CFO: The Strategist - EU & ASEAN Report

The StrategistCFO

” Influencer, listener, visionary – the CFO must be a business manager with a vision, and be able to translate it into technical steps in the business.

CFO, Food and Beverage

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ONLINE survey

The report is based on the responses of 548 finance decision makers of the largest organizations in Europe and Southeast Asia who were surveyed as a part of Management Events’ Executive Trend Survey®. Our latest survey is the 10th in the ongoing series of studies covering strategic development initiatives and investment actions of these organizations.

FACE-TO-FACE interviews

To deepen our insights, we interviewed the highest decision makers face-to-face to discuss further the trends and issues in finance.

TOTAL DECISION MAKERS researched

44%

17%

14%

8%

6%

5%

6%

CHIEF FINANCIAL OFFICER

HEAD OF FINANCE

DIRECTOR OF CONTROLLING

GROUP/BUSINESS CONTROLLER

DIRECTOR OF RISK MANAGEMENT

DIRECTOR OF TREASURY

OTHER

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KEY REPOR T TAKEAWAYS

The role of the CFO has changed from being a silent enabler in the back office to a visible frontline strategist of the company. With new technologies, CFO is now expected be the co-pilot of the CEO by offering real-time insights on both internal and external situations for fast, fact-based decision making.

From the internal processes, CFOs are now turning their focus out to the market, to business model and product innovations, and to the customers of the business.

To react rapidly to the changing market environment, process automation is a priority in most finance organizations.

The technology agenda of finance strives to increase the organization’s efficiency both in daily processes and fact-based decision making. Currently finance organizations are focusing heavily on data-related projects, especially on data integration across organization and increasing speed and accuracy of financial reporting.

Due to the change of CFO role, the whole finance function is following the lead to new purposes. New capabilities are required to fulfill the expectations of business.

Finance organizations evaluate their capabilities sufficient in the traditional finance processes, but still haven’t fully embraced their role in steering the corporate strategy direction and detecting new business opportunities. Moreover, the real time delivery of information is still on an inadequate level in many organizations.

In their new role CFOs need to be able to grasp what new technologies can do for the business. Instead of just leveraging the technologies, CFOs are also responsible for finding the right technologies to capitalize on them.

In the future, CFOs see increasing potential for organizational value creation especially in 3D printing, automation of knowledge work, and service robotics.

1 3

2 4


” You’re a coach, a negotiator, and a true partner for business in all business decisions.

CFO, Industrial Services

CFOa wingman with a vision

Finance executives across industries agree that the role of the CFO has tremendously changed. It was just a few years ago when finance was only responsible for finance – keeping its distance and not to disturb the business.

Today, a finance leader can no longer be that silent enabler hiding at the back of the office. He must be visible and seen as taking ownership of the new strategist role. Most of all, the CFO needs to be a business person who understands what is going on in the market. The CFO is the one who needs to be able to assess the financial viability of new business models and deploy them quickly into the markets. All in all, the CFO must be true business partner in the strategic agenda and become the wingman for the CEO.


AS A STRATEGISTSTEPPING OUT

”

Now, the focus is on things with actual business value. CFO, Retail and Consumer


THREE COMPETENCIES OF THE MODERN CFOBy Toljan Mirela, CFO, Coca-Cola

INSIGHT

SALESMANSHIP

ADVANCED LISTENING SKILLS

A deep understanding and contextualization of the overall strategic priorities the company is trying to achieve.

The ability to sell the vision to different parties and counterparts.

Extra-ordinary attentiveness as a tool to get up-close to every part of the business.


” In many areas, industries are turning into consumer markets, which is really calling for speed, good decision-making processes, and focus on revenue and new business models.

CFO, Transportation and Logistics

ORGANIZATIONAL PRIORITIES SHARING THE STRATEGIC VIEW

CFOs’ developing role can be seen clearly in their strategic focus. Innovating both business models and company products and services are the number one organizational priority from CFO point of view. Developing customer experience is also ranked in the top3 priorities. It is now clear that CFOs are extending their view to better understand the business, its products, and its customers.

