Why the Modern CFO Needs an Agile Finance Model

Today's leading CFOs don't simply dote on the bottom line; they help bring it into focus. In fact, CFOs' roles are quickly evolving from finance specialists to strategists, helping CEOs navigate changing business landscapes, spot new opportunities and drive growth.

These new demands on CFOs are driving finance teams to rethink their missions and operating models. New technology makes it possible for CFOs — and the finance teams who support them — to look beyond traditional financial scorecards to see their organizations in their entirety, gauge key drivers of growth that don't show up on balance sheets and ultimately influence their organizations' trajectories.

As a result, CFOs need more agile finance models, according to Agile Finance Revealed: The New Operating Model for Modern Finance, a recent study by the American Institute of CPAs and the Chartered Institute of Management Accountants (AICPA/CIMA).

This approach requires true business transformation. For the CFOs and finance teams committed to competing in a digital age, these efforts pay off. The AICPA/CIMA study reveals that 95 percent of agile finance leaders report revenue growth versus only 70 percent of other leaders. The chart below clearly indicates the trend in positive business growth when leaders adopt the new operating model.

Agile Finance Pays Off

Adopt a new finance model

The AICPA/CIMA study explored the impact and operating models of agile finance leaders. Overwhelmingly, these leaders reported the following best practices:

• Be proactive, not reactive: By using cloud technology, centralizing services and automating routine finance processes, CFOs and their teams can focus more of their energy on strategy. The AICPA study found that 67 percent of agile leaders' teams spend more than half of their time on forward-looking analysis versus 45 percent for other leaders.
• Tear down silos: Technology makes it easier than ever for finance teams to improve information flow and centralize data for easy access. In addition, agile finance leaders break down silos by integrating their teams — something that can also improve productivity and cost efficiency. An Accenture analysis suggests that by 2020, cross-functional integrated teams will deliver 80 percent of traditional finance services —cutting costs 40 percent and increasing productivity by two to three times in the process.
• Look beyond traditional KPIs: CFOs and finance teams now have tools to track, analyze and improve key performance indicators (KPIs) that, traditionally, have not been incorporated into financial models. While these intangible KPIs vary from company to company, they may include customer satisfaction, business processes, customer relationships, human capital and brand reputation. CFOs are using this data to make more accurate forecasts, minimize risk and identify new opportunities.
• Develop key skill sets: Not only are agile finance leaders more likely to rate the skills of their finance team overall as excellent, but they also place a premium on skills they need to more agile now and in the future. For example, 60 percent of agile finance leaders say their team's data visualization skills are excellent compared to 24 of other leaders. Sixty percent of agile finance leaders also rank their big data expertise as excellent, in contrast to 21 percent of their peers.
• Turn strategic vision into action: With the help of cloud technology, machine learning and real-time data, CFOs will have the insight they need not only to understand key trends, but to take advantage of them quickly. Consider that 48 percent of agile finance leaders are rated "highly effective" at delivering forward-looking analysis that identifies new revenue growth opportunities, according to the AICPA/CIMA study, and 56 percent have successfully launched a new product or service.

Achieving this level of agility requires a new operating model for finance, and the right digital capabilities. As the AICPA/CIMA study reveals, leaders who adopt and prioritize these new best practices will increase their influence over their organizations — and provide greater value.