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In NetSuite Brianyard’s quarterly surveys, the data has typically shown that CFOs are more conservative capital spenders than their peers, for example, but slightly more likely to increase budgets in other critical areas during good times. Art Wittmann tells us all about it.

The differences, while noticeable, have been manageable - until the pandemic. Since April, we’ve seen a significant and growing gulf in the fiscal priorities of finance leaders versus their peers as the two groups worry about their business from different perspectives.

In April, finance leaders wanted to aggressively slash spending except in payroll and marketing. Meanwhile, non-finance leaders were looking to cut mostly in capital projects, non-IT operations, marketing and sales. Both groups wanted to preserve IT spending, calling for only minor decreases.

Mapping that to business priorities, while all leaders wanted to cut in April, finance leaders prioritised talent and maintaining market presence, while other business leaders seemed more concerned about maintaining production and product-support capabilities. The difference in approach could be thought of as finance looking to ensure the company continues customer acquisition efforts, given that it’s reasonable to assume some existing clients will be lost. Meanwhile, non-finance execs were thinking more about maintaining service to those current customers. Other data points in our quarterly surveys back this up: Customer service ranks as a slightly higher concern for non-finance executives than for finance.

There’s logic behind finance leaders’ approach. Marketing is often the first in line when cutting needs to happen. If competitors go dark, it’s a great opportunity to steal market share as long as demand hasn’t completely tanked. We saw pockets of that opportunism in car sales and in certain restaurants that easily shifted to take out.

By June, non-finance executives reported creeping back toward flat budgets across the board, except for capital (still down) and IT spending, where most sought increases. Work-from-home mandates and e-commerce success likely drove that desire for more technology.

Finance leaders, still warily eyeing cash flow, were not quite as optimistic. Still, June saw less severe cuts, with technology spending flat. Finance leaders were starting to think about staffing reductions, likely in response to the end of PPP loans and the potential for long-term slowed demand.

These differences are what we’d call “fairly negotiable” between the two groups. Not so with the widening gulf that appeared in our September survey. CFOs are now ready to spend again, while other leaders are looking to keep outlays flat or reduced even further.

Our explanation: That hard upturn in CFO spending plans tracks the GDP turnaround reported by the US Commerce Department in late October. It seems clear that many CFOs have seen cash flow improvements in their own businesses and are looking to get back to healthy spending levels to keep the momentum going.

Rather than wonder why financial leaders are looking to get back spending as usual, it might be more telling to ask why other leaders aren’t. After all, with Commerce data showing an annualised 33% rebound in GDP, most businesses must be seeing bounces in their own performance numbers.

One possibility is that non-finance business leaders are less attuned to what internal KPIs show than their finance counterparts. Our data over time confirms that, outside of the finance department, KPIs aren’t a priority. In this survey, 66% of CFOs said producing better insights into key performance indicators was a Top 4 priority for the finance team. It was CFOs’ most frequent answer. Just 45% of other leaders agreed, making it their fourth most frequent choice.

Meanwhile, 55% of other leaders chose “identifying savings” as a top priority for finance, and 62% looked for finance to identify areas for strategic investment.

In previous surveys, we’ve seen that non-finance leaders in companies with under $50 million in revenue tend to rate user satisfaction as their most important business metric -- even before revenue and profit. It’s natural for finance leaders to stick to what the numbers say, but the numbers are often a short-term indicator that, if used as a basis to plan long term now, will probably lead to faulty assumptions, particularly if the overall economy continues its gyrations.

If one thinks of coronavirus as a step impact on the economy and business, one possible model is a unit step response as seen in many systems in science and engineering (diagram below). Financial curves don’t usually look like this because of remedies applied as time goes along or the removal of the original impact (tech bubble burst, SNL crisis, financial crisis). The introduction of a vaccine could affect this model but absent that the virus persists, so economies must constantly react. If economies open and close to varying degrees as we understand the virus better, we’ll likely introduce cycles of decreasingly severe expansion and contraction as we learn to manage the virus and its effects.

The trick for business leaders, and for the economy, in general, is to dampen these gyrations as quickly as possible and return to normal, predictable growth. On a macro level, this can be thought of as more targeted restrictions that governments are enacting now as compared to the hard shutdowns of March.

