Finance leaders differ from the majority by making a concrete impact on their organization’s performance.
FEI Daily spoke with Neil Krefsky, Senior Director, Solution Marketing at SAP, on the ways CFOs can stay ahead of the pack.
FEI Daily: SAP recently released the results of a survey with Oxford Economics of 1,500 finance executives to evaluate how finance roles are evolving in the face of the digital economy. What were some of the standout statistics you saw?
Neil Krefsky: The number one statistic to me that stands out was the leader class that we defined were twice as likely to report an increase in their company’s market share in the last year. When finance is involved and being highly effective, beyond just the traditional, there is a direct correlation on performance and market share. That’s one of the biggest competitive performance indicators that I can imagine that are out there.
The other thing that I thought was interesting was in the traditional responsibilities, across core accounting and closing, across core GRC and across core financial planning and analysis the leaders said they were highly effective. There’s no surprise there. What did stand out to me is that everyone else did not rate themselves very effective in those areas. That is a very candid response. Nobody likes to say, “I’m not doing that well in my core responsibility.”
For example, the overall population of survey respondents basically rated themselves as highly effective only 33 percent of the time in FP&A. In GRC the whole population only rated themselves as highly effective 40 percent of the time. Even in the most mature area, just core accounting and closing, they only rated themselves highly effective 54 percent. The leaders were really the ones that were on top of their core functions, which really enables them to do some more ambitious things like driving strategy throughout the organization.
FEI Daily: The biggest obstacle to making their company more efficient was the difficulty of updating technology with disruption daily activities. How can that be improved?
Krefsky: There are a few aspects to it. Some is addressed with technology, and some is addressed with change management, and some is addressed with people. The ones that do it effectively address all three of those. From a technology standpoint, it has to be part of an evaluation, so not just what might be the best technology or the hottest thing out there, but what will accomplish what they’re trying to accomplish where there’s some flexibility and how to deploy it for them where it won’t be that disruptive. Leaders really make part of their evaluation criteria not just what a certain technology or solution can do, but also how they can get this live within their company. That’s the first thing. Ignoring that in an evaluation already sets you back.
Then there’s certainly a change management aspect that’s not anything new. There’s been good deployments and bad deployments for decades now. Companies put a plan in place and look at how effective they are in terms of allocating resources, how they’re going to go through a migration process, and if they have the executive support so that they know if they reallocate a resource here or there, there won’t be a negative point of view on that reallocation.
I think the newest trend from the people aspect is certainly training and bringing in a fresh level of talent. Having a familiarity with millennial-type technology and work styles can really help move the needle faster to get away from “the way we’ve always done things.” I think Excel is the perfect example of that. I’ve seen in a lot of companies where they have some what I call PhDs in Excel and have almost built a new software and done some amazing things in Excel. However, if that person leaves or gets promoted or moves to a new job, that expertise is gone and it’s not re-trainable.
FEI Daily: How can finance executives use this study to improve their own performance?
Krefsky: 11 percent of them, a very small population, was clearly leading the pack in terms of how their companies performed, and those 11 percent all had stated themselves to be highly effective in six areas: drive strategic growth initiatives, are well equipped to handle regulatory change, improve efficiency with automation, have strong influence beyond the finance function, are very effective at core finance processes, and collaborate regularly with other business units.
To help boost their own company’s performance, they can see what has been consistent amongst leaders what they’re doing very effectively from their own rankings. They can benchmark themselves to see, “Do I have a gap here in our company? Is this more of an ambition in our company? Are we lagging behind? Are we doing well in these things?” If there are some gaps, then they can put a plan in place within their own company how to best get there.
FEI Daily: How can executives find the pain points in the business and then prioritize them?
Krefsky: There’s a lot of information out there, there are a lot of technologies to adopt and there are a lot of areas that every finance organization can improve on. It’s not a one-size-fits-all for every company, every industry, every region. The leaders are very effective in identifying where the low hanging fruit is: Where are the areas that will have the biggest impact if we move forward with this? Where I think a lot of the others, they could be adopting technology for technology sake. It could be the latest buzzword whether it’s a cloud or machine learning or whatever. For some companies that could be the biggest area of impact. Where other companies, they may be ignoring certain things like, “Should I be addressing cyber security before I really go to a cloud strategy?”
What we’ve found is leaders were very good at identifying which areas of improvement would have the biggest impact, because there are opportunities everywhere with technology and efficiency at companies. It’s a matter of not adopting or doing something new for the sake of adopting something new. It’s really identifying the one that had the biggest impact and prioritize and take those on first.
FEI Daily: What is the connection between effective GRC processes and performance?
Krefsky: A few things. One, and this is something that may not be surprising to some, was the effective collaboration already between a GRC and risk and compliance team with the core finance team and CFOs. Many companies are already being very effective at that. Especially with more and more compliance, more and more of a global business landscape where regulations and how you do business effectively come into play, GRC and the CFO need to be tightly aligned. In fact, we found a high portion of them present to the board together. Certainly that makes a company more effective, and they grow globally. Their ability to navigate the regulatory and compliance aspect. GRC can’t do it without finance, and finance can’t do it without GRC.
The other thing is that in terms of confidence in a company, and not just a company’s ability to perform better but from the outside looking in, confidence in a company whether you would invest in a company, is their ability to address cyber security risks. We found that there may be, especially in certain regions, an underestimation of cyber security risk and data breaches over what the real impact could be. So leaders definitely have that much higher on their agenda versus some companies.•