The Future CFO

Innovative new IT can boost the CFO’s performance and results

THE CHIEF FINANCIAL OFFICER ISNOT JUST A NUMBER CRUNCHER

SIX TECHNOLOGIESCHANGING FINANCE

THE MAN WITH THE DELL CHEQUE BOOK

Dell’s financial chief Tom Sweet on the mega-merger with EMCA successful CFO supports the chief executive with company strategy

INSOMNIA TOP TEN FOR SLEEPLESS CFOs

The key issues keeping leading financial experts awake at night

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THE FUTURE CFO06 / 12 / 2016INDEPENDENT PUBLICATION BY #0422raconteur.net

FINALIST

If you want proof of how far the role of chief financial officer or CFO has evolved from number cruncher to strategic adviser,

talk to a headhunter about the briefs they get from chief executives.

“If you look at a job specification from ten years ago, everything that was on there then is still on there to-day,” says Mark Freebairn, partner and head of the financial manage-ment practice at executive search firm Odgers Berndtson. “But there are two more pages that weren’t there before and are there now.”

The pressure on companies to innovate and compete in an in-creasingly complex, fast-moving and transparent world has led to the chief financial officers of large businesses becoming more in-volved in driving the commercial activities of their organisations. So they are helping to improve the business, manage margins, assess potential new markets, make in-vestment decisions and oversee mergers and acquisitions.

These are activities that all con-ceivably fall under the umbrella of strategy and require chief financial officers to possess a wide set of skills.

The scale to which the chief finan-cial officer’s strategic remit has been expanded is clear from the briefs that Mr Freebairn gets, which often request what is essentially a “mini chief executive”. “CEOs say, ‘I need a CFO who will second-guess me because that will make my deci-sion-making more robust. I need a commercial equal in that role’.”

A good example of where the chief executive and chief financial officer make a strong commercial team is FTSE 250 recruiter Hays. “In big, complex businesses, what tends to happen is that the CEO and CFO roles become interchangea-ble,” explains the company’s chief financial officer Paul Venables.

“The consequence of that is as the CFO you spend more time on the operations of the business and more time with the people. There-fore you can influence strategy. At Hays, we have two executive direc-tors and we look after 33 different countries between us. As we oper-ate a fast-paced sales business, we have to spend a lot of time in those countries.”

Mr Venables de-scribes his job as being akin to a deputy chief ex-ecutive role. He is heavily involved in strategic decisions, such as whether the business should go into a new market, open a new spe-cialism or deploy its skilled staff differently.

Sarah Willows, chief financial officer and head of operations at professional services giant KPMG, says strategy is about how a busi-ness allocates its resources. “The CFO is incredibly involved in al-locating resources,” she explains. “They must also produce the evi-dence to help the rest of the board make decisions.”

Like Mr Venables, she emphasis-es the need for a close partnership with the chief executive. “The CEO tends to focus on the opportunities and the CFO more on the risk of those opportunities. That’s a great partnership as long as both do a lit-tle of the other side. But it's difficult to be the person who both brings the opportunity and considers the risk,” she says.

In her own role, Ms Willows has responsibility for leading all KP-MG’s non-client-facing operations

and making sure they are as good as they can be since they represent part of the firm’s “shop window” to clients. Her remit spans facilities, finance, human resources, IT, knowledge, le-gal, learning and development, prop-erty and procure-ment. She is able to manage such a broad role because she surrounds her-

self with “very good people who are the experts in what they do”.

Adam Akbar, founding partner of Bronzegate, an executive search firm dedicated to finance lead-ership, highlights how corporate chief financial officers have become change-agents since the financial crisis struck. “Many are driving full-scale transformation projects, while all are improving business perfor-mance through efficiency meas-ures,” he says.

The chief financial officer’s more prominent role in commer-

cial decision-making is reflected by another notable trend, accord-ing to Mr Akbar. That is chief ex-ecutives preferring to hire chief financial officers who have sector expertise. “If you are a digital CEO and you have a choice, you would want a CFO who understands the digital industry,” he says. “That’s partly because they can hit the ground running if they are from the sector.”

The chief financial officer’s influ-ence might have expanded, but to what extent do they have a say in the vision, which continues to be the domain of the chief executive? While Alistair Cox, Hays’ chief ex-ecutive, takes the lead in setting the company’s long-term vision, he encourages other members of the management board to express their views and challenge his assump-tions. “As well as shaping the deci-sion, a great CEO helps to shape the debate,” says Mr Venables.

Although chief financial officers are increasingly expected to act as strategic advisers, their tradi-tional score-keeping role has not fallen by the wayside. Nowadays they are simply expected to fulfil both functions. “You can expand the role as much as you want, but if the CFO does not guarantee the financial information that the business is using to run itself and do its external reporting, they will be a hopeless CFO,” Mr Free-bairn concludes. “But if that’s all they’re doing, they won’t be a good CFO either.”

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No longer just anumber cruncher

A successful chief financial officer now has to support the chief executive in developing company strategy

as well as taking care of finance

OVERVIEWSALLY PERCY

Share this article online via Raconteur.net

The chief financial officers of large businesses are

becoming more involved in driving

the commercial activities of their

organisationsBl

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ages

DAN BARNESAward-winning business journalist, he specialises in financial technology, trading and capital markets.

IAN FRASERAuthor of Shredded: Inside RBS, The Bank That Broke Britain and former business editor at The Sunday Times in Scotland.

CLARE GASCOIGNEFormerly on the staff of the Financial Times, she is now a freelance journalist specialising in City and financial features.

ANTHONY HILTONAuthor, journalist and broadcaster, he is a former City editor of The Times and managing director of The Evening Standard.

JAMES HURLEYEnterprise editor at The Times and award-winning journalist, he was formerly enterprise editor with the Telegraph Media Group.

ROB LANGSTONEditor of MENA Fund Manager, the monthly title for the Middle East and North Africa asset management industry.

SALLY PERCYFreelance business and financial journalist, she is editor of The Treasurer and former editor of Accountancy magazine.

EDWIN SMITHWriter and editor, he contributes to publications including The Guardian and The Sunday Telegraph.

PUBLISHING MANAGER

Misha Jessel-Kenyon

RACONTEUR raconteur.net 03THE FUTURE CFO06 / 12 / 2016

THE FUTURE CFO

Hays chief finan-cial officer Paul Venables says the chief executive and CFO roles tend to become interchangeable in big, complex firms

COMMERCIAL FEATURE

RACONTEUR raconteur.net 2XXXXxx xx xxxx

CFOs TACKLE NEW CHALLENGES WITH THE CLOUDChief financial officers face tough economic and competitive challenges, but using the right technology, they can get ahead of the game

CFOs face a wide array of challenges. On the economic front they’re worried about

continued uncertainty, while in politics they are confronting the potential impacts of Brexit, the US election result and geopolitics in the Middle East.

More directly the digital economy and technology innovation is creating new competitive threats as well as exciting opportunities. In addition, the response of legislators worldwide offers a constant challenge.

For many organisations it is up to CFOs to respond to these challenges, and they can only succeed by making their companies lean, agile and responsive.

Cloud computing is essential here. A recent study by Frost & Sullivan shows that more than two-thirds of businesses using cloud believe it has given them substantial competitive advantage.

Now a daily reality in finance, the cloud enables large companies to be as nimble as smaller firms. Some 56 per cent of businesses use the cloud for some part of finance and accounting.

Equally, smaller companies can gain the flexibility and agility from cloud

to scale quickly without significant IT resources and make a major impact. “Smaller companies want to act big, developing their product rapidly and commercialising it quickly, globally,” says Mark Woodhams, senior vice president and managing director, Europe, Middle East and Africa, at cloud enterprise resource planning software specialist NetSuite.

One such business is DWA Media, a London-based media agency which expanded rapidly into seven countries and struggled to get the visibility and control needed. After implementing cloud technology, the CFO was able to ditch the company’s mass of linked spreadsheets and reduce financial close from weeks to a day.

DWA worked with NetSuite to unify its entire business on to a single cloud platform and the agency is continuing to grow rapidly around the world.

The reality for many companies attempting this with traditional on-premise systems is that software deployments are slow and problematic. Such firms then end up relying on spreadsheets instead, risking many more errors and providing little control or visibility.

Larger companies, attempting to be agile and adapt to new business models, often turn to substantial technology deployments to help manage the change.

But such systems can be a barrier. Mr Woodhams says: “Large businesses are often restricted by systems that are high cost, take months or years to roll out and are impossible to upgrade. There is a risk that the technology actually stops them from effectively entering a new business area or responding to competitive threats.”

Smart enterprises turn to the cloud and PageGroup is one such firm. After growing organically for 40 years, this £1-billion turnover recruitment specialist had multiple accounting and business systems worldwide. The set-up created a headache for the finance team and restricted the agility, scalability and flexibility needed to enter new markets, expand operations and grow revenue.

PageGroup is now implementing a single cloud system from NetSuite that will allow it to manage critical business processes better, including accounting, global financial consolidation, reporting, budgeting and analytics.

“We’re intent on simplifying and modernising our global financial system to better support our finance team, our recruitment consultants, and ultimately our clients and candidates,” says Mark Hearn, group services finance director at PageGroup. “We

recognised that only a cloud-based system could achieve this for us.”

Such examples in both small and large businesses demonstrate just how the cloud is enabling CFOs to have the agility, visibility and control they need.

And there is yet more potential as cloud transformation enables businesses to overturn their very business model. “Services companies are looking to create products and product companies want to create services,” says Mr Woodhams. “Cloud software is enabling this agility and change in a way that traditional systems struggle with.”