CEOs and CFOs are sharing similar preferences in terms of organizational development, although CEOs are clearly prioritizing product and service innovation.

In finance a lot of emphasis is given to process development projects. When looking at the finance decision makers, other than CFOs, business process automation rises to the top priority. While CFOs are taking a more strategic role in the company, others in the finance organization are focusing more on the operational efficiency.



CFO perspective CEO perspective Other finance decision makers

BUSINESS MODEL INNOVATION

PRODUCT AND SERVICE INNOVATION

CUSTOMER EXPERIENCE DEVELOPMENT

BUSINESS PROCESS AUTOMATION

ORGANIZATIONAL RESTRUCTURING

42%

41%

39%

36%

35%






62%

44%

42%

29%

25%






51%

45%

41%

35%

32%

STRATEGIC ORGANIZATIONAL PRIORITIES


GROWTHPROSPECTS BY CFOs

Growth plans for the next 18 months

GROWTH IN CURRENT MARKET

AIM FOR AGGRESSIVE GROWTH AIM FOR MODERATE GROWTH FOCUS ON OPERATIONALEFFICIENCY AND REDUCING COSTS

NEW PRODUCTS AND SERVICES

GEOGRAPHIC EXPANSION

M&A, JOINT VENTURES,STRATEGIC ALLIANCES

62% of CFOs are expecting growth for their organizations as 38% aims to achieve profitability through operational efficiency and cost reductions.

A clear majority is focusing on organic growth in their current market, although a significant number is planning on growing their business through M&A, joint ventures or strategic alliances.

Product and business model innovation is still the main focus as it is crucial for survival in a constantly developing and highly disruptive business environment.

71%

24% 38% 38%

29%

45%55%


4 WAYS TO SHINEAS AN ACTIVE BUSINESS PARTNER

GET EXTROVERTEDAside from efficiently running the organization's finance department, today's CFOs are tasked to play a more active role in business, providing financial insights, analysis, and more. This requires a major mindset change, from introversion to extroversion.

MASTER THE FUNDAMENTALSIn spite of changing demands, it's still a must for CFOs to master finance fundamentals. It's a matter of authority, as staying on top of the numbers gives them the license to contribute to the business.

DEAL WITH DIGITIZATIONIn multi-national companies, the CFO is already an important stakeholder in the company, taking on the co-pilot to the CEO role. But with digitalization, bigger data, growing metrics and vertical functions, the role is expected to change and expand at an even faster rate.

BE A CHANGE AGENTIt used to be that CFOs stay at the back-office and play the supporting role. Today, they have to partner with other functions and take a strong and visible leadership role paving the path through change.

1 3

2 4


” The role of the finance function has been transformed from a nitpicker and number cruncher to a challenger, consultant, and an aspiring partner for the channel management and the CEO.

Head of Group Controlling, Energy and Resources

FINANCE ORGANIZATIONin the wake of the CFO

With the CFO role change, the role of the whole finance function has transformed. Finance teams are stepping out to demonstrate their ability to provide value adding insights for the business. Traditional finance capabilities are the basis for a successful finance operations - however, new capabilities are required.

New technologies, especially analytics capabilities and process automation, are essential. To translate data into business insights and delivering it in real-time for business decision making, finance functions must take their information management strategy to the next level. It requires switching to an agile method – such as the efficient utilization of shared services to enable focus on value-add-ing business advisory – and then showing the way for the whole organization.


