started. And everyone we've been speaking to, has been reflecting on the experience of 20/20. So, Tony, let's go back a little bit to some of the themes and data and insights that you're able to gather from the report that you did on this year. what are the changes that you've been seeing? What are the demands the CFOs have been facing today that perhaps didn't even cross their radar six months ago? And what is equipping them to handle these changing demands?Klimas
I think it's actually and it is a point worth mentioning, that we did do this study, in fact, during the pandemic sort of earlier this year, at first we were a little concerned about that. But in retrospect, we're actually quite happy with that, because had we done this, in the latter half of last year, it would be a study of ancient history in some ways.Right, because the world has changed so dramatically and so much over the last six months. But, I think kind of piling on some of the things that Myles just mentioned. The collaboration aspect of the role has become increasingly critical. And we saw some interesting trends from the study with two thirds and even up to three quarters of the CFOs reporting that they have good collaboration with operations in it. But the part that we thought was interesting on the HRR in customer marketing side of the business, only about half felt that they had a good connection into the marketing organization. And less than half, 42 percent reported a strong partnership with H.R. and we found that fascinating, given how important it is, especially as we become customer focused and worried about the impact on our people. There's still some work to be done, I think for CFOs, especially in the marketing and in the real world.
I think in general, the pandemic created to, well, actually three problems, one of which was very tactical, and that was cash right early on was the ability to generate cash and find cash and keep the cash flowing. But on a broader scale. As they move to the working remotely and working from home, we learned a lot about business continuity. And this is the whole resilience topic. And we've got some CFOs that were very well prepared and did that, , without missing a beat and others. I think that that we're very much caught off guard and this has driven a lot of change in a bunch of different ways, is the increased importance of unlocking the value of data and driving insights. I talked to several CFOs early on who were completely caught off guard and almost embarrassed that they could not reforecast i in a fashion that was asked for by the board and by the CEO. They were just too slow. All the models and scenarios they had built were not really capable of such a dramatic change to business operations. And so a lot of effort now going into that whole forecasting process. And, of course, things like the cloud are playing a very important role in that as people think about some of the technologies involved.
Milne
And before we can go into a bit more depth around a these technologies, I wonder from both of you, obviously you did the study earlier on, but there's been, lots of different cycles or peaks and troughs already we had this initial sort of rush to just survive and fight the fires that came up originally. And now, again, we're having new peaks, perhaps even further into the distance, ideas around change of work, not just because of the pandemic, but also because culturally people have started to chefdom in terms of acceptance of technology or acceptance of remote working. So I guess from an anecdote perspective what's the kind of temperature right now. What would you say CFOs are thinking about or are feeling in terms of what the last six months has meant in terms of, their role?Corson
Yeah, I think it's a great, great point. And Tony sort of alluded to it a little bit in his comments in the initial aftermath of the pandemic hitting, I think the focus was on can we close the books? Can we pivot to being a virtual organization? And can finance organizations have not necessarily embraced some of those virtual technologies previously? It was very much a sort of traditional model of having people in the office working together. So I think once they got over that initial actually, yeah, this is fine. And I think some of the concerns around were filing deadlines is going to need to be extended. Didn't materialize. Then I think it became a question of actually what are the opportunities to accelerate some of the things that probably were on the horizon and were on the longer term plan and actually take advantage of this kind of wave of change in the momentum that been established. So I think what you're seeing is a real acceleration of some of those transformational activities, the shift to embracing a more digital way of working because people have actually taken the opportunity not to let a good crisis go to waste.Klimas
