In the post-recession world, the role of the CFO has fundamentally changed. Once a custodian of corporate assets and financial information, the CFO has become a core business steward helping organizations measure and focus on the right indicators of performance, thereby helping them grow and be profitable in volatile and uncertain times—all while dealing with varying market and economic conditions in both developed and developing economies. Such a demanding and complicated mandate necessitates organizations break through traditional functional silos and focus on end-to-end value chains so both efficiency and effectiveness can be optimized. Ideally, the CFO is the individual who can make this happen and is indeed increasingly playing that role in the top performing organizations in the world.
As noted in the CIMA 2011 report, "From Efficiency to Effectiveness: Transforming the Finance Delivery Mix," higher performance is tied directly to both the increasing role of finance in management support and the degree to which the finance organization functions effectively in this role. The successful CFO must understand how these opportunities can be maximized and work in tandem to best serve the organization.
Creating an interconnected enterprise through enhanced transparency and fostering organizational flexibility are the keys to competitiveness and growth. Transparency is required regarding revenue, costs, capital intensity and risk and how these factors are better understood through management metrics such as customer satisfaction, inventory, value at risk, DSO and marketing effectiveness. As CFOs increasingly take the lead in pushing their organizations beyond operational silos into management support and performance management, they will face challenges that must be met in order to promote and implement efficient practices that drive business results. Doing so successfully will cause a ripple effect of value creation throughout the organization.
However, meeting these challenges is far easier said than done. The sheer size of today's global organizations, fueled by increasingly complex and interconnected processes, can be seemingly impossible for one executive to optimize no matter how intelligent and experienced he or she may be. The amount of responsibilities held by a CFO leaves little time to take advantage of every best practice and to research and utilize non-proprietary knowledge to best serve his or her corporation's needs.
To be successful, the finance organization of the future must maximize all the tools, delivery models and resources available to deliver value to the rest of the organization. Those tools include analytics, IT tools, hybrid global delivery models and a host of solutions designed to facilitate collaboration among functions for maximum output. As CFOs are unable to devote the time necessary to manage every solution, the need for specialized knowledge and skills is greater than ever. To aid clients, I see firsthand the level of expertise required to evaluate and implement these projects is growing exponentially and these capabilities come from years of working closely with a diverse set of organizations to achieve their business objectives.
I am able to best serve global organizations through a deep understanding of the challenges facing them, which I have developed by both running everyday end-to-end processes and interacting with CFOs and finance practitioners daily in a "virtual captive" model—all to drive improvements and innovation in their processes. Through a "solution exchange" platform, I have the privilege to engage professionals from all over the world to collectively brainstorm and solve for enterprise process challenges.
This knowledge and experience allows me to objectively view each business process within the interconnected system of some of the largest, most complex businesses in the world. One inefficient and ineffective process can drag down an otherwise optimized system. However, thinking only in terms of singular processes will never allow organizations to meet and exceed their business objectives. As today's progressive CFO is facing challenges unique to both the position and today's economy, the knowledge of outside experts with a breadth of diverse experience is needed to ensure both granular and macro business systems are addressed.
This experience is ultimately utilized to help leading corporations transform their business processes, lower costs and greatly increase revenue.To that end, we are instituting a series of monthly discussions in Business Finance on topics of timely interest. Each month, we will discuss what we consider a key topic surrounding this transformative role played by CFOs, including how to protect profit in volatile times, optimizing sales and marketing effectiveness, managing risk profitably and finally, best practices for creating a flexible, globalized finance organization.
Shantanu Ghosh is senior vice president for practices, solutions and transitions at Genpact, a global business process and technology management firm.