THE FRONT RUNNERTHE BACK OFFICE AS

”

The quality of people is the most important thing in each financial operation in corporate finance. That starts with the recruitment of competent people

CFO, Transportation and Logistics

IMPROVING ENTERPRISE RISK MANAGEMENT CAPABILITIES

OPTIMIZATION OF SHARED SERVICE CENTERS

WORKING CAPITAL OPTIMIZATION

CAPITAL STRUCTURE OPTIMIZATION

MANAGING ACQUISITIONS AND DIVESTITURES

TAX PLANNING AND OPTIMIZATION

33%

36%

30%

27%

23%

11%

Development initiatives in financial management


” One of the main issues to focus on is changing the culture of the finance function. Developing people, turning them from a bookkeeping compliance department to a real business partner, encourage them to challenge and

work together with operations and commercial departments to facilitate growth and to steer and make innovation successful.

CFO, Public Transit


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CURRENT STATE OF FINANCE CAPABILITIES

Finance organizations evaluate their capabilities to be on a good or excellent level on traditional finance responsibilities, such as managing compliance and driving cost efficiencies. Moreover, finance decision makers are already confident in their ability to leverage data in business decision making.

Although successful in changing regulatory environments, finance decision-makers haven’t fully embraced their role in steering the corporate strategy direction and detecting new business opportunities. Even though the capability to derive value from data is perceived as sufficient by most, the real time delivery of information is still on an inadequate level in many organizations.

TOP 3 STRENGTHS IN THE FINANCE FUNCTIONS(EXCELLENT OR GOOD CAPABILITIES)

TOP 3 DEVELOPMENT OBJECTIVESIN THE FINANCE FUNCTIONS (AVERAGE OR POOR CAPABILITIES)

CAPABILITIES TO RESPOND TO REGULATORY CHANGES

CAPABILITIES TO CONVERT DATA INTO BUSINESS INSIGHT

ABILITY TO DELIVER COST EFFICIENCIES ACROSS ORGANIZATION

75%

69%

65%

47%

45%

39%

REAL-TIME VISIBILITY TO ORGANIZATION'S PROFITABILITY

CAPABILITIES TO SUPPORT BUSINESS BY SEEKING NEW BUSINESS OPPORTUNITIES

ABILITY TO DEVELOP OVERALL CORPORATE STRATEGY


Current state of real-time visibilityto organization's profitability by region.


A significant number of finance organizations struggle in delivering real-time data for their organization, but the results show big differences across Europe.

Finance decision makers in Austria and Turkey are more satisfied with their capabilities to deliver timelyinformation, whereas especially Sweden, Germany, and the Netherlands express substantial concerns.

REGIONAL PERSPECTIVESON REAL TIME VISIBILITY

EXCELLENT OR GOOD AVERAGE OR POOR

57%43%

34%66%

32%68%

The Netherlands

Switzerland

73%48%52%

27%

43%57%

47%53%

62%38%

63%37%

Finland

Sweden

Norway

Denmark

Germany

Austria Turkey

PUBLIC SECTOR

SERVICES

TECHNOLOGY, MEDIA AND TELECOM

HEALTHCARE AND LIFE SCIENCES

FINANCIAL SERVICES

MANUFACTURING

ENERGY AND RESOURCES

RETAIL AND CONSUMER

Of the different industries, the ones lacking the most in organizational real-time visibility are the public and services sectors. Retail industry emerged as the most developed in terms of delivering decision-makers timely information.

INDUSTRY PERSPECTIVES ON REAL TIME VISIBILITY

EXCELLENT OR GOODAVERAGE OR POOR

62%

60%

55%

50%

47%

45%

42%

39%

38%

40%

45%

50%

53%

55%

58%

61%

Current state of real-time visibility to organization's profitability by industry.



” You have to train people how to let go and step back from what they previously had. CFO,Public Transit

KEEPING IN STEPWITH TECH

CFO being the sparring partner of the CEO is not the only thing that has changed in the CFO role. A succesful CFO needs more than that. After all, the initial reason for the new requirements of the financial leader is the transforming environment which is strongly due to the digital technologies rumbling through the markets.

Today, CFOs need to be able to grasp what new technologies can do for the business and how to capitalize on them.