It's quite fascinating, right. And very anecdotally. I spend more time now responding to chats in teams than I do in Outlook on email. Right. We were using teams before this pandemic UI, but now it's completely become part of the fabric of how we operate with our clients, with each other. We're literally living on that platform and working on it. So, you know, that's just one example of how technology that we've sort of had has now become critically important and accelerated in its adoption. But to me, for CFOs, the big one is the cloud. And CFOs were always the biggest skeptics 18 months ago. I remember being in New York City doing an event with a bunch of banking and insurance executives, and several of them pulled me aside and told me that they'll never go on the cloud right there, their businesses to too important, their data to you know, the security risks are too significant and we'll just never do that. And in reality, now people are thinking much differently about the cloud. There was a study I saw recently where they interviewed information security professionals and two thirds of them have now stated that in that study that your data is actually more secure from a professional cloud provider. Right. Something like the Azure platform than it is if you keep it on Prem, because if you think about all the ways you can go out to the data. So I think the view of the cloud and the digital technologies, you know, one of those examples I gave, you know, they turned to power by inpower apps, right. To fix their problems in the short term. And they'll eventually make that, sort of something they'll industrialize. The whole attitude around the cloud has changed dramatically during the last six months. And it's actually it's quite exciting because when we come out of this, I think people now understand what they didn't understand before, were willing to understand there were sort of forced into it.Milne
Yeah, I think that is the key point, the pandemic in some sense has removed this, like veil of disbelief that some people have had own various different kinds of technologies because of that forcing of usage and then going, oh, actually, it's not really what I expected. But, Myles, I want to dove a little bit deeper into this idea of, competitive advantage, the adoption of new technologies or new ways of doing things really can enable within that finance function that we've mentioned forecasting, we've mentions cloud. And you said yourself one of the key themes have been of this. The shift and speed of development of technology. So talk us through a little bit around what does it mean to be competitively advantageous and the use of technology CFOs?Corson
What I'd maybe talk about is the this idea of long term value and actually your competitive advantage more broadly with the peers out in the market, because, as I mentioned, investors are very focused now on long term value sustainability. We're hearing a lot from from the investor community that they're looking differently at the valuation models. And I think finance and CFOs has a really unique role to play, helping to bridge the expectation of investors, but also the broader stakeholder community. As to you and your analysts in terms of what is it that is driving those business models? As I mentioned, both from a financial and non-financial perspective. So understanding what needs to be communicated externally and then translating that into a set of metrics and performance indicators internally and helping the business to really drive a culture of performance, of tracking those things that really matter strategically and will help with the outperformance of the organization. We have some frameworks that we think about how organizations can think in a structured way around that long term value creation. And it brings in areas like how do you create consumer and customer value? How do you sort of create long term brand differentiation and market share? How that translates into long term sales? Clearly, that the human and the talent dimension is is key. And it's a it's a very intangible one. So when the finance struggles to put a value on sometimes, but where organizations really need to be investing in their people, how are you measuring that investment? How are you looking at the return on the investments being made? Clearly the societal and environmental impact. We're all very aware of some of the pressure around that, both from an environmental, social and governance perspective, very much front of mind. In the US, over 180 CEOs last year signed the stakeholder capitalism letter with the Business Roundtable. And what's been interesting is that was obviously signed pre pandemic, but all of those companies have really sort of stuck true to those to the long term value principles that are espoused even in the aftermath of the pandemic. And CFOs have really had to kind of wrestle with how do you balance this long term value sustainability led focus with the pressures of short term performance that aren't going away. So that's been a challenge. But ultimately, I think one of the key things as you start to look at it within the organization is this need for really effective cross-functional collaboration, and particularly, again, is that the metrics broaden out the need to be engaging with marketing and sales functions with supply chain, put all the pieces of the demand side and supply side together and really help the organization to tell that story.Milne