Product companies are shifting from selling one-off items to either delivering added services such as maintenance or creating recurring subscription revenue. “Companies such as Rolls-Royce no longer just sell aircraft engines; they rent them by the hour of flying time,” explains Mr Woodhams. “Think of mobile phones being given ‘free’ with line rental or a monthly subscription for disposable razors. It’s a whole new way of selling products.”

These changes create complex new financial demands around invoicing, and recognising recurring and service-based revenue. With constantly evolving regulations worldwide, a cloud-based system gives the flexibility and continuous functional updates to keep on top of these complexities.

Likewise, services companies are using the cloud to help sell products, such as packaging their intellectual property as a downloadable “how-to” product, or offering a previously one-off service on subscription with recurring billing. The right cloud software can help them process the payments and handle new legislation on revenue recognition.

There is no doubt that CFOs face incredibly tough economic, political and competitive challenges. The difference now is that cloud computing enables them to adapt and grow when, where and as quickly as they need to, while maintaining proper control of their finances and operations.

Indeed, CFOs’ common conversation around cloud has shifted away from simply cost-savings to this ability to adapt and grow, with proper visibility and control, even overturning business models in the process.

“For these businesses, using the cloud means technology powers growth rather than holding them back,” says Mr Woodhams. “It is enabling true agility, visibility and control, so that they can operate and adapt as they need.”

For CFOs, making the simple transition to cloud computing is essential for their business’s survival and growth.

To find out more about NetSuite and how it can help CFOs visit www.netsuite.co.uk/cfo

The cloud is enabling CFOs to have the agility, visibility and control they need

COMMERCIAL FEATURE

ABOVE Cloud events attract finance and business pro-fessionals in their hundreds

RIGHT Mark Woodhams Senior vice president and managing director Europe, Middle East and AfricaNetSuite

BELOW LEFT PageGroup is using cloud to drive financial transformation

THE FUTURE CFO raconteur.net04 RACONTEUR06 / 12 / 2016

INSOMNIA TOP TENIAN FRASER

01APPRENTICESHIP LEVY

Many chief financial of-ficers view the apprentice-ship levy, which debuts in April 2017, as an unfair “payroll tax” that will have dangerous unintended

consequences including devaluing apprenticeships and causing companies to axe other forms of training. The levy, designed to tackle skills shortages and broad-en young people’s careers, will be paid by English employers with payrolls of more than £3 million and charged at 0.5 per cent of wage bills. However, the government, after refusing to delay the scheme, insists employers too small to pay the levy – around 98 per cent of the total – will have 90 per cent of their training costs paid for.

08OTHERS LEAVE EU

If populist parties build further support in France or Italy, causing either country to leave the EU, it would lead to a full-on banking crisis, accord-ing to Financial Times

columnist Wolfgang Münchau. He believes such a move would trigger the “biggest default in his-tory”, as foreign holders of Italian or French euro-de-nominated debt would be paid in the equivalents of lira or French francs. How-ever, these local curren-cies would have sharply devalued. Since banks are not required to hold any capital against sovereign debt, the losses would cause many continental banks to go bust. “There is a lot of German wealth waiting to be defaulted on,” said Münchau.

04 DONALD TRUMP

President-elect Donald Trump has confirmed that, on becoming US president in January, his first act will be to tear up the Trans-Pacific Part-nership and instead pur-sue bilateral trade agree-ments with individual Asian nations. This is bad news for British export-ers. Theresa May’s gov-ernment is committed to reaching post-Brexit trade deals with countries including China, India, Australia and Japan. But Mr Trump’s move puts a spanner in the works as

it means these countries will be preoccupied with pursuing deals with the United States. If Amer-ica stops underwriting global trade and military security, as Mr Trump has signalled, race-to-the-bottom protectionism not seen since the 1930s could ensue.

02 BREXIT

The UK’s decision to leave the European Union is expected to bring height-ened complexity and costs to corporates, as regu-lation diverges between countries, international labour markets seize up and export opportunities evaporate. Politicians en-tering Brexit negotiations ought to be aware that non-tariff barriers, in-cluding regulation, matter as much to businesses as tariffs and migration, ac-cording to Deloitte’s most recent survey of chief fi-nancial officers. Currency volatility can be expected

to increase as Brexit talks commence and intensify, requiring finance chiefs to learn better hedging skills. Research from the software company Oracle suggests Brexit will put chief financial officers centre stage to help their companies navigate pit-falls and opportunities in the post-Brexit world.

09STOCKMARKET CRASH

Stockmarkets have per-formed more strongly than expected since the Brexit vote, and Donald Trump’s election victory gave impetus to the Dow Jones and other US indi-ces, prompting them to reach simultaneous re-cord highs on November 22. Investors have been cheered by the presi-dent-elect’s determina-tion to slash both taxes and regulations, while pumping billions into US infrastructure. Markets were further bolstered

by a massive transfer of wealth from bonds into equities, driven by infla-tionary fears. However the last time all four leading US stockmarket indices reached simultaneous re-cord highs, on December 31, 1999, this presaged the dotcom bust.

07 INFLATION

The fall in sterling since the EU referendum, plus the oil price rebound, will inevitably fuel UK infla-tion, as the higher cost of imports gets passed on to consumers. The former Sainsbury’s boss Justin King recently warned that supermarket pric-es will rise by 5 per cent over the next six months, while the National Insti-tute for Economic and So-cial Research predicts 4 per cent inflation for next year, ahead of the Bank

of England’s 2.7 per cent forecast for the fourth quarter of 2017. Higher in-flation could lead to an in-flationary spiral, in which tit-for-tat inflationary pressures on wages and prices feed off and rein-force each other.

05 CYBER ATTACKS

Recent cyber attacks on TalkTalk and Tesco Bank have illustrated the vulnerability of large companies to hackers de-termined to steal data, syphon off customers’ cash and trash reputa-

tions. Chief financial of-ficers have a pivotal role to play in ensuring such risks can be minimised both by channelling in-vestment into appropriate cyber security, and foster-ing a culture where infor-mation security and data management do not get neglected. According to EY’s The DNA of the CFO report: “A data breach can lead to a disastrous dom-ino effect on enterprise value. Therefore, it’s criti-cal for CFOs to understand the cyber security [and be] prepared to respond to a breach at any moment.”

03 PENSIONS

The Pensions Regulator recently said that, if he ig-nores legal demands to plug the £571-million deficit in the BHS pension scheme, the company’s former own-er Sir Philip Green could have his yacht and other

assets seized by the courts. Against this backdrop, one in seven chief financial of-ficers see defined benefit pension schemes as one of the biggest risks facing their businesses, according to a report by Hymans Rob-ertson. The consultancy says finance chiefs should work alongside trustees to cut back risk and prevent deficits from widening. It adds that some chief financial officers are pur-suing the more radical solution of full buyouts of their schemes, removing them from their balance sheets altogether.

10WEAKER UK ECONOMY

The UK’s decision to quit the EU is wreaking hav-oc with public finances, growth prospects, and the plans of many chief finan-cial officers. This became clear when chancellor Phil-

ip Hammond admitted in his autumn statement that the UK faces entrenched problems, including poor productivity and an addi-tional £122 billion of gov-ernment borrowing. On the same day, the Office of Budget Responsibility slashed 2017 growth fore-casts from 2.2 per cent to 1.4 per cent, blaming weak-er consumer demand and higher inflation. Looking for positives, Mr Hammond said: “That’s equivalent to the IMF’s forecast for Ger-many and higher than the forecast for many of our European neighbours, in-cluding France and Italy.”

06BORROWING COSTS

After slashing UK inter-est rates to a record low of 0.25 per cent in August, the Bank of England has since held them steady as the post-Brexit vote Armageddon scenari-os failed to materialise. Nearly three quarters of chief financial officers now expect UK rates to stay at or below this level for 12 months, according Deloitte’s research. But, if sterling were to plunge or UK inflation to spike, interest rates could rise

dramatically, in line with what some forecasters are predicting for Donald Trump’s US. Were that to happen, in a worst-case scenario, it could lead to swathes of personal and corporate bankruptcies.

Top issues keeping CFOs awake at night Being responsible for an organisation’s finances is stressful enough, but there are a number of issues which may cause chief financial officers to lose sleep

RACONTEUR raconteur.net 05THE FUTURE CEO01 / 12 / 2016

The man with the merger cheque bookComputer technology giant Dell’s chief financial officer Tom Sweet tells how he sees his role as a “co-pilot” to the company’s boss Michael Dell

It started with Michael Dell and Joe Tucci,” says Tom Sweet, referring to the $63.4-billion merger

between Dell and Tucci’s storage company, EMC. “Joe and Michael go way back. They’re business colleagues and they’re friends. They’ve had an active dialogue over the years about the industry, how the companies might work together. And you know that EMC had a number of activist investors who had been advocating for change in the EMC structure over the last few years. So EMC was under some pressure to maximise share-holder value.”

Now, thanks to the biggest merg-er in technology history, some of the pressure is off EMC. The highly leveraged deal, which leaves Dell with almost $50 billion of debt to pay down, was made possible by the creation of an unusual “tracking stock” tied to VMware, an EMC subsidiary, which allows the newly formed Dell EMC to keep control of the business, despite owning less than 50 per cent. Having taken his eponymous company private again in 2013 in a $25-billion deal, Michael Dell has

made no secret of how much he has enjoyed being free from the tyran-ny of the “90-day shot clock” that comes with being a public concern.