CFO CAPABILIT IESEXTENDING

Organizational technology prioritiescurrently and in three years according to CFOs

CURRENT PRIORITY

PRIORITY IN 3 YEARS

ANALYTICS AND BIG DATA

50

40

30

20

10

0

_________

_________

_________

_________

_________

MOBILITY CYBER SECURITY

SOCIAL MEDIA CLOUD SERVICES INTERNET OF THINGS

ADVANCEDMANUFACTURING

AND SERVICE ROBOTS

SOFTWARE ROBOTICS AND AUTOMATION

OF KNOWLEDGE WORK

AUGMENTED REALITY

3D PRINTING / ADDITIVE

MANUFACTURING

16%

1%

6%4%

16%

11%

16%

11%

26%24%

21%

32%

26%

38%

26%

42%

24%

44%42%

34%

WITH TECHCOMPETITIVITY CHECK

The technology agenda of CFOs strives to increase the organization’s efficiency both in daily processes and fact-based decision making.

Currently finance organizations are focusing heavily on data-related projects. As showed earlier, making data flow smoothly across the organization and delivering real-time information for decision making was still a challenge for most organizations. The ability to react fast to external changes is critical in the turbulent, disruptive business environment and finance organizations are now focusing their development projects on ensuring their company’s competitive power.

Digitalization and automation of processes are still high on the priority list of finance. Different organizations are in different phases in their digitalization journey which, though, is inevitable when pursuing efficiency and cost-savings in long term.


INTEGRATING DATA ACROSS ORGANIZATION

IMPROVING SPEED AND ACCURACY OF FINANCIAL REPORTING

INCREASING FLEXIBILITY IN PLANNING AND FORECASTING

DIGITIZATION AND AUTOMATION OF FINANCE PROCESSES

IMPROVING PRODUCT AND CUSTOMER PROFITABILITY ANALYSIS

46%

42%

36%

28%

46%

Data as the strategic priority in finance initiatives


COLLEC T DATA

EX TRAC T KNOWLEDGE

EXECUTE STRATEGY

The development in the field of data and analytics are escorting CFOs to the frontline strategists of the organization. Data collection to produce business insights is starting to be a rule rather than exception. Still, running an analysis to turn data into usable, valuable information is a challenge, not to mention taking it into the level of strategic decision making.

The main goals for analytics investments in finance are to improve visibility, increase the ability to response to the external changes, and to better identify and manage risk.


56%

48%

40%

34%

33%

26%

Goals for analytics initiatives

IMPROVED VISIBILITY OF FINANCIAL AND OPERATIONAL PERFORMANCE

FASTER RESPONSE TO CHANGING MARKET ENVIRONMENT

BETTER RISK RECOGNITION AND MANAGEMENT

ABILITY TO PREDICT TRENDS AND NEW BUSINESS OPPORTUNITIES

INCREASED EMPLOYEE PRODUCTIVITY

IMPROVED VIEW OF CUSTOMER ACTIVITIES ACROSS CHANNELS

VALUE DRIVERDATA AS A


Technology will change everything. So far it’s eating our world so that everything that can be digitalized will be digitalized. I believe in the future technology will create a world that’s completely different from what we now know. It’s going to move from a centralized towards a decentralized world where everybody, anyone, or anything can become a company on its own.

Sander Duivenstein, Trendwatcher and Strategic Advisor on Disruptive Innovations

”

Management Events brings together the needs of top decision makers and the offerings of solution providers, generating business opportunities for both parties. The exclusive, invitation-only event concept provides the opportunity to meet the most potential clients in pre-booked face-to-face meetings. The participants of our events are technologically driven leaders of the largest companies in Europe and Southeast Asia.

Annually, our 160 invitation-only business events gather 20 000 leaders and 2 500 solution providers, generating more than 70 000 face-to-face meetings. To identify the responsibilities, investments, and projects of the top decision makers, we conduct 35 000 interviews and receive over 10 000 online survey responses each year.

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Economy & Finance

CFO: The Strategist - EU & ASEAN Report