The current role of CFOs and how they can reliably drive growth

 

Focusing on the customer, identifying their needs, and solving problems for them has always been an important part of our LucaNet DNA. Accordingly, we have offered a product made by financial experts for financial experts right from the start.

We are constantly renewing our promise of customer focus as well as customer-centric action and reviewing our path for this purpose - also and especially right now. Because today's customers are probably not like tomorrow's - an important realisation for us, but also for our customers and partners.

To understand our customers and their current challenges, we have invited two interlocutors to LucaNet-Partner Day 2021, who should know the answer: Rene Griemens, Chief Financial Officer, Volocopter GmbH and Sebastian Hartmann, Chief Technology Strategist, KPMG. Both of them discussed the role of the modern CFO (Chief Financial Officer) with us and clarified, among others, the following questions:

  • What should quality CFOs bring to the table?
  • How did their role change over the last 15-20 years?
  • What changes can be expected in the future?
  • What does this mean for consulting firms or PSF (Professional Services Firms) who work with CFOs?
  • And what role do technology and software-as-a-service (SaaS) play in this context?

What is the key to success for modern CFOs?

Right at the beginning of the keynote, we asked Rene Griemens from Volocopter about the success factors for CFOs. He summarised this as follows, also taking his personal experience into account:

1. CFOs are allowed to make mistakes. But they have to learn from them

Mistakes happen and that's okay. The management of the finance departments does not aim to avoid errors and wrong decisions as a matter of principle. But they cannot make the same mistake twice.

2. CFOs are experts but rally them around themselves

The current role of CFOs is not to be experts. However, they must surround themselves with professionals - the very best ones. Their team, controllers or even accountants do the expert job for them.

3. Modern CFOs rely on the right technology at an early stage

Instead of relying on low-cost accounting tools, CFOs in small and growing companies should move quickly to the right ERP technologies, enabling automation in the payment system or consolidation system, for example. If, in contrast, they save in the wrong place at an early stage, a changeover at a later point in time can be significantly more cost-intensive and painful for their company.

"The leadership dimension of the CFO role means being a strategic partner to the CEO, not just a financial partner." Rene Griemens, Chief Financial Officer, Volocopter GmbH

How did the role of CFOs change over the past few years?

The success factors of financial management have thus been summarised and put on the table. But how have the tasks of CFOs changed in comparison to the past? And why?

The insight from the conversation: Numerous innovations in finance and digitisation have contributed to the new role of CFOs in recent years. One of the main points is that they now are strategic partners to the CEO, not just financial partners.

For CFOs, this also means that they must not hinder growth, but rather support it - by finding new business opportunities and creative ways to reach goals. "How and with which investors can innovations be financed, and goals achieved?" is thus one of the central questions in financial management.

Challenges of CFOs

Driving and enabling innovation is one point. And in their new role, CFOs also constantly bridge the gap between the financial and the business or commercial side. As mentioned above, this also means that ERP systems are necessary: These support operations, must not be too complex or hinder the business, and help the company build technologies that are scalable.

The constant cycle of digital business also means that more and more technologies are required - just like in every other area, including the finance department because automated processes and agile budget planning are an absolute must.

But the main challenge for CFOs concerning all this progress and change is to keep up, stay agile, not to stand still. And also rely on the right tools to make it happen.

In this context, Sebastian Hartmann (KPMG) told us that many companies struggle to allocate funds for innovation or to deal with the innovation budget. A fact that, according to Hartmann, proves how great the importance of CFOs is, especially in growing companies - even when it comes to digital needs: The financial management releases the necessary blocks of funds and, in close coordination with the other executives, looks at where the existing can be used and the new can be conquered.

Accordingly, technology that enables innovation must by no means be viewed as a cost factor, but rather as an investment that creates added value and makes visions come true.

"Technology today is usually not simply a cost factor, but creates added value, competitive advantages and drives sales. These interrelationships need to be kept in mind - and displayed systematically." Sebastian Hartmann, Chief Technology Strategist, KPMG

How consulting firms are dealing with the new role of CFOs

The changing role of CFOs also has an impact on consulting firms like KPMG and their offerings. According to Hartmann, many customers are significantly better informed and have access to methods, technologies and knowledge. They also have a more accurate idea of what they need. And how.

For the consultants' own business models that means: Hour-based billing models will be replaced by a stronger focus on results or performance - i.e., in addition to "managed services," we will increasingly see "knowledge-as-a-service," "software-as-a-service" (SaaS) or even platform-driven models on the market. And for this a new way of pricing is needed.

At the same time, however, consultants are also taking new risks: They are selling a concrete result, for which they need to have precise control over all processes and work more efficiently. Technology and smart solutions are inevitably part of this mix - not as a cost, but as a positive component - namely to achieve goals.

With the right partner to the ideal software

The technology revolution is in full swing. It has been for many years and is moving fast. The range of technology offered is increasing, as is the number of technology providers as well as the number of consultants and service providers. Finding the right partners and the ideal software to move forward with confidence quickly becomes a challenge. Directly for companies but also for the consulting firms.

Rene Griemens and Sebastian Hartmann recommend the following procedure to their customers and colleagues in this context:

  1. Working with people who show responsibility, drive projects with enthusiasm for the field and take a holistic approach.
  2. Rely on intelligent partners who bring more expertise to the table than the CFOs and their team.
  3. Do not skimp on the consultants under any circumstances. Because the wrong ones do not add value, while the right ones make leaps possible that would be unthinkable without them.
  4. Leave the selection of business software to the external experts. They know the market best and create a requirements list for the software based on a short, concise user story.
  5. Move the process forward quickly. For this, the chief financial officers should know exactly what is desired and where the journey should go. However, they must never lose sight of the now and nip their company's growth in the bud by misplacing capacity.

What does software need to bring to the table to support CFOs in their new role?

Both Rene Griemens, CFO of Volocopter and Sebastian Hartmann from KPMG work with LucaNet. For secure numbers and agility of their own company or their customers.

Of course, at the end of the conversation, we were still keenly interested in the question of what, in their opinion, software must offer in order to be quickly adapted and implemented. Roughly summarised their answer was:

The ideal software must meet the needs at hand, be flexible and provide the opportunity to grow. The integration with the large ecosystems is quite essential for the adoption and development of software systems. This means: The software solutions have to contend with the very big B2B players like Microsoft.

In addition, according to our two interlocutors, it is important that the software can be implemented quickly and that everyone can work well with it:

  • The PSF as a consultant who is both a customer of the software vendor and the go-to-market partner and part of the customer's success team
  • And the customers themselves - at the latest when the consultant leaves the company.

More on "The Modern CFO - How the role of the CFO is changing"

Of course, a blog post cannot delve as deeply, and especially nowhere near as vividly, into this important topic as we were able to do in the high-level discussion. Therefore, we invite you: Get even more first-hand information on the demands of the modern CFO, the characteristics and challenges of the rapidly changing marketplace and how SaaS solutions help organisations grow with confidence.

Learn more below how our software opens the door to unparalleled financial performance management.

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