Changing role of the CFO

How has the role of the CFO (or equivalent senior financial professional) changed in your organisation/industry? From your perspective as a CEO, to what extent should CFOs be involved in strategic business planning and other business responsibilities?

Terry D O'Connor
CEO
Courts (S) Ltd

THIS question is debated from time to time in the business press and it always bemuses me as the CFO has the greatest vantage point in the organisation on the financial impact of both good and bad decisions ,in both the near and long term.

At Courts, our entire strategic planning process commences with insights and value analysis from our CFO and the inter-relationships between our prior years' strategic plans and financial outcomes. There would not be a single project of strategic importance to our business that she would not play an active role in from the outset and she is seen as an equal to any other senior executive in our organisation in the execution of strategy and second to none when it comes to strategy formulation.

Thankfully, in this era of insight-driven strategy and rightful governance focus the strategic role of the CFO is being increasingly recognised in forward looking enterprises.

Steve Watts
President
SAP Asia Pacific Japan

THE role of the CFO has changed considerably in recent years and the dynamic market environment has certainly brought to light the CFO's importance and prominence within the organisation.

CFOs today are moving beyond their traditional transactional management role towards a more strategic one that is focused on creating value and driving the growth and profitability of the business at the same time.

In a recent survey commissioned by SAP Asia-Pacific Japan, it was revealed that the top three challenges CFOs faced today are cost management, talent management and risk management. As CFOs continue to take on an increasingly strategic role within the organisation, technology becomes a key enabler to the delivery of a dynamic and robust financial system - with processes capable of withstanding change in business direction, without compromising regulatory compliance and control. Gaining genuine insight into business operations and processes enables CFOs to facilitate greater growth, by tapping into new markets to create new revenue streams.

Our CFO for SAP APJ, Colin Sampson, has taken it even further. In addition to his formal CFO role across APJ, Colin is also an external spokesman for our Shared Services facilities in Asia. He is also a vigorous and vocal champion of SAP's Executive Athlete programmes, which seek to ensure that all our employees live a healthy and balanced lifestyle.

Lim Tit Meng
Chief Executive
Science Centre Singapore

ON the first day that I took over as chief executive of the Science Centre, the director of finance was the first key appointment holder I discussed my planning strategy with. The second was the director of HR. I believe in using strategic budget allocation and talent management and development measures to shape a corporation and its culture.

A successful company has to maximise its financial and manpower assets, especially true for the Science Centre which is under certain constraints as a statutory board organisation accountable to tax payers, stakeholders and our parent ministry. A culture of discipline in financial management is what I requested my finance director to help instill in the company. I empowered her to come out with schemes to streamline workflow and hence eliminate unproductive processes, and to entrust heads of department with increased responsibility of managing the allocated budget.

We want our staff to develop an entrepreneurial spirit and not a civil servant mindset relying on government grants for operation.

While we are a non-profit organisation, we too can work towards total cost recovery or even a slight profit in order to grow, as long as profits are ploughed back to fulfilling the mission of the Science Centre.

Budget planning and allocation is now practised with clear objectives. Heads of departments work as if they each own a business unit and they have to ask themselves what strategic outcomes are expected for the projects they put up for budget request.

Stephen Harrison
Vice-President, APAC
Control Circle

ONCE a CFO was deemed a simple bean counter who produced reams of figures which only accountants could read and understand. CFOs have emerged as the go between on both sides of the corporate ladder, and a Bachelor of Business is at risk of coming in second to a CPA certificate as costs and financial models seem to be the flavour of the month in the aftermath of the great financial crisis.

Today the CFO has become the go-to person on every level and for every decision, with more CFOs being recognised as potential CEOs in a safe environment where stability and cost control are key factors. This can slow down a fast entrepreneurial business that requires first-to-market agility and a palate for risk, and where technology is a business differentiator.

