Five immediate actions for CFOs to consider
1. Reduce costs by rethinking the finance function
The economic fallout of COVID-19 will likely get worse before it gets better, with recovery not expected before the midpoint of 2021 and possibly into 2022. With significant economic disruption in the interim, CFOs will be expected to save costs wherever possible, as soon as possible, while balancing business continuity and financial resilience. As a result, a new finance function must be designed as a lean, agile and globally integrated organization that harnesses technology at speed and drives innovation at scale, while ensuring humans are put firmly at the center of every transformation initiative.
2. Provide reliable long-term value information to stakeholders
The CFO’s focus is becoming broader and more complex, moving from reporting on past financial performance to providing insights on the company’s financial and non-financial long-term value potential. Importantly, companies failing in long-term value reporting will be challenged by active investors and socially engaged stakeholders. As a result, CFOs will increasingly need to report on long-term value drivers such as social contributions, new business models and customer relationships. Failing to disclose the true value of a company may even make it a candidate for hostile takeover.
3. Help the business to manage uncertainty with fact-based decision-making
The pandemic has revealed some of the inadequacies of modeling, but also its value when it works well. While performance management often still acts as a scorekeeper, in future it needs to become a trusted business partner that enables CFOs to dynamically model complex scenarios and present the results to the executive leadership team in a timely fashion. Driving data to insights through technology, and translating insights to value through business partnering, will be essential drivers of decision-making.
4. Leverage digital tools to pursue speed to value
Finance functions that were already using cloud, AI and in-memory technology to build a flexible data and analytics engine have fared better than those with legacy on-premise infrastructure. Now CFOs must pursue the speed to value offered by appropriate digital and especially cloud investment. Given the true perception of some CFOs as barriers rather than enablers, slow and cautious digital and cloud adoption may not be the right answer any more.
5. Accelerate the transformation journey
Finance has already been engaged in transformation, but as the COVID-19 pandemic recedes, CFOs can focus on the endgame and what is really needed from the function in the future. We know that digital technologies like blockchain, cloud computing and automation will play a much larger role in finance, and we also know that new ways of working remotely will have dramatic impacts. However, most CFOs still see digitalization as a fragmented, asset-based solution on singular topics. Entering the new digital age requires a new approach: not incremental optimization but seeing challenges afresh through a digital lens.