“That allows us to take longer-term views around investment decisions, strategic decisions and opportuni-ties,” says Sweet. The hope is that the consolidation of Dell’s hardware business with EMC’s cloud storage capabilities will combine with the scale and expertise of its sales force and supply chain to drive a success-ful long-term strategy. But it’s worth noting that some in the industry aren’t so sure. The chief executive

of one of Dell’s big-gest rivals told the Financial Times (anonymously) that the merger merited the description in-famously bestowed upon the ill-fated Hewlet t-Pack a rd purchase of Com-paq of “two garbage trucks colliding”.

For his part as Dell’s chief finan-cial officer, has been working hard to make sure that doesn’t happen.

When he speaks to me from the company’s headquarters in Round Rock, Texas, he says the weeks since the finalisation of the merg-er have mostly been spent on inte-grating Dell and EMC as smoothly as possible, “spending time on policies, processes” and working out “how do we integrate to go to market?” Beyond that, Sweet runs off a list of responsibilities that fall

INTERVIEWEDWIN SMITH

have the strategy team underneath me and we’re tackling a number of issues about how we play in certain areas and certain markets. So I do think the role has expanded from a classic ‘close the books, report the results and manage the capital’ to a much broader, quite frankly more interesting, dynamic job, which is what interests me about it.”

Some financial chiefs’ remits, of course, have swelled more than others. Mark Evans joined the list of former chief financial officers to have taken the top job when he was installed as chief executive at tele-coms giant O2 earlier this year. An-thony Noto hasn’t done the same, yet, but has managed to accrue power and influence at Twitter af-ter buying more stock while other senior executives were only sell-ing, taking on more responsibility and working alongside a part-time chief executive in Jack Dorsey, who splits his time between Twitter and payments company Square.

But even the chief financial of-ficers who are content with the co-pilot’s seat are influential; it’s their hands on the purse strings, their say-so governing wheth-er projects get the green light or are sidelined.

As you might expect, Sweet, who has been with his current em-ployer for just shy of 20 years, the last three of them as the financial chief, is full of praise for his boss.

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The weeks since the merger

have been spent on integrating Dell and EMC as smoothly as

possible, spending time on policies and processes

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under his “classic CFO role” such as financial reporting, account-ing, business support, back-office transactional systems, investor re-lations, treasury and tax.

But he also heads up Dell Finan-cial Services, which offers leasing and other forms of finance for cus-tomers, is taking control of a di-vestiture process that will see the company shed some of its assets and is in charge of a strategy team, which “helps Michael and the busi-ness leaders think about position in the market and the strategic di-rection of the company”.

If it sounds like Sweet has a lot on his plate, then he may not be alone. In a report published by EY, the role of today’s chief financial officer was described as “a job that

may be too big for any one indi-vidual to do well, given all the re-sponsibilities and the incredible contrast between the day-to-day tactical controllership functions, and the very long-term, strategic, executive functions”.

Perhaps unsurprisingly, Sweet doesn’t go that far, but he does echo a view, which has gained cur-rency in recent times, that the role of the chief financial officer has become more strategic, rendering its holder a sort of de facto “co-pi-lot” for the chief executive.

“I do think that I’m providing inputs and thoughts, and my ob-servations, helping Michael think through some of the strategic deci-sions he has to make and that we’re making as a company,” he says. “I


01 Tom Sweet has been with Dell for almost 20 years, the last three of them as chief financial officer

02 Chief executive Mi-chael Dell following the completion of the newly formed company

02

01

I’m providing inputs and thoughts, and my observations, helping Michael

think through some of the strategic decisions he has

to make

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He cites Michael Dell’s knowledge of the industry, its trends and his thoughtfulness, and says: “I love working with Michael. He’s willing to debate points, he has a point of view, generally, as do I, generally.” He laughs. “I view my job as the CFO here to help enable his vision.”

Asked what he’s like as a boss himself, Sweet jokes that it’s prob-ably a “dangerous question” and good naturedly inquires whether I have any inside knowledge from his team. A little more seriously, he admits to being demanding, but says he avoids micro-management. “I have an incredibly talented or-ganisation and part of what I try to do is put the best people in the right jobs so they can maximise their capabilities,” he says. “So we lay out expectations – the stuff they need to get done to sup-port the company and where we’re headed – and then turn them loose to let them run their function. It’s gen-erally been a good formula for me.”

Sweet says that he “learnt the bal-ance of driving a finance organisation within the context of enabling a business model” from two of his predeces-sors at Dell, former American Air-lines chief executive Don Carty and Tom Meredith. Of his peers, he picks out Microsoft’s Amy Hood and Intel’s Stacy Smith, who re-cently took on a broader operations role, as operators who embody the strengths needed in a modern chief financial officer.

“I think you’ve got to understand the business – your own company and the industry,” he says. “So, do you understand your business? Do you understand the business model? Do you understand the levers that you have available to you? Do you understand how your business fits into the trends that are happening in the industry and the environment, and can you shape and influence the company to move in the direction that you think is appropriate?”

But he adds: “To become that stra-tegic partner, you’ve got to do the basics well. Because if you screw up and you’re not filing your tax re-turns properly, or have a reporting

issue or a recording issue, then the other stuff doesn’t really matter.”

Looking to the future, Sweet says that using data and analytics to make predictions is likely to be-come more important as the com-pany invests resources and uses developments in the technology, even if limitations are likely to re-main. “As you might imagine, the technology sector can be relatively volatile. So it’s not a case of saying ‘we’re going to grow at 1.5 per cent for the next 20 years’, it depends on demand and macro-economic circumstances. But trying to do a better job of predicting business performance and enabling busi-ness decisions is something that we’re pretty focused on. I think us-

ing predictive ana-lytics is a huge win for us, but we’re just in the infan-cy of trying to do that,” he says.

Another of Sweet’s chief con-cerns will be man-aging the teams under his com-mand and trying to ensure Dell’s global finance workforce of 7,500 people is enriched

with the right talent, wherever it comes from. “Technology is ena-bling our people to work anytime anywhere,” he says. “So the work-force dynamics around my finance team are changing. You think about flexible working, work-life balance and things of that sort – I’m looking for the best talent, even if it’s not necessarily located some-where I have an office. Workforce productivity tools are changing the shape of our finance function pretty rapidly.”

Sweet acknowledges that there have been times when this idea has been counter-productive. Marissa Meyer’s decision to completely axe flexible working at Yahoo! in 2013 is the most notorious instance of “modern” attitudes to such flex-ibility back-firing, but it’s not unique. Best Buy and Reddit are among the big names to have done the same. Sweet, though, believes it has a place at Dell.

DELL-EMC MERGER FACTFILE

ANNOUNCED October 12, 2015

COMPLETED September 7, 2016

DEAL AMOUNT $63.4 billion

NEW COMPANY NAME Dell Technologies


When you think of a big organisation, the natural inclination is to focus on its

core product or offering. This is entirely warranted, after all they act as the engine of revenue and business growth. Such is their importance that the teams who deliver these offerings to market – sales, marketing, engineering and design – are often heralded for the work they carry out.

However, it’s important to remember there is a critical, less lauded function to any firm – the finance team. Much like the human aorta, they usually work away quietly, ensuring the rest of the body can function.

Despite their importance, their role is often taken for granted. This means the critical role the finance team play can be overlooked and, in some instances, be the last to benefit from new technologies, often being stuck with processes that inhibit them from performing effectively.

It’s a sentiment that is backed up by a survey of 500 senior finance leaders across 300 smaller businesses and 200 large enterprises in the UK, commissioned by Concur and carried out by Vanson Bourne. The results paint a mixed picture – one of increasing pressure, a yearning to implement modern process and a desire for less admin.

WE’RE IMPORTANT, BUT…The finance team know they are important. Ninety-six per cent of respondents said their team played an important role in influencing business strategy, while 84 per cent said their role had become more important in the last five to ten years.

Despite this feeling of importance, there is an underlying frustration that the finance team can’t perform to the best of their ability due to one underlying factor – admin.

According to respondents, 18 per cent of their team’s weekly time was spent on general admin tasks, compared with just 8 per cent on providing strategic insights to their rest of their business. This means less time was spent focusing on important issues, such as internal and external compliance.

Spending such a large amount of time on admin processes, has led to a feeling of despondency, with 64 per

THE UNSUNG HEROES: WHY YOUR FINANCE TEAM NEED MORE SUPPORT Automation of business functions can free up the finance team to thrive, says Chris Baker, UK managing director, enterprise, for Concur

cent of respondents admitting to a feeling of disconnect between the important tasks they need to carry out and what is taking up the majority of their time, while three-quarters said they believe other departments underestimate the value of their work.

HINDRANCE OF PROCESS In short, finance teams feel they could be doing better and are being held back. Much of the reason for this is complex processes, which are hindering finance teams from doing better and, if automated, could improve their job functions considerably.

Forty six per cent of respondents said their department didn’t have a large amount of freedom to implement efficiency solutions as they see fit. This is despite many saying the ability to execute new technology had improved over the last ten years, enabling them to focus more time on getting a better view of cash flow, becoming more productive and optimising other processes in the business.

A classic example of this are two banes of many a finance team – the expense and accounts payable. In the survey, 38 per cent of businesses described their expense process and 32 per cent their accounts payable process as mostly or entirely manual. Only 35 per cent had automated more than three quarters of their expense process,

with the number rising to 39 per cent of accounts payable and receivable.

Such statistics show just how much the finance team are left to take on manual tasks. It also goes a long way to show that in many cases this department, which provides one of the most critical services to any organisation, needs more support and more freedom to improve the way they work.

Yes, they may not be the driving force that is sales or possess the innovation of the engineering team, but without finance there is no revenue, profit, expenses, invoices and pay cheques – and without these, there is no business.