It’s fair to assume that the views on spending of CFOs and other leaders are both reasonable given the data they’re using. Or at least if one is less rational than the other, we can’t say which. At the business level, coming to a steady state more quickly will likely happen if both views are considered, understood and accounted for in planning and analysis exercises. In other words, finance and non-finance leaders need to better share their views and work toward planning models that include careful consideration of all expertise, viewpoints and data.

Take the time to ask leaders across your business how they think sales and spending and business development will go. Know what steps they think the company should take to get itself into sustained growth, and what factors they consider in coming to their conclusion. Scenario planning should be an inclusive exercise that includes the views of each of your core business leaders, not just the finance team. Agree on the terms of the model and consider what happens if the economy isn’t all good or all bad but oscillating toward a new normal over the next quarters and years.

These very questions are why more leaders, and in particular, CFOs, are turning to smarter technology solutions for help, specifically ERP platforms with embedded AI. CFOs find themselves with ever-expanding job responsibilities, all the while being asked to continue leading the extremely vital finance teams, but they have the same number of hours in a day as everyone else – so something has to give.

Therefore, automating manual processes will enable CFOs to regain precious hours, dedicate time to critical decision making and apply themselves to driving a competitive business.

They need to focus on big-picture decision-making based on strategic insights, rather than simple but time-consuming tasks. Technology enables this shift: AI or chatbot assistants built into ERP applications that handle less strategic work can be a game-changer, helping CFOs focus on driving results.

CFOs are ambitious by nature, they wouldn’t be where they are if they weren’t. However, they do need to keep the finance function up and running. If the majority of their hours are spent doing this, their ambition is not able to reach its full potential. Requisitions, purchase orders and vendor invoicing are not going anywhere. But using cloud-based ERP with embedded automation empowers CFOs with intelligent financial management capabilities that can handle the routine duties that are holding back potential productivity. This frees up the CFOs to focus on innovating and proving to the CEO exactly how valuable an advisor the CFO can be.

CFOs find themselves with ever-expanding job responsibilities, all the while being asked to continue leading the extremely vital finance teams, but they have the same number of hours in a day as everyone else – so something has to give.

The time is now to invest in this technology. CFOs are part of a unique group of people within a business who have access to data from every department, from sales to HR and marketing. In light of increasingly strict regulations and compliance laws, compiling data from all business units can be difficult as teams try to ensure they comply. CFOs are therefore in the unique position where they have complete oversight of the connected data and processes in an age where businesses are driven by data. This is a very important function for a business, and CFOs should be dedicating their energy to driving strategic business decisions from this position of insight, dedicating their productive hours and decision-making to the data they have at their disposal. At the end of the day, these insights translate into valuable guidance CFOs can give the CEO to help drive the business forward.

Becoming a strategic adviser to the CEO and the board by tapping into this ambition and reducing lost productivity can manifest itself in many different ways. For example, Football Club RCD Espanyol implemented a Cloud ERP platform to automate its financial processes. Joan Fitó, Financial Director, saw his finance team become infinitely more flexible by automating repetitive tasks. Productivity went up by more than 20%, while reporting time was reduced by 50% and there are over 25% fewer errors committed by his finance team. The team can now spend time focusing on analysing Club data in real-time to become more strategic in its efforts to become a globally-recognised name in the football world.

80% of an organisation’s transactions are processed in the back-office, the home of the financial team. So, as seen at Football Club RCD Espanyol, the opportunity is there for CFOs to lead the way to digitally transform and change operations for the better, with a clear path to make the most of being data and automation driven. This will make CFOs even more central to business operations, which is why they must be ready to make this jump now. It is an ideal time to showcase their ambition in combination with intelligent process automation to handle the energy-intensive tasks and take full advantage of the opportunities presented to drive the business forward. Taking the leap and implementing an ERP Cloud with a strong automated financial functionality is exactly the way to do this. It will ultimately enhance productivity and agility, allowing the CFO to be laser-focused on making the decisions that really matter – growing a successful business.

