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Posted: April 18, 2014

CFOs: The C-suite’s big-picture guys

Add value through finance transformation

Don Mailliard & Dave Barnett

Several years of global uncertainty have made even the toughest executives flinch, and that’s certainly true for chief financial officers (CFOs) across the country. Competent CFOs are spearheading initiatives such as shared services, outsourcing, process improvement and process automation. But in today’s unpredictable environment, a sole focus on the internal finance function operating costs is just not enough.

CFOs are sitting on a gold mine of information that, with the right management and analytics, can be translated into performance insight and meaningful value. Today’s CFOs have access to a wealth of data from ERP systems, line-of-business applications, and management reporting tools.

That’s why the CFO is well-positioned to be the new knowledge executive in the C-suite. The CFO can see the bigger picture, make truer forecasts, and pave a clearer path to value—by partnering with the business units to improve strategy, operations, IT, supply chain, sales, and marketing, while deploying capital more intelligently.

For today’s corporations to be successful, the CFO must transform beyond the finance function to identify value across the broader enterprise, providing insights to help the rest of the organization improve performance and manage risk.

A 360-degree view

Data and analytics can improve decision-making throughout the business, helping organizations unlock value by:

  • Identifying new market opportunities
  • Improving responsiveness to your best customers, by understanding customer profitability
  • Improving return on invested capital
  • Improving financial discipline and integrating business performance across operations, supply chain, manufacturing and logistics
  • Identifying better ways of measuring and managing risk.
  • Optimizing operational performance through transparent fact based analysis.

When information and data take center stage, it can help organizations make better fact-based decisions and create better processes. However, transforming into this new intelligent business model can be a significant change journey. An effective information-driven approach should apply historical, current and predictive analytics to give organizations a 360-degree view of their data. This view enables a focus on business outcomes and measurable value. While the data itself is an asset, the real opportunity is turning that data into value—in the form of growth, cost savings and other benefits across the organization. CFOs can help the company harness its data in a program that includes data governance analytics, benchmarking, reporting, leading practices, and intimate knowledge of the business strategy.

Confronting complexity through information management

According to recent research by KPMG, ninety-four percent of executives worldwide told us that complexity is their greatest challenge, and information management ranks as one of the top two reasons why. Ironically, however, information management is also the most popular way to manage complexity, as cited by 84 percent of the executives in our research.

It comes down to identifying a wider variety of levers for managing overall business performance. A key differentiating role for the CFO is driving the connection between operational and financial performance. For example, a common manufacturing priority is managing the efficiency of plant utilization, capacity, and backlog. But plant throughput and backlog also have direct ties to revenue forecasts, and the CFO can integrate manufacturing analytics to drive the connection.

With expanded influence as the steward of information assets, CFOs can go beyond finance to identify opportunities for growth and cost savings across regions, functions, and the enterprise as a whole. For example, some CFOs are working with business units to more effectively deploy capital. Others are reducing the cost and delay of financing by freeing up working capital and deploying it more efficiently. Many other CFOs are leveraging business analytics to invest in the right growth areas and influence strategic decisions based on data such as:

  • Product profitability
  • Customer profitability
  • Emerging markets
  • Commodity analysis
  • Acquisition analysis

Prime position to enable change

Due to the historical focus on transaction cycles, finance and accounting departments have the best access to organizational data. And though finance has traditionally brokered an understanding of performance, the function also manages the transactional data that tracks performance throughout the organization. So who better than financial executives to organize the data, make it ready for mining and translate it to significant value? CFOs are surely in a prime position to transform their companies into a data-driven intelligent enterprise.

Note: The views and opinions are those of the authors and do not necessarily represent the views and opinion of KPMG LLP.

Don Mailliard, North America Leader for Financial Management for KPMG LLP, serves clients throughout the U.S, including Denver, and can be reached at dmailliard@kpmg.com or 214-840-2848. With more than 25 years of experience, he focuses his teams on finance transformation, shared services, business process outsourcing, planning, budgeting and forecasting and enabling technologies.

Dave Barnett, Financial Management Principal for KPMG LLP, serves clients in Denver and Chicago, and can be reached at dbarnett@kpmg.com or 312-665-3154.With more than twenty years of experience helping CFOs improve business performance and reduce operating expenses, he specializes in finance transformation program design and implementation.

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