For more information please visitconcur.co.uk

COMMERCIAL FEATURE

Chris Baker, UK managing director,enterprise, Concur

COMBINED ANNUAL REVENUE $74 billion

FACT Biggest merger in technology history; now world’s largest privately controlled technology company


COMMERCIAL FEATURE


In his high-profile November lecture in memory of the dis-tinguished economist G.L.S. Shackle, the Bank of Eng-

land’s Andy Haldane lamented the fact that economics in general and finance in particular had been particularly slow to learn from other disciplines. It was, he said, the worse for it. Other sciences had gained great insights by applying thinking developed in other fields; finance was only now coming to recognise that psychology and oth-er human behavioural issues often

played a huge part in successful business outcomes.

Interestingly another economist Andrew Smithers made a similar point in his 2013 book The Road to Recovery in which he lamented the decline in the levels of busi-ness investment in the UK and United States not just since the fi-nancial crisis but for ten or more years before that.

Smithers’ thesis was that a ma-jor structural problem was lurking unseen. He argued that changes in the way executives were paid had made them excessively risk averse. It was now commonplace for them to collect big pay bonuses if they hit certain short-term financial

targets. Accordingly they would not take the routine risks associat-ed with investment for the longer term if they thought the costs might mean they fall short of their short-term goals. And the doubly interesting thing is they might not even be aware they were influ-enced in this way, and might not even have calculated those invest-ment risks correctly.

These words should strike a chord with finance directors as they struggle to shake off their “scorers” label – that they should confine themselves to the numbers and nothing else. Modern technol-ogy has taken much of the drudge out of their traditional role because

it is now possible to get fast and ac-curate information rapidly from even the most far-flung and com-plex operation. This frees them up to apply their financial awareness and facility with numbers over a wider canvas.

It is time for those who have not already done so to raise their sights to become an in-tegral part of the team alongside the chief execu-tive. They need to be in there helping to implement busi-ness strategy, not simply measuring and monitoring their outcomes.

American author Daniel Kahneman, surely the only winner of the Nobel Prize for Eco-nomics to describe himself as a psy-chologist, has shown one way this might work. He has written that if investment risks are assessed indi-vidually, the outcome is different from what you get if they are as-sessed collectively. It is summed up in the phrase “you win some and you lose some” and Kahneman’s view is that this is the approach companies, and indeed private in-vestors, should take because the fu-ture is inherently uncertain and no one can ever be sure how an invest-ment will work out, however much homework they do beforehand. The way to cope with this is to accept some will fail, but they won’t all fail and to design strate-gies accordingly.

RISK AND REWARDANTHONY HILTON

That means in effect the busi-ness will be advanced if it puts in place a portfolio of investments on the understanding they will not all pay off. This is where the chief financial officer is impor-tant. If the finance department continues to insist that each of these investments is assessed in-

dividually on its own merits, the odds will be tilt-ed against each in turn because of the executive’s p s y c h o l o g i c a l fear that this will be one which turns out to be the loser. The result overall will be the business will not invest as much as

it could or it should. Alternatively if the chief finan-

cial officer insists on a portfolio approach to risk assessment, the result will be different.

However, it does mean the finance chief has to raise his or her game. It goes against the grain for them to say “too much detail”. It takes them out of their comfort zone to say “ig-nore the individual losers because it is the average performance which matters”. But if they cannot do this the business will be more risk averse than it should be and perfor-mance will suffer.

This thinking has implications for the whole economy, not just individual companies. It is inter-esting to look at what it is that has driven profits growth in recent years in UK companies to compare this with the drivers in other coun-tries. Anecdotally, what you do find is that the recurring source of margin improvement in the UK has been from cost-cutting, plant clo-sures, streamlining and rationali-sation, so there are finite limits in what can be achieved. By contrast in Germany growth has come from investment, raised productivity and expansion, so theoretically the sky is the limit.

Business in the UK is dominated by finance, while in Germany it is dominated by engineers – and it shows. For UK business to optimise its future, finance needs to rethink its attitude to risk.

‘Companies are limited, not liberated, by finance’Businesses in the UK tend to be risk averse, resulting in a lack of investment which is hampering economic growth

Business in the UK is dominated by finance, while in Germany it is dominated by

engineers – and it shows

The great challenge facing any life assurance company is knowing who owns what policies. Insurance company records based on policy numbers have one real handicap. The number can identify who holds a life policy or an annuity, but it does not work in reverse. Starting with a name, it does not produce a reliable list of all the products an individual might hold. So the company cannot quantify its risks at an

individual level.Therefore, traditionally

insurers have managed risks by looking at the aggregates of their life assurance policy book and their annuity book, and then allocating capital separately to back these and other lines.

Capital is needed in effect to guarantee that it will have the necessary funds to pay out on its policies when they fall due.

But this method of risk control is expensive. Capital

has a cost and the more capital an insurance company has to set aside, the more cost it carries. Finding ways to reduce capital brings an immediate boost to profits.

This is where, according to chief executive Mark Wilson, Aviva’s finance team have broken new ground. They have devised a way to interrogate legacy systems which should enable them to produce a comprehensive list of what an individual customer owns.

For the first time, Aviva can properly understand its risk exposure at an individual level and begin to manage it.

The key insight is to understand that the company cannot be at risk to pay out on an annuity and a life policy at the same time as the policyholder has to be either alive or dead. So at an individual level, these risks can be offset, which sharply reduces the need for capital and cuts costs.

CASE STUDY: AVIVA


CORPORATE RISK APPETITE PERCENTAGE OF UK CFOs WHO THINK IT IS A GOOD TIME TO TAKE GREATER RISK ON TO THEIR BALANCE SHEETS

Source: Deloitte 2016

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2008

Q1 2

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Q3

2009

Q1 2

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2010

Q1 2

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Q3

2011

Q1 2

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2012

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Q3

2013

Q1 2

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Q3

2014

Q1 2

015

Q3

2015

Q1 2

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Q3

2016

ABOVE Andy Haldane, the Bank of England's chief economist, says finance has been particularly slow to learn from other disciplines

COMMERCIAL FEATURE


THE FUTURE OF PURCHASING AND BUDGET HOLDER MANAGEMENTPowerful software can eliminate paper, unite finance, procurement and budget holders, and provide a real-time picture of company finances

In a world where the chief financial officer is expected to play an increasingly strategic role, the

corporate finance function is more and more beset by the challenges – and opportunities – posed by the speed of advances in technology.

While finance chiefs are keen to contribute to the performance and growth of their organisation, they can be too mired in the complex demands of their operational, regulatory and tactical roles to create the impact on value expected of them.

Chief financial officers are at the forefront of strategic decision-making when assessing how their technology infrastructure, which is so crucial for business growth, is implemented. All too often, tactical decisions that met a specific pain point have led to implementing multiple applications which not only fail to talk to each other, but make the financial management process unnecessarily complex.

Increasingly, the finance function is understood to operate most effectively when a “single source of truth” of relevant data is gathered, consolidated and shared across teams. This is a vital requirement for optimising organisational alignment, efficient planning and reporting, and driving the business forward based on data that all stakeholders can agree on. Instead too often departments are using different software solutions resulting in multiple sources of data, creating confusion and ultimately slowing productivity.

A key example is the purchasing process, usually still paper-based, slow to progress and with relevant financial information siloed between budget holder’s spreadsheets, and held within inaccessible accounting software, or filing cabinets, by the finance department. For most finance departments, it’s enough that purchasing orders are placed, however undisciplined that process may be, invoices paid, monthly management reports produced and the auditors kept satisfied.

In fact, for budget holders, the whole process is usually not fit for purpose with finance failing to provide information that tracks supplier relationships, manages budgets or helps to create and manage project-related budgets and spend. The only information they are likely to receive is a management report which is between five to fifteen days out of date by the time it’s delivered. Furthermore, as most budget holders are maintaining their own processes, with data held on spreadsheets, it is robbing the finance department of valuable real-time financial information.

An effective budget holder management accounting system provides “the truth” to all stakeholders by capturing a single, real-time view of the entire purchasing process. Budget holders are able to access all the information on their suppliers’ spend, the status of all current and past transactions, and capture budget information and future planned project spend to manage expenditure against project budgets.

The finance team gains a disciplined purchasing process that speeds up every facet of the process and allows access to future planned project expenditure. A 100 per cent browser-based application designed specifically to integrate with existing software can deliver startling benefits and value at a surprisingly affordable cost. This delivers:

Fast electronic approvals – a formal, disciplined and auditable approvals process, actioned from any connected device, with all the supporting information to hand, features automated reminders and personal “nudges” to make approvals swift and easy.

Comprehensive query management – with every invoice query captured and tracked in real time, finance and approvers can work together to keep suppliers on side.

information that is relevant to them, and on final approval every invoice is automatically posted with a full audit trial.

PAPER INVOICES, YOUR TIME IS UPWith no legal requirement for paper invoices, their time is up. Most businesses have changed the way they deliver their sales invoices to be paid as soon as possible, generating sales invoices as PDFs that are e-mailed directly to the customers, incurring no expenditure or delays. The data from PDF invoices can be harvested with total accuracy, creating an invoice transaction that is immediately available for approval.

Unsurprisingly, the use of e-mail PDF invoices has grown from around 20 per cent two years ago to more than 65 per cent and is on track to reach 90 per cent of all invoices generated over the next 18 months.

AUTOMATED PURCHASE ORDERINGSimply automating purchasing ordering may benefit the finance department, but it fails to meet the needs of budget holders. An effective budget holder management system must replace their spreadsheets or it is simply duplicating their work. Budget holders already maintain their own spend analyses that reflect their departmental activities, so any effective purchasing automation

process must replicate this capability, while also delivering the same information in the standard profit and loss format.