In my experience as an entrepreneur, success and business longevity happen when the CEO, CTO and the CFO work towards a vision and use technology as an enabler of business differentiation and efficiency.

Dan McConaghy
President and Managing Director
FICO Asia-Pacific

I BELIEVE the biggest challenge for CFOs is figuring out how to marry their traditional financial understanding with their newfound strategic and operational skill set, so they can be leaders in encouraging innovation and smart risk. We have seen some CFOs embrace this over the past couple of years, working closely with not just the CEO, but the chief risk officer (CRO) as well.

With successful CFOs now working closely with CROs and the CEO, the alignment between the work of these three executives begets a new understanding: that risk is measurable and can be leveraged upon to grow profitably, if it is built into their fundamental business management. This differs from uncertainty, which is unmanageable.

CFOs need to take a step back and identify what the uncertainties are versus what the risks are.

While uncertainty is present at companies in every industry across the globe, the greater danger is ignoring this uncertainty which will often impede economic recovery and growth. What is needed to balance the global economic recovery and ensure continuity of the current growth in Asia-Pacific, is to reduce unmanageable uncertainty and turn it into manageable risk.

Every bit of uncertainty removed from the equation will see a substantial increase in the ability to make sound decisions.

Paul Endacott
Managing Director, Singapore
Ambition

SINCE Ambition was founded and listed in 1999, the influence of our finance leader has increased from accounting and public company compliance to a more significant business partner role as we have expanded globally. The position now exerts genuine influence around the boardroom table and the CFO provides a fresh and independent perspective, constructively challenging our business leaders over costs and productivity.

CFOs need be involved in strategic business planning, especially in listed organisations where any business decision must come back to earnings per share. Many organisations believe CFOs are capable enough to take on other areas such as IT or even HR in addition to the fiduciary responsibilities, making them far more a COO to the business. Furthermore, at Ambition we're seeing more evidence than ever before of commercially minded CFOs being considered for the top jobs and stepping up into CEO roles as boards of directors recognise the influence the CFO has played in the organisation's business strategy.

Pramod Ratwani
President & Executive Chairman
Consilium Software Inc

THE CFO's role in today's dynamic industry is not merely financial reporting or financial management as seen in the traditional business environment. Besides compliance and value creation, the CFO's involvement in formulating and implementing corporate strategies should be a high priority. The role is getting more complex as the bar continues to rise for the new-age CFO and hence there has to be a balance between the operating responsibilities and financial responsibilities.

The CFO is increasingly expected to be more knowledgeable about his industry, not only from the financial compliance perspective but also in terms of business development, competition and product strategies. This would help the CFO in handling strong cross-functional and cross-regional teams. The CFO's business acumen is now expected to be at par with that of the CEO.

Ravi Rajendran
Vice-President and General Manager Asean
Hitachi Data Systems

THE role of the CFO has changed drastically across all industries, especially since the financial crisis and more so in the IT industry itself because it is so dynamic and fast-changing.

The CFO is consistently under pressure to maintain and reduce overall capital expenditures (Capex) and operational expenses (Opex), and to do so, he must look beyond lowering acquisition costs and search for additional ongoing savings. The focus now is not just on lowered Capex spending, but more vitally, long-term Opex savings. IT organisations need to make business cases to gain management support for both strategic and tactical investments in their IT assets. Many IT engineers and architects limit their strategic planning to technology and operational perspectives, but by adding basic cash flow analysis and measuring return on investments (ROI), return on assets (ROA) and total cost of ownership (TCO), CFOs can help their management undertake initiatives based on more meaningful observations, thereby improving their overall strategy.

At Hitachi Data Systems, we have a methodology called 'Storage Economics' that helps our customers assess the true costs of their storage infrastructure. As new technologies become available, smart organisations will need to follow the principles of Storage Economics to evaluate them not just for their technical prowess but also for how well they can support business performance and particularly efforts to economise. Keeping in mind that we cannot improve what we cannot measure, CFOs and CEOs can take the first steps to define and measure costs through Storage Economics, which is the key to provide continuous improvement to that of their storage estate.

