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The Finance Story speaks to senior leaders in the industry about the strategic role of the finance professional in the era of digital transformation.
Raghav Swaminathan is not your typical CFO, he looks beyond the numbers, he looks at the strategic nature of a business before committing to it.
“Today finance professionals cannot label themselves as just the “finance guys”. They need to build entrepreneurial mindsets and drive business outcomes. CEOs value business insight.
If you look at it, CFOs are able to connect the dots for the CEOs who have a deep understanding of customers, product impact, and income profiles,” says Raghav Swaminathan, CFO of Wipro Enterprises and Wipro Infrastructure Engineering.
If you spend an hour with Raghav you will know the importance of a CFO who thinks beyond governance, compliance, auditing, and reporting. He talks about business transformation that every industry is embarking upon, he believes you only invest in something if you understand the business impact.
CFOs are more strategic than ever
“There are different kinds of CFOs. One who would say no to everything and focus on minimizing risk to ensure future value.
Then there is the CFO who acts as only data and reporting support. Finally, there is the CFO who becomes a business partner to the CEO in framing and operationalizing strategy.
The latter looks at strategy and provides a holistic view to the CEO. CFOs who think about strategic planning and analysis are the ones who will become the sounding board for the CEOs,” says Neelesh Bothra, CFO of Spencer’s Retail.
The value of the CFO in this era is indeed operational as a lot of the functional work is being automated.
Meenakshi Dagar, CFO of Lenovo India says, “Any CFO who has the vision to enable growth, has dynamic leadership skills, and takes care of the interest of all the stakeholders, including the customers, the government, and the employees, is a good fit for the CEO position.”
According to TCS, CFOs need to provide a framework for:
- Developing next-generation business models: Many CFOs are playing crucial roles in such business model innovations. In a TCS survey of 689 senior finance officers in the U.S. and European companies, 44 percent said a key way for them to drive revenue growth is by getting extensively involved in new business models.
- Embedding finance in key business areas and business decisions: A key move to become more agile is placing finance professionals in functional areas: marketing, sales, pricing, and product development, among several others.
- Funding tech innovation: TCS research on digital transformation and ecosystems found that in most digitally successful companies this decade, CFOs have played a key role in establishing the budgets for these initiatives. CFOs should establish an enterprise budget for the company’s digital transformation.
“In my experience, this has been happening for quite some time. Probably, right from the time when I began my career in the early 90s.
If we can just give an example, in those days MNCs like HUL used to recruit a reasonably good number of Chartered Accountants as their trainees. And many of them have grown to become CEOs of many large companies as these MNCs had a good policy of training, across multiple offices including overseas offices.
This trend is healthy and will continue. I sincerely wish more finance professionals get to call the CEO function,” says M P Vijay Kumar, CFO of Sify Technologies.
CFO is an internal VC for business transformation
Balaji Mani, Finance Director and CFO of Amazon Pay says
“As a CFO you need to genuinely be seen as somebody who drives the business the right way and not just look for one end – profitability or controls or growth. So, not just in Unilever (my previous organization), and Amazon, I think in most organizations today, the CFOs are strategic partners. They also play a very critical role along with the CTO to define digital strategy.
As the CFO of Amazon Pay, I work closely with the CTO and the CEO to decide what really are the big bets in technology. And why do we prioritize?
Because, at the end of the day, technology and resources are limited. And, when you have limited resources, I think that is where strategy and prioritization come in.”
“A few years back a CFO’s role was very straightforward and revolved around three main tasks: the books and records of the company, financial reporting, and compliance. But, today the role has completely transformed. The CFO must have the vision to support a company’s digitization journey, support the company in cost-effectiveness, rather than just be a gatekeeper” says Jagdish Baheti, Head of finance and accounts at Delfingen India.
A tale of a startup CFO turned CEO
If you look at the startup Zebpay, it was the CFO turned CEO, Avinash Shekhar who rallied the company to stay afloat after the entire founding team left the company.
Strangely enough, Avinash Shekhar was hired by the founding team to be the CFO of the company and initially, he was not convinced about joining a crypto platform.
“However, once I joined the company I realized the power of Blockchain and Crypto, as a CFO I began to handle the reporting of the thousands of trades with several banks.
When the company changed management because of policy reasons, I was the only one who knew what was going on in the company and I began to set its strategic direction with the investor” says Avinash Shekhar, who is now the CEO of Zebpay.
According to Trasers, a consulting firm, in the digital age, the concept of Finance as a back-office function is no longer valid. The days of sales or marketing, negotiating with customers or partners, manufacturing or supply chain negotiating with suppliers, and then going to Finance for approvals, are going to be over.
“Finance now affects customer, partner, and supplier transactions, experience, and satisfaction in real-time.
For this to occur, the finance function has to digitize and integrate its interactions with various other functions.
For example, at Meta (formerly Facebook) a lot of hardware-related experiments are taking place and the technology team works closely with the financial team to understand the product and its commercial aspects.
I have to sit with several hardware-related ideas and come up with their impact on the company,” says Priya Agarwal, Finance Manager, Meta.
Impact in the world of Metaverse
According to Gartner CFOs must be personally driven. A report from Gartner says being personally effective is hard yet achievable for a CFO.
Only 20 percent of CFOs are personally effective, yet personally effective CFOs differentiate themselves through controllable behaviors.
• Personally effective CFOs close the natural gap between themselves and customers by spending more time with them and personally prioritizing pricing strategy, working capital, and the head of sales relationship.
• Personally effective CFOs go beyond relationship-building to challenge the CEO and board members’ assumptions about major decisions.
• Personally effective CFOs plug into the business by personally prioritizing business performance management and securing strong relationships with general managers (GMs) and their business unit CFOs.
• Personally effective CFOs allocate their personal time with the same rigor they ask their companies to allocate capital.
“CFOs should advise CEOs on what markets work and what does not. In the end, the function is going to become much more strategic as a lot of functions in finance are being automated and the future is all about operational roles of finance” says Raghav of Wipro Enterprises.