As important, the new purchasing process must enable the simple capture of planned projects and likely costs and cash-flow implications, benefiting both the budget holders and the finance department with a single view of “the truth”.

THE SOLUTIONIt’s time to overhaul the working relationship between finance and the rest of the business with a 100 per cent browser-based application that extends the functionality of all existing ERP and accounting software using API connectors designed specifically for the purpose with seamless integration.

This delivers real efficiency, information and time-savings to budget holders that drive adoption, while the finance team gains disciplined purchasing and approval processes with a real-time view of commitments, accruals and budget availability.

Let your business make significant productivity gains, while providing your budget holders with the information that allows them to make the best use of their budget spend.

For more information please visitwww.compleatsoftware.com

COMMERCIAL FEATURE

It’s time to overhaul the working relationship between finance and the rest of the business

Single unified overview of suppliers – budget holders and approvers have access to all the information on their suppliers, including turnover, every invoice awaiting approval or under query, plus approved invoices and payment statuses.

Fully automated order reconciliation – automatic two and three-way matches with the order and/or receipt, with successful matches are passed directly into the workflow; three-way matches are posted to accounting packages with zero touches.

Real-time budget management – budget holders have instant access to their available corporate and project-related budgets, helping them to manage their departmental spend proactively moment by moment, removing all the phone calls and e-mails every month.

Accounting and enterprise resource planning (ERP) integration – tight real-time integration extends the functionality of every accounting and ERP solution; users only ever see the suppliers’ and general ledger


CFO OPTIMISM AROUND THE GLOBE

TRENDS CFOs THINK ARE TRANSFORMING BUSINESS

CFO OUTLOOK

Percentage of CFOs who think the region will see modest to substantial economic growth over the next year

Region's respondents All respondents

TECHNOLOGIES CFOs EXPECT TO HAVE A MAJOR IMPACT ON THEIR FIRMS

2008 20082009 20092010 20102011 20112012 20122013 20132014 20142015 20152016 2016

71%

62%65% 65%

NORTH AMERICA EUROPE

Source: IBM 2016 Source: IBM 2016

0% 0%

20% 20%

40% 40%

60% 60%

80% 80%

100% 100%

INDUSTRY CONVERGENCE

RISING CYBER RISK

THE “ANYWHERE” WORKPLACE

REDISTRIBUTION OF CONSUMER PURCHASING POWER

SUSTAINABILITY IMPERATIVE

ALTERNATIVE FINANCE AND FINANCING MECHANISMS

SHARING ECONOMY

CLOUD COMPUTING AND SERVICES

60%

67% 48%

47% 46%

29% 24%

22%

AA

B

B

C

C

D

D

E

E

F

FG

G

MOBILE SOLUTIONS

52%

INTERNET OF THINGS

52%

COGNITIVE COMPUTING

38%

ADVANCED MANUFACTURING

TECHNOLOGIES

36%

NEW ENERGY SOURCES AND

SOLUTIONS

26%

BIOENGINEERING

14%


Source: IBM 2016

IMPORTANCE AND EFFECTIVENESS OF STRATEGIES FOR CFOs TO WEATHER DISRUPTION

Develop talent in the finance department

Provide input into enterprise strategy

Optimise planning, budgeting and forecasting

Drive integration of information across the enterprise

Identify and track new revenue growth opportunities

Importance Economic growthEffectiveness Spending/investment

86%

86%

81%

75%

63%

60%

67%

62%

47%

38%

Percentage of CFOs who think the region will see modest to substantial economic growth over the next year, and the amount they expect to increase their company’s level of spending and investment

OUTLOOKS MIXED WITHIN REGIONS

Actions CFOs are taking in light of political or economic uncertainty, domestic and international, over the next year

Percentage of CFOs who believe the following are important or effective

IMPACT OF POLITICAL AND ECONOMIC UNCERTAINTY

Increase our focus on domestic markets

Increase our investment in risk management or security

Redirect planned investments from some countries to others

Reduce our levels of spending and investment overall

Avoid doing business in some other countries

None of the above

41%

39%

31%

30%

28%

12%

Source: CFO Research/American Express 2016 Source: CFO Research/American Express 2016

2008 20082009 20092010 20102011 20112012 20122013 20132014 20142015 20152016 2016

73%

59%65% 65%

Source: CFO Research/American Express 2016

LATIN AMERICA ASIA/AUSTRALIA

CANADA

UNITED STATES

ARGENTINA

BRAZIL

MEXICO

FRANCE

GERMANY

RUSSIA

UK

AUSTRALIA

CHINA

HONG KONG

INDIA

JAPAN

SINGAPORE

0% 0%

0%

20% 20%

20%

40% 40%

40%

60% 60%

60%

80% 80%

80%

100% 100%

100%


https//mygide.uk/times

The most powerful and business friendly financial modelling tools on the market,

at a price that makes sense

f o r w a r d - l o o k i n g s o f t w a r e


a tax strategy will make business-es think twice before pursuing any kind of tax avoidance.”

While complexity has allowed some companies to minimise their tax bills, most chief financial of-ficers crave clarity, says Taxand’s Mr Wach. “There aren’t any easy answers. What is certain is that CFOs and tax directors want con-sistent and clear guidance as to what is acceptable and what is not,” he concludes.

When giant companies with devilishly com-plex tax arrangements are accused of unethi-

cal behaviour, the stock response is “we act within the rules”. If the pub-lic and politicians don’t like it, the argument runs, they should change those rules.

Presented with the apparent con-tradiction between a gargantuan turn-over and the skinny profits that can result in a trifling tax bill, defenders of multinational businesses will often explain that it’s their job to im-prove financial ef-ficiency in any way that’s legal, not to set tax law.

Does that hold true? Is it really the chief financial officer’s job to reduce the tax bill at all costs? It’s not quite so simple, says Matthew Rowbotham, partner and head of tax at law firm Lewis Silkin. There is, of course, no obligation for Eng-lish companies to minimise taxes. They are, however, obliged by law to promote the success of the business.

“That specifically requires a balanced approach to a range of factors, not a narrow focus on net profit maximisation,” says Mr Rowbotham. Listed companies

also have additional considera-tions under the corporate govern-ance code that promote “trans-parency, risk management and accountability in corporate deci-sion-making”, he notes.

That sounds like a description of exactly what some believe is lack-ing when big businesses establish elaborate structures to take advan-tage of the gaps in international tax rules.

However, following a series of tax scandals, in-cluding this year’s ruling from the European Com-mission that Apple must pay back the Irish state up to €13 billion in taxes after it was found to have been given an a nt i- compet it ive “sweetheart deal”,

the mood appears to be changing. Tim Wach, managing director

at Taxand, the global tax adviser, says: “The last decade has seen po-litical and public perception of [tax] planning change dramatically, with people seeing any form of planning as damaging to reputation and a cor-responding increase in tax audits by authorities globally.

“Our recent survey found that 77 per cent of CFOs and tax directors said they have seen an increase in the number of audits undertaken by tax authorities in the past year – up from 60 per cent who said this in 2015.”

“The concern might be about the risk of an HM Revenue & Customs challenge or the damage to brand caused by media coverage. There’s no point shooting for a lower tax rate if it causes your profits to plummet when you’re criticised in the press.”

Legislation introduced in the 2016 Finance Act now requires big business to publish their tax strategy. “Affected companies will need to decide where their own risk- reward boundaries lie,” says Mr Rowbotham. “Of course, the government is hoping that the very act of formulating and publishing

While the pressure for chief finan-cial officers to reduce taxes can be intense, he notes that companies are becoming increasingly aware of a “negative view of tax avoidance”.

Taxand’s survey found that 91 per cent of chief financial officers and tax directors believe that ex-posure of a company’s tax policy has a detrimental impact on a com-pany’s reputation, up from and 51 per cent in 2011.

Laurence Field, head of tax at ac-countants Crowe Clark Whitehill, says: “Your job is to maximise prof-its, shareholders tell management. In the past this has been used as an excuse to maximise returns through aggressive, but not illegal, tax plan-ning schemes.

“These days the position is more subtle; your job is to maximise prof-its at a sustainable level, say share-holders. With greater focus on the moral and ethical issues surround-ing tax avoidance, companies don’t want their businesses disrupted through [a taxman] investigation or adverse publicity.”

The result? Chief financial officers have stopped asking whether a tax structure simply works and are now focused on thinking about what it could look like, regardless of wheth-er the law allows it, Mr Field argues. That can result in a confusing posi-tion for the finance chief.

“The moral dimension in tax is now important to high-profile busi-nesses. Campaigners, the press and tax authorities have… [discouraged] businesses from simply follow-ing the law. They want business to follow the law as they would like it to have been written, rather than how it is written,” he adds.

With the risk of falling foul of reg-ulators as well as public opinion, un-derstanding and warning manage-ment of the potential downsides to aggressive tax planning has become as much a part of the chief financial officer’s role as considering potential tax savings, Mr Rowbotham notes.

“A director might be in breach of company law if they mismanage a company’s tax affairs, but they are un-likely to be criticised simply because they considered, and rejected, a plan-ning opportunity which in their view presented a business risk,” he says.

Recent high-pro-file tax scandals have changed both political and public perceptions of tax planning

Taxing issueof paying what’s dueControversy over giant corporations paying dwarfed tax bills has put finance chiefs in the media and public spotlight

TAX AND REPUTATIONJAMES HURLEY

While some multinationals appear to carry on regardless in the face of political and public outrage over their tax arrangements, others are more sensitive to being hauled over the coals.

