Reinventing the CFO

Chief financial officers (CFOs) are under greater pressure than ever before. While they aspire to be business partners, their departments have shrunk, their people are stretched to breaking point and they continue to struggle with the basic accounting tasks.

CFOs that wish to add greater value to the business need to find a suitable means to limit low value tasks.

Explains Jeremy Hope, research director at Beyond Budgeting Round Table (BBRT): "Over two-thirds of financial professionals` time is spent on transaction processing and month-end routines. There are simply too many journals, too many spreadsheets, too many errors and too many disconnected systems. Budgeting takes too long, is too expensive and adds too little value. In addition, there are too many irrelevant measures and reports, information flow is slow and forecasting and risk management are not core competencies. The result of all these failings is increasing levels of detail and complexity."

Says David McWilliam, MD of Cognos SA: "Business priorities need to be on changing internal processes and technologies so they`re repeatable and effective, freeing CFOs and the office of finance up to add greater value to the business. However, meeting this challenge is difficult for organisations using manual, inadequate or multiple consolidation systems for their financials as they are unable to structure, control and automate the process for internal and external reporting, and cannot gain a single, accurate view of financial results."

"CFOs can make a real difference to the success of their organisations," notes Hope. "But to do so they need to build a credible finance team that will be seen by managers as a trusted and valued business partner. Their accounting expertise is taken for granted, but continuous involvement -- not just checking or validating decisions that have effectively been made - is essential. As a business partner the finance team needs to be involved in many more tasks, such as strategic planning, forecasting, resource management, project management, process improvement, decision support, operational effectiveness and risk management."

To alleviate the pressure, the office of finance must create more time and build capability. "The first task of the CFO is to liberate both finance and business managers from the huge amounts of detail and the proliferation of complex systems that increase their workload and deny them time for reflection and analysis," says Hope. "Creating space and time for higher value work is the crucial step that turns the transformation rhetoric into practical reality."

The CFO can build capability and capacity by empowering people lower down in the organisation to make the right decisions and act on them, he adds. This will filter out a lot of data which otherwise ends up on the CFO`s desk. In addition, Hope suggests the CFO simplify the budgeting process, the general ledger and reporting systems, reduce the number of measures and spreadsheets, derive more value from IT and remove the constraints of transaction processing through outsourcing.

External pressures include compliance with new regulations and legislation such as Sarbanes-Oxley and international accounting practices. "Reliable financial data is the backbone of compliance, and a robust consolidation system provides the foundation for accountability," says McWilliam. "It is the launch point for delivering greater transparency and management of company performance.

"The primary priority must be to focus on improving the core systems that directly support financial reporting and accuracy," McWilliam notes. "Transactional systems, spreadsheets and first-generation financial systems are not fulfilling new regulatory requirements. To produce appropriate financial statements, a single aggregated view across all transactional systems is required."

Cognos 8 Controller, the latest financial consolidation software from Cognos, offers pre-defined functionality that helps companies simplify consolidation, compliance reporting and management reporting processes. It offers even greater advantage through its integrated enterprise planning, business intelligence, scorecarding and performance management functionality.

Advantages of Cognos 8 Controller include consolidation of multiple, diverse ledgers with thousands of operating units and accounts into a single, common chart-of-accounts structure and secure a single, accurate view of key corporate information; rapid creation of reports to facilitate compliance reporting and evaluate financial results across multiple countries, currencies, and legal entities, each with their own accounting policies intact; reduction of consolidation, close, and reporting cycles by days or weeks; and support of better planning and forecasting, providing a firm foundation for operational and strategic decisions.

"With more time available and high quality people, the finance team can make a huge impact," reiterates Hope. "Knowing where value is created and destroyed would be a good start. Helping to find key value drivers; knowing how to measure elements of intellectual capital; knowing which products and customers are profitable; analysing the full costs of processes before coming to an outsourcing decision - these are all crucial questions that finance can provide answers for."