Teng Yeow Heng Michael
Managing Director
Corporate Turnaround Centre Pte Ltd

THE role of the CFO as the 'bean counter', 'financial analyst' or the 'policeman' of the company is passé. Today, many companies cannot afford to employ a CFO who is not actively participating in the business such as strategic business planning, investment analysis, identifying business opportunities for the company as well as helping the CEO in the transformation process and operations of the organisation. The CFO has access to financial numbers and other management information that are invaluable in aiding the CEO in making better decisions.

Also, a CFO will not be able to do a good job if he or she is not involved on the ground or get a good handle of the operations as well as the marketplace issues.

R Dhinakaran
Managing Director
Jay Gee Enterprises Pte Ltd

THE role and intent of a CFO in an organisation remains important over the years. Over the years we have come with many new ways of defining the role with more new terms being used.

Our expectation of the CFO as an important board or panel member has been to continue providing realistic directions by judiciously interpreting the past results, current contexts and then realistically projecting results for future options. The CFO often provides the much needed realism to collective optimism which may come about while discussing strategic matters at the highest level.

Strategic planning is not slave to any particular function whether it is marketing or finance. Strategic planning is the collective agreement by a company towards its long-term goal and every function has its imperatives embedded in this exercise for it to be equally involved.

By ignoring or sidelining any function in this key process of formulating strategies, the company risks its future far too much. The responsibility of providing balance of power to various complementing functions lies with the CEO.

A mature CEO will often overcome his emotional attachment to his own field of specialisation or specific members of top management and accord equal merit to all members of the top management.

The CEO must ensure that the strategic planning exercise takes on board all the functional heads including the CFO as well as other important functions like HR and marketing.

The CFO is undoubtedly beyond the role of an accountant, controller or finance manager and the company must encourage an active involvement from functional heads like the CFO in the collective determination of long term interests of the company.

Annie Yap
Managing Director
AYP Associates Pte Ltd

THE role of the CFO has evolved beyond conventional record-keeping and reporting of financial figures to the CEO to one who works hand in hand with the CEO to proactively facilitate strategic business planning and shoulder other pertinent business responsibilities such as business contingency planning. In my organisation, the CFO capitalises on his financial knowledge to derive financial forecasts that look beyond the short-term goals of increased sales revenue so as to ensure long-term profitability and sustainability of my business.

In addition, the CFO is able to leverage on his expertise to provide the CEO with prudent advice on how best to formulate business contingency plans, thereby playing an imperative role in ensuring that financial risks are kept to a minimum.

Having been in the HR industry for the last few decades, I have witnessed an evolution of expectations from my clients when it comes to filling a CFO position. Their prospect of a successful candidate will typically be one with qualities as mentioned above.

Karin Clarke
Regional Director - Singapore and Malaysia
Randstad Pte Ltd

THE role of the CFO has changed dramatically over the past few years - from a shared service function to one that helps navigate the new business world.

At Randstad, our CFO produces a comprehensive review of our quarterly business performance, which summarises our competitiveness, and then looks forward to say, 'Here are the growth industries in the next six months, here are the industries in decline.' Our finance model now also includes a dedicated financial advisory team that looks at how it can add value to our business - leaving the core finance function to shared services. Like the new CFO role in many organisations, this demonstrates the move from number crunching to contributing to a company's success through an effective strategic vision.

The downturn forced many CFOs to reinvent their role and restructure their finance teams - it was a time when people called for clear direction and stronger planning. This thinking has continued as companies look to grow. Together with the CEO, a CFO must interact directly with clients, senior leadership and frontline workers. They still need to produce accurate and timely figures, but it's what they do with them that really counts. With this, people on the frontline have the ammunition to make the best decisions and plans.