In 2012, coffee chain Starbucks faced protests over its use of tactics like paying a “royalty fee” of 4.7 per cent from its UK company to a Dutch subsidiary for the rights to use the Starbucks name and coffee recipe.

It also used transfer pricing, buying coffee beans from its Swiss subsidiary at a mark-up, to help to minimise its UK tax bill. According to a Reuters investigation at the time, the coffee giant paid only £8.6 million in UK corporation tax in the preceding 14 years despite £3 billion in sales.

In an attempt to draw a line under the issue, the company made the unprecedented offer of a “voluntary” UK tax payment of £20 million.

The move was widely ridiculed. Tax experts described the arrangement as “commercially gobsmacking”, politicians said it made a “complete joke” of the British tax system and tax campaigners called it “a desperate attempt to deflect public pressure”.

Last year, Starbucks boss Howard Schultz complained that coverage of the episode in the British media “took on a life of its own” and the company had been portrayed in “a pretty bad way”. It just goes to show that it may be easier to err on the side of caution when it comes to tax planning, when avoidance activities have invited such opprobrium.

CASE STUDY: STARBUCKS

The moral dimension in tax is now important

to high-profile businesses

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Transfer pricing

Tax litigation/disputes

Indirect tax

Corporate tax rate

Compensation equity and employment taxSupply chain/business restructuring

Mergers and acquisitions tax

Individual tax

Real estate tax

20%

15%

13%

13%

9%

9%

8%

7%


MOST CHALLENGING AREAS OF TAX IN 2015 GLOBAL SURVEY OF MORE THAN 400 TAX PARTNERS AND 2,000 TAX ADVISERS

Source: Taxand 2016

6%

The role of chief financial officer is beset by chal-lenges, from handling new accounting standards to

wider regulation and evolution of corporate treasury in the face of risk-

averse banks. So top finance chiefs are reaching out to technology partners to handle these increased demands and limit the growth of associated costs.

In the 2015 Financial Executives International CFO Technology Study, analysts at Gartner found that busi-ness intelligence (BI), analytics and performance management were the top areas for CFO IT interest.

According to analysts John Van Decker and Christopher Iervolino: “Most technology constraints con-cern the lack of business insight or BI availability, and the inability to use business applications for pro-cess efficiency.”

Here are six key issues chief finan-cial officers face and the technology that can help them.

INNOVATIVE TECHDAN BARNES

Six technologiesare revolutionisingfinance chief's roleChief financial officers are able to tap into innovative new IT to boost their performance and company efficiency

01 GETTING VALUABLE BUSINESS INTELLIGENCE

DATA WAREHOUSING

Data warehousing is a technology that lets firms store and retrieve huge data sets, allowing the user to get valuable insights from an enor-mous scale of information. Typi-cally employed by very large busi-nesses, this lends itself to complex analysis of business intelligence and even real-time BI.

“With BI there is still a high degree of manual operation that tends to cover basic reporting requirements,” says Irfan Khan at SAP. “If it is providing analysis into specific areas of market risk, credit risk or other nitty-gritty risk associations within the business, there is often a long tail of legacy tech-nology that you have to deal with.”

Rather than using multiple data bases for business silos, a data ware-house operates at a scale that can work across the whole enterprise.

02 BALANCING FINANCIAL AND RISK MANAGEMENT

BIG DATA

Chief financial officers increas-ingly need to balance financial and risk data to show a single set of figures. In finance this is often the case to support stress tests that regulators use to assess a compa-ny’s strength. In these circum-stances, the ability to crunch mas-sive data sets is of real value. Big data systems have something of a misnomer as they not only handle large chunks of data, they can also handle high-speed data process-

ing and in some cases tackle pro-cessing of unstructured data, such written documents rather than purely structured numerical data.

Mark Sykes, chief operating of-ficer at high-performance com-puting specialist Kx, says: “The open source movement has made the cost of entry of this type of technology much lower than it would have been historically. If you just roll back ten years you would have needed very expen-sive mainframe or big-iron tech-nology to be able to run this, unless you were using a database like Kx.”

03 UNDERSTANDING ORGANISATIONAL

COMPLEXITY BUSINESS PROCESS MANAGEMENT SYSTEMS

Knowing your business inside out is no simple matter. For a chief finan-cial officer, who wants to get to grips with the assets, costs and process-es involved in an enterprise of any size, they will need business model-ling tools that can create a whole en-terprise model, from strategy over

business processes to information architectures, application land-scapes and services.

Tools such as Software AG’s ARIS and IBM’s Blueworks Live can be used to model processes within a firm and, combined with other analytics, they can then be used to establish the technology assets underpinning the organisation. In Gartner’s CFO study, business process management tools were ranked as a top-three in-vestment priority over the next three years by 21 per cent of respondents.

06 PERFORMANCE MANAGEMENT

REAL-TIME ANALYTICS

Real-time analytics can allow a business to keep track of perfor-mance in an environment that is seeing volatility in currencies, commodities and in political risk. The finance department is undergoing transformation just as much as any other part of the business to streamline process-es, to improve operational con-trol and to provide a better level of information for senior busi-ness managers to make strate-gic decisions. Understanding performance is both challeng-ing and dynamic.

“Without proper documenta-tion and insight, organisations risk failing to deliver the antici-pated business value,” says Char-lie Platt, sales director for finan-cial services at Software AG.

In an increasingly complex situation, the ability to capture the current operating model

– the end-to-end processes, systems, technologies and the people that use them – and de-termine a future model is criti-cal to understanding where effi-ciencies can be made, analysing the impact and cost implica-tions of change, and assuring successful implementation.

“Utilising real-time and in-memory analytics can provide more timely insights without many of the limitations of tradi-tional business intelligence tools and data mining,” says Mr Platt.

05 CROSS-BORDER GROWTH AND

COMPLIANCE THE CLOUD

As businesses grow they are exposed to the rules and ac-counting standards of different countries, and of the finances for companies they acquire or merge with. Using the point solutions that are already in place at acquired firms or buying local point solutions and trying to integrate them can be a major challenge.

“Using the same set of finan-cial data, using the same char-tered accountants, what we call a financial data model assists in the rest of the organisation,” says Mark Nittler, vice president at on-demand financial manage-

ment solution provider Workday. “So things like an aggregate view of revenue can happen au-tomatically. That whole process of supporting a regional opera-tion as it is getting going, as well as how that regional operation or new acquisition folds into the existing model, means cloud can be a huge advantage.”

04 CYBER RISK ARTIFICIAL

INTELLIGENCE

The loss of financial informa-tion, customer information or actual assets weighs heavily upon the finance team. Accord-ing to the Gartner CFO study, IT security was the top investment for larger organisations.

Yet defending against cyber at-tacks is notoriously difficult. In the UK, 22 per cent of firms have suffered a data loss in the last 12 months, according to the 2016 Dell EMC Global Data Protection Index, yet the UK is the seventh highest country for having busi-nesses ahead of the curve in cyber security.

To get ahead of the cyber crim-inals, firms are turning to sys-

tems powered by artificial in-telligence that are able to learn to spot new attacks rather than relying upon the pattern of pre-vious attacks, either as specific deployments of general ma-chine-learning systems, such as IBM’s Watson, or dedicated sys-tems like Cylance.

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When we talk with ICAEW members in business, the diver-

sity of their skills, experi-ence and aspirations is strik-ing. Yes they all have a solid grounding in finance, tax, compliance and so on. But, despite the stereotypes, they can also be charismatic com-municators, IT whizzes and canny entrepreneurs.

The accounting profession continues to attract some of the brightest and the best. So far this has provided a flow of people able to take on the chief financial officer’s role required by the varying needs of businesses and their boards, but there is always more to do.

With this in mind we believe there are three areas to con-sider in order to ensure chief financial officers continue to

enhance organisational per-formance and develop the fi-nancial leaders of the future.

Firstly, know your busi-ness, know yourself and know whether the fit is right. If there is one consistent piece of advice we get from chief financial officers, it is that to be effective you have to un-derstand the business. Easy to say, not always easy to do given the pressure of the job. But getting out into the busi-ness, understanding how value is created and tracking competitor strategies have to be prioritised.

This becomes a lot easier when self-aware chief finan-cial officers build an effective finance team which com-pensates for their own weak-nesses. And by delegating significant responsibilities, they play an important part

in developing future finan-cial chiefs.

H o w e v e r , even chief f i n a n c i a l officers who build great teams know that their k n o w l e d g e , skills and experi-ence are better suited to some circumstances than others. For example, we know of chief financial officers who specialise in turnarounds, re-alise that they are not suited to running a stable organi-sation and aim to develop a successor who can then step up to the role when the time is right.

Secondly, be a role model for continuous learning and devel-opment. Chief financial officers

learn almost continuously

through their day-to - day work, be it through d i s c u s -sions with

other board m e m b e r s ,

meeting oper-ational managers

or reading the latest market analysis.

But sometimes a more struc-tured approach is called for to open up new ways of think-ing and collaborate with people from different indus-tries. ICAEW supports this through its year-long F-TEN programme for chief finan-cial officers and those as-piring to the position, which blends mentoring, workshops and peer-learning sets. Role

models are important for de-veloping future leaders and by demonstrating a commit-ment to self-development, chief financial officers help ensure their finance teams also take learning seriously.

Thirdly, play a part in im-proving diversity in finance teams. Organisational needs will continue to evolve, par-ticularly given the develop-ment of new technologies including artificial intelli-gence. So it’s difficult to pre-dict future chief financial officer career paths, and the types of people and skills that will be required.

