endobj Moreover, many of these companies are launching transformations in rapid succession: 73% announced two rounds of cost restructuring combined with reorganization or downsizing within two years. However, a significant mindset shift would be required to motivate the organization to pursue margin-improving initiatives: executives and employees were proud of the company’s historically strong performance, and benchmarks still indicated relatively low costs. endobj To enable the CFO to assume an expanded role, most companies will need to strengthen the finance function. In this analysis, we compared TSR growth with that of the S&P 500 or a relevant industry index.). In defining the master plan for a global industrial company’s transformation, the CFO collaborated with the CEO to prioritize 50 improvement topics. 0000583322 00000 n We covered the first four of … 0000583431 00000 n By leading the efforts to create transparency and apply a value lens, CFOs can help guide their companies to more substantial and enduring performance improvements. (See Exhibit 1.) Partnering for Performance. 0000010354 00000 n And they must ensure that investors understand how the transformation will boost the company’s TSR. The CFO needs to be a trusted adviser not only to the CEO, but also to the Board and to the rest of the management team. In other types of transformations (for example, moving from traditional automobile manufacturing to developing digitally-equipped and driverless vehicles) there may be new risks that emerge, such as cyberthreats and data privacy breaches. CFO 3.0: Digital transformation beyond financial management is a new guide that looks at the evolution of the chief financial officer. All qualified applicants will receive consideration for employment without regard to race, color, age, religion, sex, sexual orientation, gender identity / expression, national origin, protected veteran status, or any other characteristic protected under federal, state or local law, where applicable, and those with criminal histories will be considered in a manner consistent with applicable state and local laws. Companies must translate this knowledge into effective initiatives and allocate the appropriate resources. Implementing transformations and evaluating the return on investment has become increasingly complex, however. The CFO’s Vital Role in Corporate Transformation. CFOs may need to consider funding a transformation differently, for … To encourage the business lines’ adherence to the planned initiatives and resource allocation, the CFO enforces the consequences (such as loss of funding or staffing) that stakeholders agreed to in the plan and aligns stakeholders around the case for change as well as the transformation’s objectives. <]/Prev 1231922 In defining the master plan for a global industrial company’s transformation, the CFO collaborated with the CEO to prioritize 50 improvement topics. Defining the Master Plan. Partner & Director, Center for CFO Excellence, Managing Director & Senior Partner; Global Leader, Center for CFO Excellence. CFO Insights January 2020. startxref For example, the CFO can support a new CEO or other new members of the executive team in understanding the company’s cost structure, performance development, and ongoing improvement initiatives. 0000001361 00000 n 0000010829 00000 n One of the CFO’s primary roles is around financial disciplines and resource allocation. I think one roadblock to transformation is the business functions around strategy, report, plan, and analyse. Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. In the role of chief performance officer, the CFO ensures a successful transition from the definition of the master plan to the execution of it. The need for an activist CFO has become clear as companies increasingly consider transformations to be an essential part of their efforts to adapt to fast-changing markets and outperform their peers. © Boston Consulting Group 2020. The CFO adopts the forward-looking perspective taken by investors and proactively applies insights to reallocate resources and take corrective actions. CFO transformation Over the past twenty years a significant number of transformation programs have evolved that focus on systems, tools and processes in order to improve business performance. Blog by CFO Rethink on common Accounting, Finance and Transformation solutions for SMEs and important blind spots to look out for. At a financial services company, the CFO supported business leaders in conducting hands-on performance reviews in which they took a forward-looking perspective on the potential benefits of a transformation they were undertaking. 0000002138 00000 n 0000000015 00000 n Automation and digital transformation continue to progress, reducing costs, improving productivity and allowing employees to leverage critical The finance department’s to-do list is shifting, and so is the role of the CFO. 0000018981 00000 n These insights help executives identify the most important value drivers and determine whether a transformation is needed. A year of resolution: Qualcomm CFO talks 5G, COVID-19 and digital transformation Akash Palkhiwala, CFO of Qualcomm, says COVID-19 has accelerated the adoption of … 0000001189 00000 n The results also suggest that CFOs are already playing an active role in transformations. Furthermore, 44 percent of CFO The CFO also fostered stakeholder alignment—first by working closely with the executive team and top management and then by communicating the case for change and the improvement initiatives to the broader organization. BCG research has also found that value creation is highly correlated with margin expansion. For many companies, operational-improvement initiatives aimed at reducing the cost base are the most effective way to increase margins. 0000560473 00000 n To provide a fact base, the CFO conducted a systematic appraisal of baseline performance. In addition, it produced detailed information on how the company creates value, giving the CFO a foundation for constructively challenging business leaders, identifying performance gaps, and proposing ways to close them. Indeed, among recently launched transformations, only one in four has succeeded in creating shareholder value above the industry average. Today, we help clients with total transformation—inspiring complex change, enabling organizations to grow, building competitive advantage, and driving bottom-line impact. 