Chief Financial Officers (CFOs) have never had more on their plate. According to a recent McKinsey Company report, five functions other than finance now report to the CFO: risk, regulatory compliance, M&A, IT and digitalisation. Stretching themselves across all of these areas makes CFOs not just extremely busy, but puts a lot of responsibility on their plate, especially when they’re doing all this while facing economic uncertainty, strict regulations and scrutiny from investors. When you consider that these leaders, like the rest of us, only have a limited number of productive hours in a day, then how can we make sure they’re focusing on the most important parts of their jobs?

In our demanding business landscape, we need to understand that the CFO is required to be a true strategic leader, not just the head of the finance department.

For CFOs, thriving at work has, for a while now, meant more than being good with numbers. Especially in today’s terms, it means ‘getting ahead’ of any uncertainty and equipping themselves with the power of future-gazing, being able to look ahead and apply reliable insight to any future scenarios. Nearly half of businesses have changed their models to become more agile and the CFO is expected to be the driving force behind that.

For CFOs, thriving at work has, for a while now, meant more than being good with numbers.

The CFO has been given all of their additional responsibilities thanks to their unique position at the helm of the organisation. Our heads of finance are among an elite few with access to data pertaining to all parts of the business. This is especially the case as regulations and compliance laws become stricter, resulting in different business units, even within one company, putting access to their own individual data sets on lock-down. And, if you only have a few people allowed a true oversight of connected data and processes in an age where businesses are driven by data? You take full advantage of it.

Here’s where we need to empower the CFO to do all they can to make the best use of all business information; both by having a platform from which they can easily access and understand it, and secondly, making sure they have enough time in their day to make full use of it.

It’s under these conditions that we’re seeing CFOs start to turn to ERP solutions with embedded artificial intelligence. By both freeing up and maximising their time, they help make the best use of the productive hours they have available. After all, CFOs are still dedicating far too much of their time to tasks that just keep the finance function up and running. Requisitions, purchase orders and vendor invoicing need to happen. But, when cloud-based ERP with automation comes with the intelligent financial management capabilities to handle these routine duties, it not only frees CFOs up from doing them – but makes them more reliable as it eliminates human error. Given recent Accenture research showed finance staff spend an average of 60% and 70% of their time on tasks such as processing transactions, accounting, controlling, compliance and reporting, that’s a lot more time back in their day. This time can instead be spent on the more strategic parts of their job, finding insights that empower the valuable guidance they can give the CEO and help to drive the business forward.

Organisations need their leaders to be pushing themselves where it matters, focusing as much as possible on the bigger picture and going above and beyond in their mission to perfect their business strategy. Equipped with cloud-based ERP applications that add automation to the equation, CFOs can speed up manual tasks as well as eliminate time-consuming and costly upgrades from their routines. Imagine a future where the CFO is able to juggle all the jobs they have at hand, ensuring everything happens as effectively as possible, while also making sure the largest chunk of their time is dedicated to progressing their business. An attractive proposition, right?

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To hear about the future of the finance function and the need for bringing a data scientist into the finance environment, Finance Monthly speaks with Angela Mazza Teufer, Senior Vice President of ERPM at Oracle.

We are living in the age of data, one in which both traditional quantifiable information and unstructured data is being hoarded in huge amounts. It takes a specific set of skills to draw useful business insight out of this data, and that is why data scientists have become so crucial to the modern business.

The introduction of GDPR regulation earlier this year has forced companies to become more data literate, and has in some cases seen them appoint Chief Data Officers (CDOs) or build teams responsible for overseeing data governance.  This represents an important step towards a future where all businesses are able to make the most of their data, but it takes more than data management to turn data into value. This is where data scientists become crucial, and particularly in select business functions.

As a function that has always dealt in data and whose remit has expanded significantly in recent years, the finance team has a great deal to gain by bringing advanced data expertise into the fold.  Finance teams have traditionally been made up of people with a specific set of practical skills, including management accounting, auditing and forecasting.  While these remain important, businesses increasingly expect their finance department to play a more active role in driving organisational strategy, which requires a more diverse set of abilities. Data science is the most important of these.