Lim Soon Hock
Managing Director
PLAN-B ICAG Pte Ltd

OVER the years, the role of the CFO has evolved from being perceived as a bean counter to being recognised as a key business partner in a management team. This is a positive development.

When I was in Compaq in the early 90s, I always subscribed to the philosophy that every member of my management team was first and foremost a business partner and subservient to that, a functional manager. 

The rationale is simple: if there is no business, none of us in our functional capacity will have much of a role to play. The CFO is one of two key functional heads with whom I work closely, to this day. The other is from human resources. While the CFO ensures that the company's financial lifeline is secure, the head of HR ensures that the right and congenial environment is created for all employees to give of their best.

In ensuring that the company's financial lifeline is secure, the CFO must participate in strategic business planning and the pursuit of major commercial undertakings as well as large business opportunities. Other than contributing his financial expertise, which should also include a large dose of risk management, the CFO should also give his views and opinions first and foremost, as a business manager.

Any CEO worth his salt will want to tap on the collective wisdom of his team, including the CFO, in today's fast changing and challenging times. While I do value the opinions and perspectives of other functions such as sales, marketing, engineering, legal, HR, etc, I also hold those of the CFO in high esteem.

CFOs are an important check and balance for companies, in their dual roles as a business manager and a financial professional. These roles are not mutually exclusive, and because it is so, in the absence of a head for corporate planning, I often deploy my CFOs to drive the strategic planning process and annual budgeting.

Andrea Ross
Managing Director (Singapore & Malaysia)
Robert Walters Singapore

THE role of a CFO has definitely changed globally over the past decade both internally at Robert Walters and within our extensive client network. Within senior financial roles that we have recruited for, we noticed a dramatic shift in the requirements of CFOs with increasing emphasis placed on support and value-adds that the candidate will be able to bring to the business. This includes qualities such as excellent communication and relationship building skills, as well as the ability to motivate staff and resolve issues.

With a growing importance placed on strategic relationships between businesses and their finance functions, the traditional role of a CFO becomes more complex. Finance professionals are now expected to be familiar with technological advances (as they now also need to work more closely with CIOs), commercial terms within the business and be able to give expert opinions on business-related issues. This means that traditional-type finance professionals could be in danger of being left behind, especially in larger MNCs which expect a great deal from their finance function.

Therefore, it is critical for finance professionals to constantly upskill themselves through training and networking as well as keeping abreast of market activities.

At Robert Walters we organise regular networking events including roundtables for CFOs within the financial services sector on transfer pricing, taxes and corporate governance. Such executive dialogue sessions are imperative to bringing people together and facilitating the sharing of industry trends, practices as well as ideas within a larger network.

Florence Ng
Managing Director
Straits Talent

OVER the last decade or so, the role of the CFO has evolved from one that is 'controlling and accounting' focused to one that is more business friendly and commercially focused. As the financial guardians of the business with a fiduciary duty of care to the shareholders, this is often a delicate balance. This is true across all industry segments, regardless of scale, size or complexity of the business.

In our organisation, in addition to the traditional role of financial accounting and reporting, we constantly engage our CFO in our management discussions in the following:

Strategic stewardship of the business, ranging from top level business planning to certain ground level operational matters:

Commercial affairs, such as the review of business contracts and other legal documents;

Business continuity planning, so as to address potential risk management areas;

Information technology and systems and ensuring their robustness;

Human resources development, including succession planning and the impact on business growth plans.

Clearly, CFOs of today are under pressure to be astute business partners, possessing a good blend of technical financial competence, professional ethics, strong commercial acumen, tact and diplomacy, as well as a good measure of common sense. Here's to all the CFOs out there, and their continuing professional evolution

Toby Koh
Group Managing Director
Ademco Security Group

IN Ademco, our CFO plays a very intrinsic role in strategic business planning. As a matter of fact, I insist that the CFO has a keen understanding of the daily operational matters faced by the various teams in Ademco be it, sales, technical, engineering or customer service.

