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The older generation of CFOs are finding their role is being disrupted

Till not very long ago, the CFO relied on a trusted team to analyse financial performance, sales figures and employee productivity. Now with the advent of big data analytics, CFOs depend on analysing tonnes of data. While that's fine for the younger CFOs, it's quite an issue for the older generation.

Mahadevan Natarajan, Senior Director APAC Enterprise Performance Management, Oracle Mahadevan Natarajan, Senior Director APAC Enterprise Performance Management, Oracle

Till not very long ago, the CFO relied on a trusted team to analyse financial performance, sales figures and employee productivity. Now with the advent of big data analytics, CFOs depend on analysing tonnes of data. While that's fine for the younger CFOs, it's quite an issue for the older generation. Mahadevan Natarajan, Senior Director APAC Enterprise Performance Management, Oracle explains to Business Today's Anup Jayaram how the role of the CFO has changed.

What are the major challenges that CFOs face in India?

The key challenge for CFOs as they look to navigate economic uncertainty is visibility. It's harder than before for CFOs to reasonably predict what the future holds - businesses are evolving faster. CFOs need to better predict external market conditions while having complete visibility of internal business performance.  Linked to this is the CFO's role in helping react to digital disruption. They need to understand how digital technologies can enable more customer-centric business models while increasing employee productivity. CFOs need to ensure they have access to relevant data. Access to the right data is a competitive differentiator.

The big difference is that CFOs are no longer just book-keepers and accountants: the CEO and board rely on them to offer strategic inputs and drive innovation. A 2016 Oracle survey of finance leaders revealed 52 per cent of CFOs say their role now largely involves advising business on how it can achieve growth. CFOs are now challenged to break down traditional functional silos to have a complete, unified understanding of the whole company. Those who can do this effectively will be able to make better-informed decisions.

The older generation of CFOs are finding their role is being disrupted. Earlier, CFOs relied on a small, trusted team to analyse financial performance, sales figures and employee productivity. New digital capabilities mean 'machines' analyse data more efficiently than humans. The CFO is now tasked to derive actionable insights from vast volumes of data, rather than simply analyse reports. The older generation of CFOs are finding it difficult to purely rely on technology to provide insights. 

What are your observations on the role of CFOs in India? Are you starting to see CFOs functioning in, or moving towards the future role you've described?

The current generation of CFOs are struggling to adapt. Many do not yet fully trust the findings of big data analytics. As soon as they're willing to place their confidence in advanced analytics, they'll be ready to move forward with adaptive intelligence and automated, AI-enabled approaches to finding insights from data. This requires a shift in mindset.

CFOs between 40-45 years have a different view of adaptive intelligence compared to those between 50-55 years. The adoption of predictive and real-time intelligence is now imperative amongst all CFOs to retain a competitive advantage. If CFOs fail to accept this, they risk being left behind.

What qualities will set up the CFO of tomorrow for success?

The CFOs of tomorrow are millennials today - they are braver in approach, and focused on innovative ways of accelerating business success. They are willing to embrace the tide of digital disruption sweeping the profession and will use it to their advantage.

The CFO must do more with less. To get more value from the same level of resources, automation and adoption of technology will be necessary - for financial close, planning, budgeting, forecasting, tax reporting, allocations and management reporting. Today's routine finance tasks should be completely automated so that resources can be effectively used to deal with change.

What competitive advantages can businesses gain by adopting a digital-first, data driven approach?

A data-driven approach empowers CFOs giving them the data they need to predict future trends and make strategic decisions. Tomorrow's CFOs will gather this data from internal sources, third-party Data as a Service (DaaS) offerings and IoT devices. CFOs will be armed with deeper insights based on real-time data and predictive analysis that will help them identify and enter new markets rapidly, capture opportunities quicker than ever before, mitigate impending risk and drive service innovation.        

By using data and data-driven collaborative tools, the CFO of tomorrow will be able to break down traditional silos that stifled communication and understanding between business functions. Drawing on connected and collaborative data, CFOs will have a complete view of the business and external conditions that may impact the business. Weather sensors will alert them in advance that a storm may disrupt the supply chain; Fitbit data will let them know when the workforce is stressed and ambient temperature sensors will let them know when the factory is in danger due to overheating.

Innovation is one part of the CFO's role; ensuring financial control is still of paramount importance. Through Oracle's data-driven tools, CFOs will benefit from greater financial transparency, accountability and accuracy; helping the board mitigate risks and make better informed decisions.

Oracle understands that digital disruption and economic uncertainty present real challenges for CFOs and their businesses. But success cannot be achieved by playing it safe. The next-generation of CFOs will embrace data-led tools and processes that will help predict future trends, enable collaboration and innovation and ultimately, help their businesses outpace competitors.

Which areas of the CFO role will be most affected by technology by the end of this decade?

The cloud will enable greater collaboration across the enterprise. Already CFOs are benefitting from cloud solutions that provide a single source of truth for important data and enable secure collaboration. Over the next decade, CFOs will lead the way in introducing greater levels of collaboration. This will enable more flexible workforce models where teams from various freelance pools can work productively with contractors and full time employees in virtual teams. The CFO will also use cloud tools to ensure that everyone in the business has access to the data they need, when they need it. This will enable better decision making based on deep real-time insights.

Cloud will change how CFOs bring the business together. Cloud applications for ERP, EPM, SCM and more are easy for everyone to use and will support diverse members of the company in participating in tandem toward a common goal.  With more collaborative planning and reporting processes, the CFO and the business can more easily achieve business goals.

Cloud-based IoT applications give CFOs direct access to external data, helping them make decisions faster. A CFO might see from an IoT feed that a typhoon will impact their Asia-Pacific operations; enabling them to act on this information immediately. Previously, it could have taken several days for supply chain management to note the approaching weather event and inform the CFO - but thanks to cloud capabilities, the CFO can proactively access wider insights, more quickly, across the entirety of business operations.

The cloud will also change how CFOs analyse information. To make full use of the vast amounts of data available, CFOs will need to embrace adaptive intelligence applications which use machine learning to analyse the data and derive actionable insights.

Overall, the role of the CFO has, and will, become much more strategic as they're tasked with choosing the appropriate steps to take based on what the data reveals. Cloud technologies will also enable greater control. CFOs will benefit from greater financial transparency and be able to assess and mitigate risk as appropriate, helping the board to make better informed decisions.

Can you share some real life customer examples from India to throw more light on CFO challenges in India?

In India we have many customer cases and we hear from CFOs about their challenges. The challenge for Pearson, the world's largest education company running schools, offering integrated services for educational institutes, publishing in India was integrating all businesses as a single entity to lowering complexity of processes and offer a single window to stakeholders for reviewing the internal reports. The Oracle ERP helped the CFO simplify and consolidate budget forecasts and monitoring in a single spreadsheet. That allowed changes at the click of a button, reducing their total cost of ownership while not having to fret over upgrades & system capabilities.

HelpAge, a philanthropic body that serves the needs of the elderly wanted the right resources and supplies for them, while remaining accountable to donors and other stakeholders. Despite having a well-equipped call center and a number of field personnel at work, transferring details of supplies including the donations and patient records was resulting in delays in operations & impacting their productivity. Migration to ERP cloud applications not only helped them automate processes and reduce operational expenses, but enabled them to focus on their core function - caring for the elderly, rather than on the processes.