There was a time, in the not so distant past, when CFOs used historical data to forecast what would happen in the future. To tell the truth, many considered it best practice in a predictable environment. Eighteen months into the pandemic, this, and the world of finance, has changed irrevocably. These financial leaders have come under immense pressure, having to close books remotely, shore up supply chains, administer furlough schemes, and do near-constant scenario planning. In fact, it’s safe to say that the modern CFO is now required to be agile and always decision-ready.
In theory, the concept of agility in the context of the enterprise — a company’s ability to outperform the competition and drive growth in new, ambiguous, situations by learning and adapting — sounds like something every CFO should be focused on. After all, the CFO is in charge of the function that’s responsible for curating all the data that drives and defines a business. Yet, the reality is often far from this case.
Many CFOs find their ability to create and gain enterprise agility hampered by legacy technology, leaving them unable to turn data into insights for better, more timely decision-making. Moreover, many work in organisations that now need to fundamentally change how they approach agility in order to recover and grow. For the CFO, in this challenge lies an opportunity — one to become the lynchpin of agility.
CFOs can trigger transformation
According to a Workday survey, amongst C-Suite leaders, 37% of respondents revealed that they believe the finance function is most likely to influence digital growth in a business. This makes sense, as the CFO and finance team, with a vast array of performance and other data at its disposal, should have a finger on the pulse of every department in the enterprise. But in order to gain value from data, CFOs have to rethink their processes and ditch their legacy technology. This is because, legacy technology hampers data-sharing capability, whereas cloud-based financial software has the potential to promote greater transparency around budgeting, forecasting, as well as spotting anomalies and trends more rapidly to stay ahead of the competition.
The thing is, while cloud technology is vital to transformation, it alone cannot create true organisational agility. CFOs must work collaboratively with the rest of the C-Suite, from IT to Sales and HR, to build a plan that will guide a wider change within the business. Once a plan is in place, it must be communicated and then reinforced to the rest of the workforce by providing them access to real-time data and cloud-based models. Led by the CFO, this will give crucial insight into payroll, cash flow and planning scenarios. In turn getting the entire organisation on board, creating uniformity and ensuring teams are all working from the same source of truth to move the business forward.
Agile practices start with an agile mindset
Beyond getting every person in the organisation working from the same, single, source of truth the CFO has to bake agility into the heart of the organisation. Led by the CFO and finance team, business units across the enterprise should embrace qualities such as quick thinking, being perceptive and taking action. Encouraging this way of thinking and working is the key to any agile organisation’s success, and it must start with the finance team.
Take the multinational professional services firm Aon, for example. By March 2020, the pandemic had forced the company’s entire team to work from home. It meant Aon’s finance team had to do a fully remote close. Despite this being a new challenge, Aon had baked agility into its financial processes by investing in the right technology. With live data and transparency across its 120 regions, Aon’s finance team was able to close remotely on time, with one region even being able to close a day early.
Nurturing an agile culture
With the right technology, collaborative working and mindset in place, the CFO can start building a culture of agility. There are five key behaviours they should be focused on identified by Workday’s global organisational agility and digital growth survey:
- Be responsive. Companies need the ability to plan continuously and in real-time to overcome uncertainty. For CFOs, this means implementing real-time financial planning so they have the agility to manage ongoing challenges such as critical business cuts, acceleration of product innovation, and fluctuating resource needs. CFOs must ensure their finance team has the right digital skills to consistently analyse data and share financial insight with the rest of the business in real-time.
- Be adaptable. Organisations must create flexible organisational structures and processes that enable both the business and leadership to pivot quickly in the face of change. Opening discussions across departments, particularly HR and legal, can help the CFO adapt at speed and feel supported.
- Be skilled. 50% of organisations are already planning to upskill their workforce by 2024 to adapt to the changes in the working environment. The CFO has a central role in communicating the specific skills required for an agile finance team. If finance leaders are to embrace cloud-based technologies and real-time data analytics, they must ensure they recruit the right talent to maximise the full potential of these technologies. Furthermore, with 14% of CFOs believing their strategy is evolving based on continual learning, finance leaders must ensure their entire finance function has access to the resources and training needed to keep pace with the challenges it faces.
- Be empowered. CFOs must empower decision-making at every level. They must equip employees with the information and data they need to innovate and make independent yet informed decisions. This is why shared access to data analytics through cloud technology is such a core enabler to agility.
- Take control. CFOs need to be able to recognise failure and act on it. They should understand if something isn’t working, switch gears and try a different approach. Finding ways to measure performance and pivot to avoid risk are essential traits in keeping agile, in particular during the pandemic, and should be embedded into the organisation’s culture.
Agility is success
The role of CFO, and finance, is forever changed. For companies to gain agility, recover, and grow, post-pandemic, the CFOs must embrace the opportunity to lead the business in proactively adopting the right technology, build collaborative relationships, and adopt an agile mindset for the entire organisation. Those that succeed, will not just survive H2 but thrive in a post-pandemic era.
Workday is a leading provider of enterprise cloud applications for finance and human resources, helping customers adapt and thrive in a changing world. Workday applications for financial management, human resources, planning, spend management, and analytics have been adopted by thousands of organisations around the world and across industries—from medium-sized businesses to more than 45 percent of the Fortune 500. For more information about Workday, visit workday.com.