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CFOs struggle to move past ‘transactional’ responsibilities

March 2, 2023

Dive Brief:

  • CFOs increasingly want a seat at the table when it comes to driving transformation at their businesses, but may struggle to move outside of the finance box, according to a study released Tuesday by software provider Microsoft.
  • While most finance leaders (79%) believe it’s crucial for them to take a greater stake when it comes to “empowering transformation” at their companies, other departments or teams may not share that view: 88% of CFOs said they “feel the challenge of being seen as a barrier to innovation by other parts of the organization,” the study of 500 full-time U.S. finance leaders found.
  • Most finance leaders (88%) also feel as though they are still primarily responsible for “transactional” tasks at their businesses, such as financial reports, rather than for “strategic functions” such as product or service innovations, according to the report.

Dive Insight:
Eighty-five percent also feel like it is important for their companies’ senior leadership to “formalize” the expanding role of the finance team to include more strategic functions, according to the study.

“Despite their reputation as risk-averse adversaries to creativity, the reality is different finance leaders believe that to meet future needs, it is a big priority for them to play a significant role in owning business model innovation and empowering transformation across the organization,” Georg Glantschnig, VP of Dynamics 365 Finance and service-centric ERP at Microsoft wrote in an email of CFOs’ perspectives in response to questions.

While more and more finance leaders are pointing to digital transformation as a top priority for them and their business, CFOs remain tasked with protecting their organizations’ funds and ensuring they are spending responsibly.

Many CFOs are currently overhauling their technology budgets as rising costs, labor pressures and other economic headwinds impact their bottom lines, leading some finance chiefs to cut back on technology spending as they switch their focus from growth to sustainability.

As they work to cut costs, acting as their businesses’ economic safeguard while also pushing forward transformation can be a difficult balance for finance leaders to hit, and many feel as though their organizations would rather they stay well within their usual lane.

The majority of CFOs report they are facing pressure from other departments or teams to do just that, according to the report, with most finance leaders also feeling as though they facing roadblocks when it comes to adding value beyond their day-to-day.

CFOs, however, are pushing back on the role of finance when it comes to transformation, with 86% noting it is important for other departments to “proactively” work with the finance team for their future innovation goals. Looking to new technologies as well as forging stronger relationships with other members of the C-suite can help CFOs as they look to drive both financial and transformative strategies, according to the report.

CFOs need to “work to create an environment where they are empowered to evolve their roles and bring their business stewardship, not just their financial stewardship, to the table,” Glantschnig wrote, noting CFOs can emerge as “unconventional heroes of business transformation” by embracing technology and “challenging long-held misconceptions” as well as working with other members of the C-suite, he said.

A relationship between the CFO and the Chief Information Officer, for example, is key when it comes to optimizing technology spending, Russ Porter, CFO of the Institute of Management Accountants told CFO Dive in a recent interview.

For that matter, strengthening their relationships with other C-suite leaders can also enable CFOs to make their companies’ financial position clearer to their peers, enabling the leadership team to make more informed strategic decisions.

The CFO is “always going to be rooted in the reality of the financial data,” Jim Lawson, co-leader of the global financial practice at Russell Reynolds told CFO Dive in a recent interview, and making sure to communicate and share their perspective with other executive leaders is key as leadership debate where and in what initiatives they should be investing.

“The CFO’s role is really to bring everyone back to the reality of the situation,” Lawson said.

[CFO Dive]

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