No one starts a new year planning to do the same things as the prior year, so as we head into 2017, we asked our CFO members – the Asia-based finance leaders of some of the world’s largest companies – what they’re going to be doing differently.
We last met as a group in Singapore in mid-December to discuss our agendas for the new year, with a particular focus on how finance functions can remain relevant to their commercial organizations.
The days of easy money for Asia – if they ever existed – are most definitely gone as multinationals seek not just growth, but profitable growth, in the region. That demands a finance function that possesses a curiosity about both the business itself and the operating environment, and delivers insight and proactive advice in a timely manner.
Developing these kinds of ‘amphibious professionals’ – those at home both in the finance team and in the business – is going to require more cross-functional moves in the course of a career
So, what are our CFO members doing differently in 2017?
They’re developing great business partners
Great business partnering is dependent on the attitudes and skills of the finance team. Attitude-wise, CFOs recognize there’s a need for finance staff to want to engage more deeply with the broader business.
The business itself must also be receptive to the idea of truly partnering with finance professionals. As one of our CFO members notes, this working relationship must go beyond traditional models of the finance professional being a specialist advisor, or ‘internal consultant’, to the business.
“We’ve tried that in the past, and it didn’t deliver the results we expected,” he says. “Our experience on these kinds of cross-functional projects has been that it is only when you have shared accountabilities and shared incentives that you truly get the individuals working as a single team aligned around a common goal.”
Finance people who are curious about, and have empathy for, the kinds of problems the business faces are also in high demand. “It’s a different mindset,” says one of our members. “Business problems tend to be more messy and unstructured than some of the more narrowly technical problems in finance, so you will need people with general business nous.”
Developing these kinds of ‘amphibious professionals’ – those at home both in the finance team and in the business – is going to require more cross-functional moves in the course of a career. “We expect both to recruit more non-finance qualified professionals, and move more out into different areas of the business” says one CFO.
Another member notes that more cross-functional moves in and out of finance are being driven by the shrinking of the local finance function. “Frankly, people don’t have much of a career path if they only want to say within the local finance group,” she says. “They need to be prepared to go offshore, or into other functions.”
They’re building teams that add more organizational value
Perhaps no challenge for finance leaders is as fundamental as that of adding value to their organizations. Many CFOs believe this value-add is less about addressing the surface wants of the organization, such as routine transaction processing, and more about underlying needs.
In particular, finance professionals can greatly contribute to decision enablement for key executives. As one CFO puts it: “Finance people are often very good at stitching together the different sources of cost, customer and revenue information to create a compelling case for action.”
“They are also good at understanding trends and likely consequences … If you are deciding whether to start or stop a product or business, this is invaluable information.”
Another CFO says it’s in a superior understanding of commercial risk that finance professionals have great potential for adding value.
“A key part of our business is having some very large and complex supplier contracts, and there is a real need for people who can identify, quantify and mitigate the commercial risks implied in these contracts. That’s an area where I see us as adding great value in the future.”
It’s incumbent on CFOs in the Asian region to identify where their teams can add value to the global company, and bid for work that can be efficiently undertaken in the region
A third CFO notes that managing compliance, both from a legal and cost point of view, is also a key value-adding challenge.
“Most of the signs I see are that the problems of regulatory compliance are not going to go away, and, in fact, are only going to get more onerous. As well as making sure we have no legal exposures as a firm, we also need to ensure that compliance costs don’t get out of hand.”
They’re eliminating the inessential or inconsequential
Rather than seeing the expected shrinking of headcount in regional finance functions as something that is being ‘done to’ the Asia team by the global company, CFOs emphasize it is important to be pro-active in this inevitable organizational adjustment.
CFOs must “think global, act local”, or look at the finance function from a global company perspective. For example, they can identify the most efficient locations for performing particular finance tasks, and then undertake the required local initiatives to make the relocation of those activities happen.
At the same time, it’s incumbent on CFOs in the Asian region to identify where their teams can add value to the global company, and bid for work that can be efficiently undertaken in the region.
They’re making sense of Big Data
An avalanche of Big Data poses special challenges to finance, which has traditionally been seen as the custodian of that data.
“There are masses and masses of data on all sorts of areas of the business’ operations, and it is easy to lose focus, get diverted, and waste resources collecting and managing it,” says one CFO member. “We will need to have the business understanding to be able to identify, recognize and find the data that truly matters.”
Another challenge is designing adequate controls, and ensuring data quality.
Says a second CFO: “People are not going to come to us to get data – the tools make it easy for them to go to the data directly. At the same time, they might not understand some of the assumptions and limitations of the data, and therefore may overreach with their decisions. We need to help them understand those issues.”
About the Author
Simon Hayes is based in Singapore as Director of CEB's International CFO Forum, a peer network and briefing service for the chief financial officers of multinational subsidiaries. He can be contacted at [email protected].