So we spoke about the importance of being able to measure investments, particularly we're talking about new innovative approaches to things. And when we're thinking about sort of less traditional investments or less traditional forms and measures of ROIC, I'm thinking, for instance, investing in people and skills. And do the metrics need to change from before? Do we need to rethink how we how we measure new innovative approaches to things?Corson
Yeah, absolutely. This is a big area of focus for all of our clients right now. As I mentioned, this this whole focus on long term value. How do you communicate what it is you're doing in a different way and start to make it as tangible as possible? And you're taking the talent example? A lot of organizations have been putting out statistics on things like diversity and inclusiveness historically, which is important. And it is an important measure of broader societal impact. But I think where you can then take that sort of input measure and start to talk about, well, actually, what does it mean in terms of business performance? And obviously the whole benefit of diversity is you increase innovation. So how is that sort of different perspectives, bringing perspectives from different parts of society, allowing you to open up new markets? And actually, how is that impacting development and sort of the innovation cycle? The more you can start to make those connections and put some metrics around it? I think the more that the market is going to respond positively so that they would just be one example. But I think that this is very much an emerging area. I think a lot of organizations are now wrestling with what is it they need to be doing to put some quantification around this?Milne
I want to build a little bit on what you said there, and also something you alluded to Israel today, but you were talking about, this balance of really wanting to think about long term value. But, of course, being in a CFO position and short term, I guess profit, our progress or performance is obviously going to be massively front of mind. And when we think about the sheer pace, that of change of technology, it can probably be quite difficult to know what to do right now if you're thinking long term, considering the fact that technology changes so quickly anyway. So, Tony, I wonder if you could comment a little bit about the risks that might stand out and how you sort of determine the best path forward in this kind of CFO position when you're making decisions around what is it we're going to invest in for these long term value ideas?Klimas
It's very interesting, because pretty much every CFO out there, 82 percent agreed with the statement around long term value being important in that they are stewards of long term value. But almost an equal number of 78 percent talked about the short term pressures that they face. This is very real. It's something that people are experiencing. I think part of the way they're responding is if they can't get their house in order for the short term stuff, it's going to be very difficult and challenging. Right, to get to the ways we measure and the way we account for this long term value. Right off the bat, I think there's some blocking and tackling that has to occur. But beyond that, then when we talk to CFOs and ask them about what stands in their way of long term value, we actually see something very interesting here.This is one of the places in our study where we saw some distinct generational differences with sort of the boomer and Gen X CFOs still being very focused on regulatory risk and that being a barrier and trying to sort of navigate through some of those challenges. Whereas the millennial CFOs, I suppose we could even have some Gen Y CFOs.
Right, that people born after 98, although mostly I think it's millennials, but they very much view cybersecurity and information risk as sort of one of the key barriers. To accounting for a long term value and building long term value. We don't know why that is. We're going to actually explore that, and go further. So more to follow on why there's a generational difference there. In any case, I think CFOs in general understand that there are some significant barriers. There's a whole new way of thinking about data and non-financial data, especially that we have to figure out there are new emerging standards. So UI is actually involved in developing some of these emerging standards about how we actually account and value long term value.
Myles mentioned some of the activities with business roundtables and other groups that are studying this. This is an important trend. If you're hearing for a long term value the first time on this podcast, you should go off and study it, because there's a lot going on here and there's going to be some real challenges. And at the same time, you've got to keep the cash going, got to keep the books close. You don't got to keep the business running. And so it's a real it's a real challenge.
