CFOs Need to Refocus on Building the Business, Not Just Saving It

CFOs and other finance executives have done a great job at controlling costs throughout the extended period of global economic volatility that has become the "new normal." But there's a growing sense of that CFOs need to do more to deliver value to their organizations, and that the finance profession needs to adopt and actively pursue best practices to restore their companies to ongoing growth.

As managing director of Accenture's Finance & Enterprise Performance consulting practice, Paul Boulanger has closely observed this shift from cost management to orchestrating growth. "Finance organizations that contribute the most to their company's future performance will be those that align with the corporate growth agenda and have the right capabilities in place while sustaining the cost management gains of the past couple of years.

Business Finance sat down with Paul Boulanger recently to discuss the findings of Accenture's new study on high performance finance, as well as to get his take on what the Finance Masters of 2012 will need to concentrate their efforts on.

Business Finance: Paul, I understand that your research has enabled you to identify what Accenture refers to as Finance Masters. I have to think that those companies probably adhere to practices that might be instructive for others in similar situations. So what are Finance Masters accomplishing that other companies could learn from?

Paul Boulanger: It's important for finance executives and finance organizations to think about the characteristics of what differentiates Finance Masters in today's world. Over time, and our research has shown this, it's no longer about having low cost finance operations and consolidated back office operations. Those are important, but not sufficient.

The battle for finance mastery involves the business capabilities that allow finance to drive overall enterprise performance. That includes things like finance leaders having the right governance structure for finance that reflects the various important but distinctive competencies that finance needs to deliver -- not just the stewardship of assets in the form of strong transaction control, but also business-focused competencies of financial planning and analysis. Having a robust financial planning and analysis organization is a distinct competency -- that's a governance structure that's common in finance masters.

It allows them to have an impact on the culture of the company. That is to say, an impact on the way executives and operators in a company or enterprise think, the way they make decisions and process information, the degree of financial acumen they carry. These are important impacts that a strong financial planning and analysis competency can have on an overall enterprise.

Finance Masters tend to have a stronger role in the organization. They have a strong role, for example, in strategic target setting and planning, that is to say the translation of corporate strategy into a realistic but integrated operating and financial objectives for business operators to target. That translation from strategy to operational targets is a role that finance should be playing in every company, and they play it in different ways. Having strong forecasting capabilities, reporting and analytic capabilities -- these are characteristics of high performance finance organizations.

So as you can see we're placing a lot of emphasis on the business finance side of the equation because that's where we now see the differentiating ground. We see a lot of companies that have invested in their core controllership capabilities; not as many have invested in their business facing capabilities, and that to us is where finance organizations have the opportunity to differentiate and create competitive advantage in today's world.

BF: What practices should CFOs be undertaking to deliver more value to their companies?

Boulanger: There is a variety of practices that we believe from our research that finance organizations should be pursuing. One is to have the right governance structure that I highlighted earlier, and ensuring that they are building the competencies around both controllership and business finance. It's having an evergreen strategy -- that's another area where finance masters tend to excel.

Like all parts of the business, finance has a plan for capability development and evolutions over time. Highly advanced finance organizations often have an evergreen development strategy, usually with a three-year window, and they're constantly working against a set of initiatives. They're going to have an impact not just on their cost structure, which is where a lot of finance organizations have focused in the past, but rather on the capabilities that they bring to the table, namely their ability to process information, to forecast the business, to partner with the business in terms of decision making, and their ability to respond to financial and other forms of regulatory compliance requirements that are evolving.