In the darkest days of the last decade’s economic meltdowns – both in 2001 and 2008 – companies that survived relied heavily on their CFOs to keep their heads above water. CFOs counted the beans, so to speak, keeping expenses down and minimizing overly daring growth initiatives.
Today, with most market dangers in the past, companies have realized that financial teams can do more than simply contain costs. Much like a CMO or a CEO, CFOs can become the drivers of growth. The view of the C-suite is changing to envision CFOs as strategists. Forward-thinking executives acknowledge this shift in
The growing influence of the CFO is evident in the functions they oversee. According to a recent joint study by Gartner and the Financial Executives Research Foundation, 39% of the financial executives said that their IT organizations report to the finance chief, a percentage that appears to be growing. In addition, survey respondents reported that the influence of CFOs over IT investments has increased by more than 40% in the past two years.
CFOs are getting their heads around this new role, and executives are seeing the logic of giving greater power to finance: 41% of finance executives believe their companies will need to extract much greater value from their financial data over the next year. This challenge will push both the CIO and CFO to work together to invest in the
It is important to touch on why this new C-suite dynamic with the CFO at the center is just now emerging. During the downturn, finance data was typically stale. It was days or weeks old, which did not allow finance executives to react to what was happening in real time. Also, stale data stymied forecasting. There is little point to deciding the future direction of the business if you are basing that decision on what took place a month ago. Finally, the sources of data flowing into the enterprise only gave part of the picture. Without data from both internal and external sources, it was impossible for finance teams to get a full view of the business landscape. Social media is a great example. It is from outside the firewall, is a valuable resource of market and customer sentiment, and is useless if not acted on immediately.
This brings me to perhaps the biggest challenge facing CFOs and enterprises during the slow-growth, stay-afloat days: the inability to invest in new technology for ingesting and analyzing the increasing flow of data made available in the emerging big-data era. The amount and types of data were changing, but the tools used to ingest and analyze the data were out of reach. This dynamic resulted in IT silos and finance departments that were able to add little value to one another.
Now that the economic picture is brighter, and technology has become more sophisticated, technology investments have served to break down the IT and finance silos. The result is a sun-setting of the systems that relegate data to separate silos and the welcoming of those that empower CIOs and CFOs to partner with other C-suite members to drive growth.
CFOs have always been uniquely positioned to coordinate business growth efforts with the rest of the executive team, even though in the past they have been relegated to financial decision-making. As they use technology to do a better job of deriving insights from data, CFOs can lead businesses into aggressive growth mode. The future of the CFO position is bright.
Christian Gheorghe is the founder and CEO of Tidemark.