Milne
For sure, let's actually move a move on a little bit with that idea of keeping the business running and particularly over the last six months, has obviously been a lot of discussion about efficiencies and effectiveness and making sure that you're not losing money within the enterprise so that you can make the investments elsewhere. So let's talk a little bit about the technologies that are being used to drive enterprise wide efficiency and effectiveness Myles. I'm going to come to you tell us a little bit about that.Corson
I think Tony hit on some of the points already. Cloud and unlocking the historic data challenges is huge. And I think once you get that problem solved, the ability to use performance management software to really drive this business insight and help drive more real time decision support is a key area of focus. Obviously, automation continues to be a big theme. using machine learning A.I. to eliminate one of my colleagues calls the drudge work and actually allow people to get out of the basic blocking and tackling. And that is a historic kind of finance transaction areas into really delivering the business insight and helping make it actionable and spending time with your internal stakeholders. I think those are key. And then the other point I would just make is, historically, I think we've tended to focus on the enterprise efficiency level. I think the introduction of a block chain allows us to also talk beyond the enterprise to networks of enterprises. And it can unlock some of the potential from how we connect more real time to networks of customers and vendors and again, further drive efficiency in how transactions are processed and recorded and spend time more on the commercial side. So those are just a few theories, but I'm sure Tony has some other thoughts as well.Klimas
I think Myles gave a good list of some of the technologies, I think that are very important now.And certainly, the cloud is a platform and the infrastructure it brings, are critical because it allows people to deploy some of these things quickly. But I also think, you know, he mentioned A.I., right? We built a tool called Lighthouse on the power BI platform using some EY specific algorithms. And what this does is improve forecasting accuracy rate. So it uses a combination of machine learning, neural network based artificial intelligence, and ultimately helps our clients do a better job of forecasting. And we've actually found this tool when we take it to clients, we usually run historical data through it and show them the difference and what it could have produced with respect to accuracy. then it becomes a discussion of, you know, if you can be five, 10, 15 percent more accurate with your forecasting, how much is that worth to you? And you can start to have a discussion then around how we're going to leverage that kind of increased accuracy in the way we run our business. And certainly there are cases where that's critically important and you can make better decisions and act on that data in a different way than you otherwise would. Other cases, maybe not so much the case, but it's interesting to we've sort of moved beyond the place where we're worried about getting the right data. Now we have tons of data and we have all these amazing tools that we can apply. And so now it's become a discussion about, how are we going to get the most value out of that? And I would say out of all of these technologies, any of them that support the value or the role of the CFO in unlocking the value of information that's really at the core where finance adds value. So certainly costs are important. rRsiliency and adaptability are important. But at the end of the day, finance really brings value by unlocking insights into the information. They're uniquely positioned to do that. And so I think the smart CFOs in the smart companies have figured that out and they're putting a lot of focus on that right now.
Milne
So we spoke a little bit about forecasting and sort of wanting to get better at it or the needs to get better at it, but how do you get better at forecasting when things are so unpredictable, particularly I'm thinking right now, Tony.Klimas
Yeah, so it's actually the unpredictable nature of things that has made people realize that they need to get better at forecasting. I think a lot of people thought they had a great a process until the pandemic arrived and completely threw that idea out the window when they realized how incapable they really were. And I think that ability to understand the lack of capability also helps you understand where I need to do a better job. So ultimately, the pandemic has forced some truth on people where they have weaknesses. These could be around the way they manage their data and the data quality. It could be the availability and the access to the data. So they might have all the data they need. It could be around what they do with that data wants to have it in the tools that they're using to manipulate and analyze the data. So whatever the reasons are, I think the uncertainty exposed all the fault lines and all the problems and has now created a scenario where we can start to fix those things. For example, some of the tools that we're using I mentioned are lighthouse tool in the power by that we built it on. You know, these are just part of the toolkit that allow you then to address these fundamental problems that you've now identified because of the fact that it's become incredibly complex and you have to deal with it. You can't just let it happen. You have to you have to come through it and fix it.Corson
And maybe I'll just add onto that saying attorneys describe some of the process and the technology side of things. I interviewed the head of Pinay for one of the big box home improvement retailers for my podcast. And we talked a lot about the need to change the business drivers. And he talks a lot about the need to interact more closely with the business. And that's been evolving so quickly. You think about the trend of the pandemic, understanding what was happening with mobility, people spending more time at home, what were the triggers that then started getting them comfortable to do projects themselves and then ultimately start bringing in contractors to do projects where that meant in terms of some of the deal size of what they were seeing, how that impacted on their stores, in-store credit cards and the need to have access to funding. The fact that actually with some of the stimulus packages, people did have money to spend because they weren't spending it on other sort of things like going out and eating and socializing stuff. So there was more disposable income but that wasn't done by finance in isolation. It was done in collaboration with business partners. Clearly, it also then flows into the conversations with the supply chain, particularly in the pandemic environment where supply chains have been disrupted. How do you manage all that and adapt and keep things connected? So I think, again, this point around staying connected with the business and how you collaborate is so important.Milne