In addition to continuous learning, one way of reduc-ing the risks of not having the right people available is to in-crease diversity in the finance department. We mean diver-sity in the broadest sense, not

just those nine areas protect-ed in UK law, such as gender and race, but also employing people from different disci-plines, like data science, in the finance department. Also important is the two-way movement of staff between finance and other functions.

Chief financial officers have been fulfilling strategic roles and leading on IT for decades. In other words, they have managed to adapt to the needs of the time, albeit some more successfully than others. Such adaptability does not happen by acci-dent and the finance profes-sion cannot be complacent. However, we believe today’s chief financial officers will continue to adapt and play their part in developing the financial leaders of tomorrow.

Nurturing the financial leaders of tomorrowThree ways chief financial officers can lead on change and

enhance organisational performance

OPINION COLUMN

RICK PAYNE

Manager finance direction programmeInstitute of Chartered Accountants

in England and Wales (ICAEW)

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COMPONENTS OF S&P 500 MARKET VALUE

1975

Tangible assets

Intangible assets

19850%

20%

40%

60%

80%

100%


Investing in intangibles is hard to graspSometimes unquantifiable but often invaluable, intangible assets may be left off the corporate balance sheet, despite their importance

Items such as corporate cul-ture, diversity, talent and brand reputation are difficult to value, but may play a key

role in a company’s success.Investment in such intangibles,

therefore, may be difficult for chief financial officers to recom-mend to the board when there is no obvious return on investment. Yet the long-term investment case can be compelling.

“The way in which many organ-isations currently measure value and returns can often fail to reflect the social, fiscal and environmental considerations that are increasing-ly critical to business success,” says Malcolm Preston, partner at global consultancy PwC.

“The public and wider stakehold-ers now expect organisations to look beyond the bottom line, both in their goals and reporting, to get a more ho-listic view on which to base decisions and judge performance.

“It’s not just the balance sheet that’s important to the CFO, but also the market capitalisation. Thirty years ago, around 80 per cent of a company’s market cap was support-ed by its net assets, but today that’s flipped to only 20 per cent. So the rest is made up of ‘intangible’ value, including brand reputation, culture and human capital.”

Protection of the brand and promo-tion of a strong company culture can help prevent small issues from snow-balling into larger ones.

Alon Domb, head of corporate at legal and professional services firm Gordon Dadds, says the correlation between underinvestment in compa-ny culture and poor brand reputation with a decline in revenues or a rise in claims against a company can some-times be overlooked.

“The key for CFOs is to change their approach to persuading their board to invest in intangible assets by focus-ing on what they could lose by not in-vesting, rather than the returns they could make,” he explains.

“In light of the current economic un-predictability, investing in intangible assets might be more prudent than traditional tangible investments.”

Brand reputation should also be a priority for companies, says Mr Domb, particularly online where challenges to intellectual property rights can sometimes go unnoticed.

“Companies should view legal pro-tection for their intellectual property rights and taking action against de-famatory statements as protecting their investment in their brand repu-tation,” he says.

“Managing the company’s repu-tation, especially on the internet, requires continual attention. Bad

INTANGIBLESROB LANGSTON

COMMERCIAL FEATURE


Companies of all sizes are experiencing a shift in the composition of their revenue

streams, transitioning from traditional one-time product sales, to business models where products are provided “as a service” via subscription-based purchasing plans.

Today you can buy jet engines, razor blades and even bacon as a service for a monthly fee. This shift has been driven in part by cloud technology and SaaS (Software-as-a-Service), but also by investors’ desire for “sticky”, recurring revenue. Chief financial officers now need to adjust their business systems and monitor new key performance indicators to succeed fully in recurring revenue-based businesses.

CASH V RENEWALIn the traditional product or transaction-based sales world, a product or service is purchased, delivered and cash collected in what is commonly called the opportunity to cash process. In the subscription world, companies need to think longer term because customers can leave before selling costs are fully recouped. This has caused businesses to shift from an opportunity to cash mentality to a longer-term opportunity to renewal approach, where customer relationships are closely monitored.

Because customers can leave at any time, the success rate of customers and the likelihood of renewal are now leading indicators for chief financial officers to predict cash flow, revenues and long-term profitability. Never before has customer satisfaction and their ongoing success been so directly tied to business results.

‘EVERYTHING-AS-A-SERVICE’ ECONOMYFinance chiefs must adapt to a new service economy, says Jeremy Roche, chief executive at FinancialForce

CUSTOMER-CENTRIC ERPFor chief financial officers, this has led to the rethinking of enterprise resource planning or ERP systems. According to Ray Wang, principal analyst and founder of Constellation Research: “Success depends on a system of intelligence. Digital business models require a real-time view of everything from receivables, utilisation, support ticketing, analytics and revenue recognition. It’s no longer about how great your sales pipeline looks, but rather whether your customers are happy and your renewal base is robust.”

Most companies are hard pressed to achieve this comprehensive view of their customers. Traditional ERP systems were designed years ago before the Everything-as-a-Service economy took hold. Businesses often cobble together a disparate mix of subscription billing apps, revenue recognition spreadsheets and traditional accounting solutions. They try to marry up a separate customer relationship management system to monitor customer health and services. Unfortunately, this creates a myriad of customer records, multiple versions of the truth and poor audit trails. This is hardly a system of intelligence.

A new breed of systems is available that blends the traditional role of ERP (system of record) and CRM (system of engagement) across the opportunity to renewal process. They include subscription billing and revenue recognition capabilities built around a single customer record where every interaction with the customer can be seen across sales, services, billing, receivables and revenue recognition.

Not only does this position the company to manage the customer experience more effectively, it gives chief financial officers the intelligence they need to predict future cash flow and revenue based on customer success intelligence.

CUSTOMER-CENTRIC CFOFor many chief financial officers, Everything-as-a-Service business models can instigate a different mindset and focus. In a study by CFO Magazine, 70 per cent of chief financial officers reported that more than half of their revenue is now coming from services of different types, and 95 per cent also believe the chief financial officer’s role must adapt to this new services model.

Financial managers need to be more customer facing, more in tune with the disposition of customers in this environment. The information that investors want to know, such as renewal, customer attrition and net expansion rates, lie across the opportunity to renewal process. Chief financial officers will need to scrutinise service levels and customer issues more than they have in the past.

With the right tools and mindset shift, chief financial officers can understand the health of their customer base and, consequently, their own businesses. In the Everything-as-a-Service economy, the lines between chief financial officer and chief customer officer are blurred.

For more information please visitwww.financialforce.com

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2005 2015


Investing in intangibles is hard to graspSometimes unquantifiable but often invaluable, intangible assets may be left off the corporate balance sheet, despite their importance

reviews will happen from time to time and should not be treated heavy handedly.”

Investment in diversity and com-pany culture, through regular re-views of the employee handbook, can reduce the risk of disputes, which can sometimes lead to costly tribunal claims, he adds.

It can also be important in attract-ing and retaining staff, particularly in competitive labour markets, says Peter Richardson, managing direc-tor and head of Protiviti UK, a con-sultancy focused on internal audit, risk, business and technology.

“Investing in intangible assets shows employees that organisa-tions care, and they feel higher value in their work and are more committed to their performance,” says Mr Richardson.

“Employee attrition is expensive and damages morale. Keeping em-

ployees engaged and retaining them is more cost efficient in the long run.”

Yet for intangible assets to be taken seriously by chief financial of-ficers and their boards, a change in international accounting standards may be necessary.

Setting out its work programme for the next five years in November, the International Accounting Standards Board removed specific references to intangible assets, saying: “Any attempt to address recognition and measurement of intangible assets... would require sig-nificant resources, with very uncertain prospects for any significant improve-ment in financial reporting.”

Nigel Sleigh-John-son, head of the In-stitute of Chartered Accountants in England and Wales’ financial reporting faculty, says: “Few intangibles meet the criteria for recognition on compa-ny balance sheets, except in the con-text of the acquisition of a business, and some would argue that as a result financial reporting fails to provide a clear picture of a company’s resources to investors and other users of finan-cial reports.

“There is, however, some room for optimism. In the UK, the quality of narrative and non-financial disclo-sures in the ‘front half’ of the annual report by many listed companies about the business model, strategy and drivers of long-term value cre-ation has improved significantly in recent years.”

Mr Richardson adds: “One of the key challenges CFOs face is that return on investment in such things as culture; brand does not happen overnight and it often takes months,

In light of the current economic unpredictability,

investing in intangible assets might be more prudent than

traditional tangible investments


Source: Ocean Tomo 2015

if not years to see the benefits coming through. It’s also hard to measure and therefore to quantify.

“So, when faced with demands from a range of stakeholders – sharehold-ers, investors, even employees – who will still be demanding strong finan-cial performance, it’s easier to focus on activities that give immediate more tangible results.

“As measuring the success of in-vestment in intangibles is more diffi-cult and without that obvious line of

sight to ‘justify’ the spend, it’s easier to focus on the more mechanical com-ponents of running the business.”

While interna-tional standards may yet take time to reflect the challeng-es of modern ac-counting practices, a change in the chief financial officer’s approach to the issue may already be underway.

“We review the business case for every investment which also includes intangible assets,” says Andrew Merrick, chief financial of-ficer at law firm Irwin Mitchell. “In-vestment in intangible assets, such as people, company culture and brand reputation, is capable of im-proving the business and therefore generating a strong return.

“However, as with other types of investment, it is essential to be clear about the outcomes that will create value, plan to deliver them and meas-ure the results.”

Indeed, having an investment plan will often help financial chiefs identify the value of intangible assets and contribute to the ongoing success of a company.

