The Renaissance CFO: From Numbers Producer to Strategic Partner

In today’s global economy, the job of the CFO is broadening beyond the finance function into a more strategic role. CEOs are in need of CFOs who not only have a firm grasp of financial fundamentals, but can also bring their unique perspective on the business to the table. What has evolved is what we call the Renaissance CFO, and CFOs have a golden opportunity to assist and support their CEOs with important issues that keep them up at night.

According to KPMG’s latest report The View from the Top, which captures the views of over 500 CEOs and business executives, 63 percent of CEOs said that the role of the CFO will become more important in the next three years. Yet, almost a third of CEOs feel their CFOs are not up to the challenge. CEOs expect their CFOs to be collaborative and strategic business partners; maintaining the finance function but also embracing a forward-thinking focus on global reach, risk management, technology implementation, data and analytics, market growth and talent management.

The gap between expectations and reality

One thing is clear: something has to change if CFOs are going to close the gap between the expectations of their CEOs and the reality on the ground. However, a number of external factors have affected CFOs’ ability to close the gap and become a more strategic business partner.

According to the CEOs, capitalizing on technology to find the most profitable markets and customers, while connect them to their business is vital. In fact, 85 percent of CEOs of top-performing organizations say applying data and analytics to achieve profitable growth is the greatest strategic value a CFO can bring to an organization. Better technology can help, but many companies simply have too many data and customer information to navigate and provide valuable insights.

To add to this, the ever-increasing regulatory burden (a lingering effect of the financial crisis) and the complexities of new data privacy and securities regulations are taking a toll on CFOs. CEOs named the regulatory environment as the external factor that will most influence the future role of the CFO. But that is not necessarily a negative: 61 percent of CEOs also see regulation as an opportunity to derive competitive advantage.

Taking the lead – The Renaissance CFO

In order for CFOs to succeed in today’s complex business environment they need to think about the following:

1. Strategic thinking

Whether it’s analyzing a new market or advising on a merger, CFOs should drive finance to optimize global business strategy. In this Renaissance era, CFOs must find ways to improve and capitalize on business insights, leverage new tools and technologies, drive strategies and decisions, take corrective actions, and be bold strategic leaders for the business.

2. Staying ahead of the technology curve – Data & Analytics

There is a big opportunity for CFOs to translate data, both financial and non-financial, into coherent, easy to understand information to help CEOs make informed decisions. It’s all about analyzing and anticipating your clients, markets and channels.

3. Turning the regulatory environment into a competitive advantage

CFOs should also seize the opportunity to be a more proactive player in the regulatory environment. This could include shaping policies, changing business models, rethinking value and analytics, or just upgrading processes and systems to improve efficiency. The key is to anticipate, innovate and adopt the right mindset to turn this “burden” into a competitive advantage.

4. Investing in talent

Attracting and retaining top-notch finance talent is the most important contributing factor to improve the finance function. There needs to be a radical shift in the way CFOs develop finance talent, such as moving them into line operations and different geographies so they obtain global experience. An alternative would be working through succession planning across functions. Close to half (48 percent) of CEOs say that global experience is the most important attribute a CFO can possess.

It’s clear that change is needed. The crucial step for CFOs is stepping out of their traditional roles in the finance function to showcase global leadership qualities and more effective collaboration with operations. This is the era of the Renaissance CFO.

To learn more about what it takes for CFOs to succeed in today’s business environment and how CFOs can take the lead, please visit kpmg.com/viewfromthetop. You can also follow the conversation @KPMG on Twitter, using the hashtag: #CEOoutlook.

*****
What you may have missed — and really should read:

– What’s top of mind for the world’s chief executives over the next three years? by Mark A Goodburn, Global Head of Advisory at KPMG International.