Yeah, I want to build on that a little, because you spoke about, a lot people wanting to work out how to unlock value and utilize these tools for efficiency and for effectiveness. But I guess the question that's still on everyone's lips, especially when it comes to today, is how do you balance, I guess, core human resources with the use of smart machines and how do you ensure that you're using both effectively so that sort of maximize the employee experience? You're not kind of, just laying everybody off or not utilizing people's skills the best way possible, but at the same time having that organizational effectiveness alongside the.Klimas
In our last DNA study, there was lots of talk about skills and upskilling the workforce and so I think we didn't see that as much this time. So I think people have invested a lot in the training. They've started to identify sort of the digital skill set. Not that we've solved that problem by any sense of the word, but I think we understand it. What we did see in this study, which was quite fascinating, though, is a large number of CFOs now talked about mindset and culture as being barriers. Right. So it's not so much about having the right skills, but it's more about the way people are thinking about these things. And certainly there's a lot of fear that it would be, it would be not a good thing to not acknowledge that sort of up front. And so I think the smart CFOs realizes they're hitting it head on. You know why we've done tremendous work in automating our back office. And while we've eliminated a lot of sort of lower manual type work, but at the same time, we now have an automation center that we have operating in multiple countries that's actually overseeing the governance and the development of how we apply robots in the AI. We have one set of sort of work that's going away, but it's being replaced by another set of work, which is actually ultimately more highly value added. So I think it's important that we talk about those things in an honest way with organizations. We do things to make sure we take care of the people because they're still very much at the center of this. And I think the fact that CEOs are talking about culture and mindset and at least acknowledging that that's a challenge right now, I think that's actually quite important and ultimately a good thing, because once we acknowledge it, that we can deal with it.Corson
I agree with that, Tony. I think it's a really important point. And I see actually the fact that CFOs are acknowledging the importance of culture and purpose as a really significant step change. And always three quarters of the people we surveyed said they saw change in culture of finance as a major priority. And also they recognize the need to be connecting the finance culture with the broader purpose and culture of the organization. And that is really positive. It's showing, again, about a little bit more of the balance of the the IQ and IQ, which is going to be, a differentiator of CFOs and finance organizations that perform well in the future. And I also think it's important because one of the challenges in getting back to this idea of barriers, I think, is sometimes the brand of finance within an organization can be a challenge. And whilst we've talked a lot about finance and CFOs becoming more strategic, the business partnering is aspirational where they want to be playing. I think there is still a legacy perception. And this was identified in the research that when asked about how finance was perceived within your organization, they said, well, it's still seen as very cost focus and risk averse. And I think that can act as a barrier to some of the collaboration we were talking about. As CFOs focus on purpose and culture, the brand will start to evolve and support this collaboration we've been talking about.We need better PR people in finance to get there. How cool or how interesting or how useful or how crucial the role really can be.
Milne
So this idea of the kind of historical perception of finance as being sort of entirely focused only on cost saving and being really risk averse versus the sort of strategic function that also cares about culture and mindset and everything we've been talking about. What is it that people in finance can do to try and change that perception? You said PR, we need PR for finance, but really, what does that look like?Klimas
Of course we're kidding around PR, although it would be it would be good if it were that easy.And I think the reality is most finance executives will understand this, you have to earn your way into the C suite. You have to earn your way into the strategic sort of leadership of the business. And I think if you go back to some of our findings right. In the disconnect between finance and marketing, right on the customer side of the business, for example, and even the H.R. side of the business, which is, a critical part of pretty much every business, I think the answer lies right there. To the extent that the CFO can truly become more collaborative across all of the C suite, not just I.T. and operations and sort of the traditional places where I think finance has always sort of played a role. But if you can bring value to the marketing organization, to the H.R. organization. Some of these non-financial metrics that Myles talked about when he was talking about the long term value and how we measure it, I think then people will start to look at finance and accounting differently. They'll start to look at finance and accounting as someone who has a strategic view of the business, who is thinking about the customer, thinking about the employee and the other stakeholders. And and then I think we'll start to see the perceptions of finance change. certainly in a crisis, this is what you find out, what you're really made of so I think as we move through the last six months, it's been a great opportunity for CFOs to connect into the Organization for Finance, to connect into the organization in a way that maybe it didn't before. If you haven't done that yet, it's still not too late. There's still plenty of crisis left to deal with and plenty of opportunity to add value in new and unique ways. It's going to be in the actual actions and how we how we approach that collaboration across the C Suite.
