Finance chiefs played a critical role in shepherding their organizations through a global economic crisis in 2020, and a recent survey shows how.
CFO Research (part of Argyle Advisory and Research Services) and FTI Consulting surveyed 325 chief financial officers and other senior finance executives in August to understand better how the finance function drives enterprise value.
Five key themes emerged from the survey results:
- The CFOs’ work during the pandemic has earned them the right to be strategic leaders in their organizations. The pandemic shined a spotlight on finance chiefs’ ability to lead via an essential and often overlooked task: corporate scenario modeling and planning.
- In the face of a “new normal” economy, CFOs maintained productivity with remote teams. In response to COVID-19, a whopping 71% of finance team members worked in a remote or mostly remote workforce model, the survey showed.
- The digital workforce continues to grow. While most chief financial officers have started to adopt automation, the survey results suggested automation has not reached its full potential in most organizations.
- The corporate finance service delivery model is evolving. Forty-one percent of the survey respondents indicated their finance work was performed by a shared services organization (SSO), but 48% said they used business process outsourcing (BPO) or hybrid models, such as BPO hybrids.
- Looking ahead, the CFO is well-positioned to lead the way as an enterprise value creator. The finance function’s ability to provide insights on predictability in an ambiguous market will guide company decisions on cost, working capital, liquidity, risk, and capital structure.
Strategic CFOs have demonstrated the ability to provide forecast models based on different scenarios, to adjust and adapt, to make informed decisions, and ultimately to lead their companies past the worst of COVID-19 and into the recovery period. Leading finance chiefs showed their companies how to adapt, transform, and sustain performance going forward.
Overwhelmingly, the surveyed finance executives portrayed their chief financial officers and finance teams as rising to the task across the domains of strategic leadership, planning and analysis, use of technology and automation, and identifying risks. More than nine out of every 10 of the survey respondents said their CFO and finance functions:
- Played prominent roles in guiding business strategy, making operational decisions, and driving enterprise value across the organization;
- Drove value by regularly identifying areas and leading efforts to reduce and optimize enterprise costs; and
- Used digital technologies like predictive analytics and intelligent automation to deliver timely, accurate, relevant information.
CFOs needed to adapt to remote workforces, cultural changes, and talent challenges. The survey data suggested that leading CFOs were prepared with automation-assisted support and reacted quickly by revising priorities, facilitating processes remotely, and preserving talent and culture in their teams.
The most immediate priority for the CFO and finance function in response to the coronavirus pandemic was to enable a remote workforce, according to the survey. Forty-three percent of the survey respondents said their finance teams adopted a remote workforce model, with an additional 28% working mostly remotely, and 14% working partially remotely but mainly in an office.
The issues that the newly forged remote finance workforces had to contend with were wide-ranging. More than 40% of the surveyed executives said the pandemic had a significant impact on cost management, financial planning and analysis, and budgeting and forecasting. And more than one-third of the survey respondents said that risk management, treasury and working capital management, technology adoption, and accounting and financial reporting were significantly impacted.
While CFOs have made advancements in robotic process automation (RPA) for the finance function, there are still opportunities to improve. Most CFOs have started to adopt automation. More than three-quarters (77%) of the survey respondents said that at least 1 in 20 members of their finance team were “virtual,” meaning they were using RPA and other automation capabilities.
But only 27% said that at least one in five members of their finance team were virtual, which suggests that automation has not reached its full potential in most organizations. Eliminating and automating manual processes was a high priority or critical priority for 52% of the surveyed executives.
Service Delivery Evolves
The survey results showed that BPO is still going strong despite the impact of automation on the scope of work outsourced. The finance function delivered most of its services through BPO for 25% of the survey respondents, compared with 22% mostly through global business services (GBS), 18% primarily through captured shared services, and 23% through hybrid models.
GBS adoption by organizations was being led by CFOs and finance. Finance was overwhelmingly the most included function for GBS service delivery, with 86% of the GBS organizations including it. IT was the second-most included function, at 35%, followed closely by human resources and procurement, at 33% and 32%, respectively. Most of the GBS organizations represented in the survey, 55%, reported to the CFO.
Cost containment is still a dominant concern for CFOs. Almost one-third of the surveyed executives said they planned to increase the use of either captive shared services, BPO, GBS, or a hybrid model to leverage their variable cost models in this uncertain business climate.
Enterprise Value Creator
About two-thirds of the surveyed executives defined the current role of their CFO as a finance and accounting leader. Most of the survey respondents also selected an additional role for their CFO, split nearly evenly between three types: an efficiency and effectiveness driver, a business partner and adviser, and an enterprise value creator and organizational leader.
The survey indicated that the enterprise value creator role was an expanding one for CFOs. Eighty-nine percent of the surveyed executives said that the CFO and finance function had the talent and skills to drive enterprise value for the organization.
In the short term, CFOs showed their companies how to sustain their businesses through the initial stages of the pandemic. Over the long term, CFOs will look to transformation initiatives to sustain cost savings. Sixty-four percent of the surveyed executives said that improving planning, scenario modeling, and forecasting was a high or critical priority for the CFO and finance function over the next 12 to 18 months.
To achieve strategic goals and drive value, 84% of the survey respondents said they were evaluating, implementing, or already using planning, forecasting, and budgeting technologies, and 86% were doing the same for performance reporting and analytics technologies. And 79% said they were evaluating, implementing, or already using enterprise performance management (EPM) technologies.