What data science brings to the table

One of the biggest challenges faced by businesses is how to make sense of the enormous volume of data they collect, from customers, internally, and increasingly from third parties. Finance teams could easily spend all of their time just gathering and analysing data on business assets and performance, but the challenge today is to distil this information into something meaningful, especially as even financial reports are increasingly filled with ‘intangible’ assets that are not so clearly defined as revenue and profit, such as customer reach.

Having a data scientist embedded into the finance function will provide the specialist understanding and valuable resource to combine information in all forms, identify patterns that might otherwise have gone unnoticed, and most importantly draw out actions for the CFO or finance director to take to the board.

This also frees up other members of the team to focus on their areas of expertise rather than expecting them to pick up a whole new set of skills and take on a role they never signed up for. No matter the department, trying to ‘upskill’ an employee in data science underplays the importance of the role and makes light of the years of training and experience that specialist data scientists undertake.

Often, some of the most valuable information companies collect today starts life as an unstructured, chaotic set of data points. It ranges from concrete demographic data on their customers to news events and sometimes even weather patterns. The task of combining all of these streams of information and making sense of them requires the full-time attention of a dedicated specialist. It is certainly not something that core finance employees can accommodate on top of their existing responsibilities, nor can it be effectively undertaken without the appropriate training.

In short, it is much more effective to bring a data scientist into the finance environment and educate them on its specific needs, data types and ways of working, than it would be to pile complex data science responsibilities onto existing team members.

The future of the finance function

The changes to the role of the CFO and the growing demand on the finance function to be more forward looking and predictive have been well documented, but many organisations still find themselves in a period of transition. They understand what’s expected from them but are still setting up their teams and processes to deliver on this expanded brief.

It is enough of a challenge to forecast accurately in periods of uncertainty, without having to collect, analyse and process data from beyond the balance sheet as well, but it can be overcome with expert support.  By bringing the right mix of skills into the finance team, companies can develop the skills they need quickly and start reaping the benefits today.

Oracle and the MIT Technology Review recently released a new study that highlights the importance of collaboration between finance and human resources (HR) teams with a unified cloud. The study, Finance and HR: The Cloud’s New Power Partnership, outlines how a holistic view into finance and HR information, delivered via cloud technology, empowers organizations to better manage continuous change.

Based on a global survey of 700 C-level executives and finance, HR, and IT managers, the study found that a shared finance and HR cloud system is a critical component of successful cloud transformation initiatives. Among the benefits of integrating enterprise resource planning (ERP) and human capital management (HCM) systems is easier tracking and forecasting of employee costs for budgeting purposes. Additionally, integrated HCM and ERP cloud systems improve collaboration between departments, with 37 percent of respondents noting that they use the cloud to improve the way data is shared.

The report also reveals the human factors behind a successful cloud implementation, with employees’ ability to adapt to change standing out as critical. Among organizations that have fully deployed the cloud, almost half (46 percent) say they have seen their ability to reshape or resize the organization improve significantly – as do 47 percent of C-level respondents.

The productivity benefits have also been significant. Nearly one-third of respondents (31 percent) say they spend less time doing manual work within their department as a result of moving to the cloud and that the automation of processes has freed up time to work toward larger strategic priorities.

“As finance and HR increasingly lead strategic organizational transformation, ROI comes not only with financial savings for the organization, but also from the new insights and visibility into the business HR and finance gain with the cloud. People are at the heart of any company’s success and this is why we are seeing finance and HR executives lead cloud transformation initiatives,” said Dee Houchen, Senior Director of ERP Solutions at Oracle. “In addition, improved collaboration between departments enables organizations to manage the changes ahead and sets the blueprint for the rest of the organization’s cloud shift.”

The survey also reveals there is a blurring of lines between functions and individual roles as the cloud increasingly ties back office systems together:

Andy Campbell, HCM Strategy Director at Oracle added: “As organizations navigate technological changes, it’s critical for the C-suite to empower its employees to evolve their individual business acumen. Many businesses understand this and it’s encouraging to see 42 percent planning to provide their teams with management skills training to help them break out of their traditional back-office roles. The learnings from the move of finance and HR to the cloud will ultimately spread across the organization as, together, they conceptualize the shape of the next disruption.”

(Source: Oracle)

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