Corson
Yeah, I think, again, this is AQI key. Thing is so important. historically finance people have tended to be associated with left brain in a very analytical thinking. We view spreadsheets and lots of numbers. And what I think the technology is allowing us to do is bring more of that right brain sensibility, more to the storytelling, the visualization, which will hopefully allow better collaboration and communication with functions like marketing and the perhaps don't have the comfort with the traditional analysis that's being produced. So I think the technology plays a role and just this mindset of engagement and collaboration is going to be so important.Milne
I've got one final question for you, and hopefully it's a nice one to sort of end on, as is this idea of what's the long term vision of the CFL rule and the finance function as a whole? We've talked about culture change and whatnot, but I'd love for you to paint a bit of a picture of what this vision might be and what finance leaders can do today that ultimately gets them towards that vision.Klimas
I think two things come to mind, right, and so the first one is our CFO is in our study, talked about a lot of challenges. But at the end of it, it was something like 70 percent of them. Agreed with the statement that there's no more exciting time to be a CFO. So, I mean, someday, all of us, whatever role we play in this digital revolution, we're going to look back on it and we're going to realize that we've actually, despite all the challenges, we've actually lived through some amazing times where we made amazing advances in how we live and how we work. And ultimately,I think that's going to be a part of the way we think about finance in the futureWwe see a lot of optimism in that regard. I think the other thing is it's been a long, hard year for all of us, I think. If you go back and study similar scenarios, right. Going all the way back to the 1918 pandemic, one of the uplifting things that I kind of hold on to is the fact that in almost every case, the aftermath, once the issues are resolved and you move beyond it, you actually see an acceleration of a lot of good things. Right, including economic activity and growth. And so, we can all hope for another roaring 20s coming. Which is one of the things that happened after the 1918 pandemic. And I think in that time, we're going to see lots of amazing advances because we're still at the very beginning of the digital age. I often liken it to standing with the ENIAC computer, the first digital computer back in the 19th, late 1940s. And you could have never imagined where that was going to go and what it was going to become someday. That you might walk around with a device 25 million times as powerful in your pocket. So we have all this exciting change happening. And CFOs, I think, in the organizations are sort of at the center of a lot of that change. And that makes the role very exciting. And despite the fact that there's lots of challenges, I think ultimately when we talk to CIOs, they're really jazzed up. They're making a difference within their companies and within their communities. And ultimately, I see a lot of exciting things in the finance function and I'm glad that I get to be a part of it.Milne
And that's a very optimistic vision. Then, Myles, I'm going to come here. You're going to share the optimism. You're going to give us something quite different.Corson
No, absolutely. Look, I think, as Tony said, the level of satisfaction the CFO is happy right now with the role, however challenging it is, is really refreshing and reassuring.And I think this this role as the steward of long term value for organizations is a really exciting one. And you're balancing that to the historic mandate for protecting and optimizing value and adding an opportunity to to help grow and create value, I think is hugely exciting for the CFOs of today, but also people coming up through that for the finance organization. So I do think the this point around balance of the Q and IQ is going to be really important. And how we build the softer skills, the ability to connect and communicate across organizations is going to be a differentiator. And, there's a great quote that I read recently that I think really sums it up for me. Know if it doesn't involve judgment, you should automate it, outsource it or forget it. And again, for me, finance organizations really need to focus on where the judgment is and how they advance the business. And the business supports that. I think if we can all focus on those higher value skills, take advantage of automation, taking away the drudge, everyone's going to have more rewarding and successful careers.