Finance is a resource that must be carefully allocated to get maximum returns. What I mean by maximum returns is more than just shareholders' returns and this is something the CFO must understand. For example, we budget a teambuilding cum family vacation overseas which costs thousands of dollars. From a pure financial point of view, any CFO would find it hard to support such expense. However, in Ademco, the CFO along with the Leadership Team understands the qualitative benefits of such an investment.

The other very vital role of our CFO is the constant engagement of colleagues in being mindful of the best deployment of financial resources. The entire organisation must be aligned in financial discipline and objectives in order to achieve optimal growth.

Dhirendra Shantilal
Senior Vice-President Asia-Pacific
Kelly Services

THE evolution of the CFO's role is an inevitable part of the ever-changing business environment. As human capital specialists, Kelly embraces the notion of job evolution for two reasons. One, it means that there is progress. It shows that the job is moving with the times and is keeping up with business trends to remain competitive. 

Secondly, it shows willingness to change, an important paradigm to adopt, especially in this era of volatility.

The new CFO is not just a scorekeeper anymore; the designation now demands that it has a stake in strategic business decisions. It is after all a synergistic combination of accounting acumen and entrepreneurial strategy.

The melding of these elements will allow an organisation to formulate a clearer 'big picture' as well as a more accurately calculated long-term strategy. With both the CFO and CEO charting a business path on an enhanced collaborative front, what you will have is an organisation that is well-equipped to confront any challenge.

Dora Hoan
Group CEO
Best World International Ltd

INDEED the role of the chief financial officer in today's business organisations has been evolving over time depending on the industry and organisational set-up. In our case as a direct selling company, the dynamics may differ owing to our business model where results are largely driven by organic growth through network-building and market-sensing. Still, we draw a lot from the expertise of our group financial controller who is suitably experienced to provide guidance with good financial management to ensure that the company is safeguarded at all times and used appropriately and efficiently to secure positive business results.

As a globalising SME, we have many subsidiaries across geographic regions. This makes foreign exchange a very critical factor in our business viability and profitability. Our key finance person keeps a look-out for these fluctuations so that we can come up with coherent strategic decisions as and when circumstances demand. 

Although not directly involved in the overall strategic planning process, it is invaluable for our business to bring a financial expert's influence to bear on immediate and long-term implications of our opportunities and risks, for a good financial strategy.

Liu Chunlin
CEO
K&C Protective Technologies Pte Ltd

CHANGES in technology has resulted in a world where automation of accounting work, increased speed of information and decisions has become the norm. These changes create the environment where the CFO's role has to grow, taking note that the number crunching work can be delegated down the line. In our industry, where engineering capabilities of our staff are valued so that lives can be saved, the strategic development of the company rests solely on the CEO and CFO. It has been the case of our company and the situation for our industry that the CFO plays a crucial role in strategic planning, legal, deployment of resources and overall general management of the company.

Daniel Soh
Director
Amrop

INCREASINGLY, CEOs are looking for CFOs who can add value at the strategic business level, in addition, to building credibility in the financial numbers. The ability to link numbers to the business and vice-versa is critical. The role of financial planning and analysis is key, where CFOs partnered to drive better reporting quality and data analysis, tied in very much to the business and operations.

The CFOs should also establish the finance function to drive quality in management reporting and internal controls. There is also a need to develop and lead the finance team to be business partnering and commercially inclined. In partnering CEOs, CFOs have to anticipate what the CEOs need and are looking for, including all the perceived pitfalls and dangers to potential business transactions. In this respect, CFOs must be prepared to come up with alternative strategies to try and minimise the downside risks. The CFO role has to ensure the risk management side is addressed and the CEOs understand the entire implication of a business transaction.

On the whole, the CFO must demonstrate his/her adaptability in different operating environments as well as his/her resilience in driving activities to conclusion. CFOs must also possess a very strong commercial sense and constantly look at ways to help the business make better decisions. 

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