408 44 新型コロナウイルスの感染拡大により、深刻な世界的リスクに対するレジリエンス（回復力）の必要性があらためて浮き彫りになりました, 過去10年間でビジネスにおける勝者の顔ぶれは大きく変わりました。これからの10年間で成功へのカギはさらに大きく変化していくと思われます。急速に進化する環境で成功するために、リーダーは自社にどのような準備を整えるべきでしょうか。2020年代に勝利をおさめるためには何が必要なのでしょうか。, アジャイルを効果的に取り入れる方法を見つけだした大企業は、アジャイルチームを組織に上手く融合させるために注意を払いながら、アジャイルの原則を適用しています。大規模なアジャイル変革を成功させる5つのカギを紹介します。. 0000573266 00000 n To support the plan’s development, the CFO assesses the quality of proposed initiatives and their contribution to value creation. To help teams manage performance, the CFO selectively adds milestone-oriented KPIs to the review structure, ensuring transparency into achievement of the initiatives. 0000600292 00000 n The assessment took into account the development of costs over time as well as the maturity of existing improvement initiatives and their potential impact. Finally, the fourth role CFOs can play in digital transformation is in transforming their own department. Finance Function Excellence, I believe the CFO-CIO relationship is a critical piece of a successful digital transformation journey. They also need to define metrics for tracking and evaluating the impact of these changes from the perspective of value creation. Ask any CEO and nine times out of ten, you will get this answer: I want a CFO that is able to contribute in a significant manner to the corporate strategy. While […] This includes exploring the critical connection points between finance and IT that can help their departments better meet business goals. The transparency enabled by a culture of truthfulness provides the basis for the forward-looking decisions required to design and execute a successful transformation. 0000590849 00000 n (TSR is the annual percentage return to owners, which comes from capital gains plus any dividends. Recognizing the challenge, the CFO framed a case for change to convince the organization that cost reduction was necessary to maintain the current rates of growth and profitability over the long term. Several situations present opportunities for CFOs to emphasize the importance of performance transparency and demonstrate how the finance function can play a forward-looking role in driving a transformation’s success. In addition, the CFO designs the governance for the transformation, aiming to provide insight into the development and maturity of projects and promote accountability. Only 24% of transforming companies experienced greater TSR growth than their industries over both the short term (one year) and the long term (five or more years). <. By challenging business line leaders about value creation opportunities, the CFO helps the company develop a value-oriented vision for its target operating model. By providing a better understanding of the status quo and improvement priorities, the results enabled the CFO to set clear top-down targets. Fortunately, today’s CFO is in a unique position to address such issues by supporting transformations on three essential fronts: CFOs’ new leadership role in corporate transformations, especially those that fo-cus on operational improvements, is a further advance in the development of their responsibilities from backward-looking reporting to forward-looking strategic support. During solution development and implementation, the CFO should assess the transformation through a value lens, especially if it is not meeting expectations for impact and project teams are not able to make course corrections to get it on track. If we break it down to simple terms: we have a strategy, we plan on how the strategy will be deployed, we report on an actual outcome, we analyse the outcome, and hopefully we further analyse to provide some indications of future outcomes. trailer In our survey, 60% of the finance executives said they will devote at least 20% of their finance budgets to digitally transforming the function. CFO 3.0: How digital transformation can improve financial reporting Sage’s CFO 3.0: Digital transformation beyond financial management research revealed that nine out of 10 senior financial decision-makers in South African businesses play a vital role in their organisation’s digital transformation. 0000584255 00000 n 0000598514 00000 n 0000003778 00000 n 0000572344 00000 n For example, three-quarters of the companies we studied are investing in digital technology, a field in which they are still building the operational and financial expertise required to develop a business case for investments. Cathy was CFO of Target from 2015 to October 2019 and was a key contributor to the company’s digital transformation program. Stephens, who has served as CFO since joining Barnes Group in January 2009, will continue in that role until December 31, 2020 to assist in a smooth transition. CFO 3.0: Beyond finance To fully understand this shift from CFO 1.0 to CFO 3.0, Sage commissioned a study, CFO 3.0 – Digital transformation beyond financial management, that helped us to identify the opportunities and They organized the topics into approximately ten work streams and then sequenced the work streams so that those enabling other improvements were undertaken first, followed by the highest-impact initiatives. 451 0 obj These critical factors can reverse the odds of success from 30% to 80%, the company pointed out. In this expanded role, CFOs promote value creation by serving as strategic advisors to business leaders, overseeing performance across the organization, and communicating a persuasive equity story to investors. 0000584697 00000 n endobj IT leaders’ top priority … By building on the existing review structure, the CFO ensures a strong connection between the transformation and ongoing business performance and avoids creating an additional layer of performance management. According to a BCG analysis, 52% of large public companies in Europe and North America announced transformations in 2016, a 42% increase compared with 2006. We advise those that do so to take what we call a “machine-first” approach. To optimize TSR, CFOs should play a role in all four phases of a transformation (see Exhibit 2): CFOs’ actions across these four phases can be distilled into a set of imperatives to transform for value. %PDF-1.5 These programs were initiated to bring about long term and persistent changes. 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