“Too often, CFOs are seen as number crunchers rather than inno-vators,” says Robert Held, Americas regional director of strategy exe-cution consulting at international consultancy Palladium.

“But successful organisations are recognising to maintain success they must become the driving force of change. And the result is proving to be the difference between average per-formance and extraordinary social and economic results.

“With its in-depth knowledge across all departments, the CFO’s office is perfectly positioned to identify trends and help drive growth in an organisation. But to truly become a game-changer, CFOs must focus on two core ele-ments – strategy and customers.”

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03 CHIEF MARKETING OFFICER

Chief financial officers who think marketing is just for fluffy bunnies are the dinosaurs of the business world. But there can often still be significant cultural differences that prevent the financial chief and the chief marketing officer from form-ing the best relationship.

Far too often chief financial of-ficers focus solely on the costs rather than the value, while mar-keting chiefs fail to pin down the metrics that define success. This relationship can fail because the foundations are not in place. It is always worth having a discussion at the outset about how each meas-ures success and being gracious enough to understand this is simply a different view of the world, not a question of right and wrong.

Marketing teams can often be populated with strong and articu-late individuals, who are not afraid to present their case directly to the chief executive, so the canny chief financial officer will make sure the relationship is one of partnership.

As a discipline, marketing is un-dergoing as great a change as any within the business world, as social media increasingly drives the rela-tionship with the customer, and a good financial chief understands this is a business reality, rather than dismissing it as “something teen-agers do”. Getting to grips with the many and varied marketing tools is a prerequisite.

But it is here that the marketing and financial chiefs can meet. Mar-keting tools should offer an insight into customers that any half-decent chief financial officer will welcome with open arms. A good relation-ship here will cement a customer profile that can be a basic building block of strategic predictive model-ling and that’s a core discipline on which any C-suite executive should be focused.

Just because chief financial of-ficers are from Mars and chief marketing officers are from Venus doesn’t mean they can’t have a great relationship.

02 CHIEF INFORMATION

OFFICER

Digital disruption is one of the key forces shaping our world, which makes the relationship be-tween the chief financial officer and chief information officer among the most critical. It’s all about making good use of each other’s knowledge to drive the company forward.

In some cases, the chief in-formation officer reports to the chief financial officer, but whatever the reporting lines, the information chief has valu-able input about the technolog-ical threats and opportunities in this brave new world. A good chief financial officer needs to understand how technology will transform operations and be able to evaluate the cost implications of tech investment – and also grasp the implications of not in-

vesting in security measures, for example.

Collaboration is the name of the game. This is not necessarily about preventing the chief infor-mation officer overspending on a new IT system, though that may be part of the remit. But if the fi-nancial chief can’t understand the cost benefits of the new system, it’s up to him or her to keep asking awkward questions.

For the chief information officer, the relationship is often to do with ex-plaining and persuading. The latest must-have gadget usually comes at a price, and it is the chief financial of-ficer’s job to nail that price to meas-urable and time-limited benefits. A good information chief has to be able to explain those benefits and engage with the financial boss to pin down the costs.

Given the increasing importance of data-driven insights to grow a business, a chief financial officer needs to be able to understand the digital tools that can provide es-sential data. The chief financial officer’s role is increasingly ana-lytical and the chief information officer is the best ally in this.

Getting to grips with big scary concepts such as blockchain will be a whole lot easier if the financial chief has the kind of relationship with the informa-tion chief that allows them to ask dumb questions.


CFO's guide to stakeholder managementAn accomplished chief financial officer will maintain a solid and productive working relationship with key members of the company to add value across all functions of the business

STAKEHOLDER MAPCLARE GASCOIGNE

01 CHIEF EXECUTIVE

Which cliché would you like? Wing-man? Marriage partner? Trusted right hand? The relationship with the chief executive is all of the above – and the chief financial of-ficer might also need a mind-read-ing superpower.

The relationship between the boss and financial chief is perhaps the most important in any compa-ny, and complementary skills are a bonus. Traditionally, the chief financial officer is providing back-up and support to the chief execu-tive, putting the numbers under his or her ideas, reining in the wilder flights of fancy by pointing out the cost implications, and acting as a conduit to other directors.

It’s also about acting as a deputy because a good chief financial of-ficer should be able to manage the day-to-day running of the company.

So the chief financial officer needs to understand the chief executive; to understand the individual’s style, quirks and vision for the company. But this isn’t about taking a pas-sive role; today’s financial chief is as competent as the chief exec-utive, able to think strategically and should be allowed to voice an opinion. Indeed, a big part of the role is helping the chief executive future-proof the company and that isn’t the job for a yes-man or woman.

Instead, it’s about being willing to challenge, even play devil’s advo-cate. Trust is key; the chief execu-tive needs to know that this is not opposition for opposition’s sake or a hideous C-suite power struggle, but a vital opportunity to see the whole picture and not get carried away with a bright idea.

Part of the chief financial officer’s role is to point out aspects that the chief executive might have missed, but without being adversarial. Part of the chief executive’s role is to listen to the chief financial officer as an equal and respected partner, and be willing to accept that what he wants to hear might not be the same as what he needs to hear.

A big part of the role is helping the

chief executive future-proof the company

Marketing tools should offer

an insight into customers who any half-decent chief

financial officer will welcome with

open arms

The chief financial officer’s role

is increasingly analytical and the chief information officer is the best

ally in this

EXPANDING SKILLSETSHOW THE CFO CAN MAKE THE MOST OF BOARD TIME

MULTIFUNCTIONAL CFOs

PLAN CAREFULLY

MANAGE EXPECTATIONS

USE OPPORTUNITIES

THINK CAREFULLY

USE TECHNOLOGY EFFECTIVELY

BEING EFFICIENT WITH TIME-POOR EXECUTIVES

Activities CFOs think are most likely to be added to the finance function’s responsibilities in five years’ time, if they aren’t included today

IT

RISK MANAGEMENT

HUMAN RESOURCES

MERGERS AND ACQUISITIONS

PROCUREMENT

LEGAL

SUPPLY CHAIN MANAGEMENT

TAX

Secure the time required to focus on the important issues, giving priority and quality time to strategic discussions

For example, it may not be possible or wise to complete a major strategic discussion in one day

Use opportunities for free-flowing conversation; for example, at dinner the night before the board meeting

Concentrate on facilitating a meaningful discussion; don’t assume the 40-slide presentation is always the best approach

Technology is an enabler to bring people together; telephone and video conferences can often be the best choice for time-poor executives

Source: Chartered Institute of Management Accountants

Source: CFO Publishing 2015

35%

30%

29%

28%

27%

24%

22%

21%

05 FINANCE TEAM

Having done enough collabora-tive partnering, the chief finan-cial officer needs to lead the fi-nance department, as long as they do not confuse leadership with dictatorship.

Unlike relationships with other C-suite officers, the rela-tionship with the finance team requires the direction and pro-tection of the more junior and less experienced members. This is where so-called soft skills will be most needed, often a challenge for chief financial of-ficers who have risen to the top through outstanding num-ber-crunching skills.

Of course, there’s a necessary level of compliance as any finance department has to be able to meet the basic requirements of legality and competence. But for the chief financial officer, there’s an extra layer of development needed to

ensure the team grows its skillset on both an individual and group level. It’s all too easy for the finance chief to end up doing everything, since they are hopefully one of the most competent people in the finance department, so they may need to learn the difference be-tween being the best person to do the job and the only person able to do the job.

Departmental goals should be made clear; everyone should un-derstand how the numbers and reports they are so busily produc-ing relate to corporate objectives. Analytical and strategic thinking should be encouraged; the team shouldn’t be afraid to ask ques-tions or point out mistakes. Even bosses might stumble and make a mistake someday, and the fi-nance team must be trusted to catch them.

So how will the chief financial officer know when they’ve done a good job? Often it’s about not screwing up; if there hasn’t been a financial emergency, they’re doing OK. But an even better measure is how often others in the company come to the finance department with questions, confidently ex-pecting the right answers. Then finance is really at the heart of the business.



04 CHIEF HUMAN RESOURCES

OFFICER

In a Venn diagram of the C-suite, human resources and finance have one of the biggest overlaps. After all, payroll, hiring and firing are all jobs that need the skills of both departments.

Most people in the C-suite will agree that people are a compa-ny’s biggest asset. It has become a motherhood and apple pie kind of statement, and of even more importance given the increasing prevalence of service-oriented businesses. A shortage of talent can be one of the biggest inhibi-tors of corporate growth, and it’s up to the chief human resources officer to understand why and what needs to change.

If you want a great finance team, you need to harness human resourc-es’ ability to engage and nurture talent; if you want a great company, you need to apply human resources skills to get the best people on board and plan for future succession. No company will grow well without a company-wide strategy to iden-tify gaps in the talent stream and plug them.

But all this fabulous talent comes at a cost, and it is the chief financial officer’s job to analyse and evaluate that cost. It can often seem a brutal job, measur-ing employees’ worth in numbers,

and this sometimes leads to cul-tural misunderstandings between human resources and finance professionals. But people statis-tics are as important to success as any other metric.

A collaborative relationship be-tween the chief financial officer and human resources chief can often be one of the most produc-tive for a company, with demon-strable increases in employee productivity or revenue. In many companies there is a welcome sharing of the technology that does the administrative grunt work, freeing up employees for a more analytical role.

As both jobs become more strate-gic, increased collaboration pays dividends. The division between hard and soft skills is increasingly blurred as both the chief financial officer and chief human resources officer need a broad vision to see the best way forward.

The relationship with the finance

team is where so-called soft skills will

be most needed

No company will grow well without a company-wide

strategy to identify gaps in the talent

stream and plug them

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