Top 5 CFO Priorities For 2017
Have the strategies that have served your finance organization and company become an anchor weight? Or are you confident that your business has the right financial people, processes, organizational structure, and technologies to compete into the future?
The answers to these questions are constantly morphing, as external factors change the competitive and regulatory landscape and varying degrees of internal complacency take hold.
For CFOs, increasingly seen as drivers and executors of global strategy, that means having to constantly re-evaluate the business—its strategic direction, the competitive landscape, potential new business models, and how operational structures, processes, and approaches need to change to support all of the above.
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And while some business and organizational gauntlets are common to companies of all sizes, CFOs who are helping to launch a startup, grow a midsize company, or lead a large enterprise face distinct challenges if their organization is to progress, even survive.
Where must CFOs focus their time and resources in 2017? We've narrowed the priority list to five, a mix of short-term, tactical considerations and long-term, strategic objectives.
1. Prepare for new accounting standards.
First, the tactical. CFOs must take the time to understand the new FASB and IASB revenue recognition guidance on the ASC 606 protocol.
"CFOs need to focus on understanding the new guidance and their own specific contracts to be able to determine their accounting policy and what the impact will be to their accounting processes and ERP systems," says Kimberly Ellison-Taylor, chairman of the American Institute of CPAs and executive director of Oracle's Health and Human Services Industry Solutions Public Sector unit.
Some industries are affected more than others by the new rules, which must be applied in annual reporting periods after December 15, 2017, for public organizations, and after December 15, 2018, for non-public organizations.
For insight into the new guidelines and how to prepare your organization to meet them, consult this recently posted six-part series on Oracle's Modern Finance Leader blog.
2. Avoid 'mind traps.'
At each stage of a business's growth, CFOs and other company leaders can fall victim to set ways of thinking.
For small and midsize businesses, one of the big dangers is thinking small, says Loren Mahon, vice president of finance systems in Oracle's CEO Office.
"Businesses can grow incredibly fast today, so it's more important than ever for small businesses to consider how they will operate globally," Mahon says. "Even in the early phases, CFOs should focus on how they set up to address issues around international regulations, jurisdictions, tax implications, and data privacy."
Meantime, a trap that has toppled many a larger company is the attitude that "if it ain't broke, don't fix it."
"Large companies can't let size and scale become an impediment to adaptability and flexibility," Mahon says. "Things may be working perfectly well today, but is the company able to change direction quickly to adjust to new competition or a new business strategy, take on new acquisitions, or create new business models? Don't be afraid to disassemble what's been built up over the years if it's no longer working in the most efficient and effective way—or if it doesn't enable the business's strategic direction.
3. Rethink roles and skill sets.
Finance departments need people, all the way up to the CFO, with advanced analytical and communications skills who can help other departments use data to make sound strategic decisions—especially in an environment of business model disruption. That forward-looking, collaborative analyst can no longer be the exception in finance departments.
In an August 2016 Oracle survey of finance leaders in Europe, the Middle East, and Africa, 52% of respondents said their role is now predominantly focused on advising the business on how it can achieve growth goals, and 56% said they're working with lines of business more closely than ever before.
The financial talent companies need depends in part on their stage of growth. Small and midsize businesses "need to go after skill sets that can scale with the business's expanding needs, and have strengths in collaboration and innovation," Mahon says. But midsize companies need people who can operate in a more structured way as the company standardizes and streamlines workflows with big growth in mind, she says.
"At the enterprise level, innovation is critical," Mahon says, "and that's typically not the talent you focused on to scale to this level. You need people who can think about processes in a more agile fashion and uptake new functionality quickly."
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4. Get serious about collaboration.
It's critical for financial leaders to collaborate with colleagues in other departments, especially around operational imperatives, Mahon says.
Beyond "traditional accounting or transactional environments that are finance-focused, CFOs need to think about how to form cross-functional teams that link sales, distribution, marketing, finance, customer service, and other critical areas together in very flexible and adaptable ways," she says.
For established companies, getting to that level of collaboration takes more than new skill sets and business processes. It often requires a cultural shift, aided by the latest collaboration tools, Mahon says.
5. Automate the low-level stuff.
Software tools that help finance departments monitor things like risk and regulatory compliance free people to do more of the higher-level analytical, business development, and other work outlined above.
But CFOs whose organizations are operating on legacy, sometimes disjointed on-premises ERP systems are challenged to shift their team members to more strategic tasks.
That's why more and more companies are moving their finance functions to cloud applications, whose features are updated and augmented multiple times a year, with minimal disruption to the business. And while CFOs take a range of migration paths to cloud-based ERP systems, depending on business needs, the best-in-class, standardized functionality of those modern systems can force a rethinking of outdated financial processes, controls, roles, and responsibilities, Mahon says.
"The cloud shift is not just about cloud," says Ed Anderson, a Gartner research vice president, in a press release. "As organizations pursue a new IT architecture and operating philosophy, they become prepared for new opportunities in digital business, including next-generation IT solutions such as the Internet of Things. Organizations embracing dynamic, cloud-based operating models position themselves better for cost optimization and increased competitiveness."
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