Strategy & Operations » CFOs look to embed agile processes

‘Agility – the ability to move quickly and easily’.

An important pre-requisite for business survival in response to the radical changes that have been thrust upon us over the past few months. A KPMG poll of 1,300 CEOs last year found that 67 percent agreed that ‘acting with agility is the new currency of business; if we’re too slow, we will be bankrupt’. It seems a safe bet that this percentage would be even higher today.

The key to business continuity, at a time where very little is certain, is surely flexibility and responsiveness. CFOs find themselves at the heart of their organisation’s ability to predict, understand and react dynamically to challenges and opportunities as they occur. In our July 2020 Digital Business Report, 42 percent of respondents said cash flow and survival will be their single biggest challenge in the next 12 months. As crisis management plans have been dusted down, adjusted and urgently implemented, finance leaders have needed to employ a range of skills beyond traditional financial expertise.

Most recently, many have been called upon to demonstrate a thorough understanding of their organisation’s culture, operations, supply chain, customer base – and the technology underpinning it all – in order to help protect the business. CFOs have been working ever more closely with operational colleagues, analysing detailed organisational metrics on a frequent basis. They have become more intimate with the customer base, alert to changing behaviours and potential problems that could affect income flow. Finance leaders are at the coalface of pandemic business viability, helping to conserve cash, maintain revenue, forecast liquidity, reduce costs and introduce relevant government assistance.

Stakeholders are increasingly looking to the CFO for business insight and guidance, backed up by accurate and timely data. According to the Economic Intelligence Unit, ‘the future finance professional is as much a strategist as an accountant’. Finance leaders have increasingly been translating unexpected and fast-changing figures into business implications, advising other board members on where to make savings and increase efficiencies – and highlighting where weakness and threats may lie. In doing so, they are enabling a more collaborative, informed c-suite, at a time when the business is reliant on this level of cohesion. The CFO and their finance team are business enablers – creating a leaner, stronger and more resilient company in the midst of the crisis.

CFOs are also increasingly acting as digital pioneers. They understand how vital technology is because they use it to provide, control and interpret the data that helps inform and redirect the business. Sitting at the sweet spot of financial and operational processes, armed with accurate information and the right infrastructure they can meld these data sets together to form one version of the truth. Triggers can then alert them to trends so that swift, effective and sometimes tough decisions can be made. Even before the challenges of the pandemic, our Annual Trends Survey revealed nearly half of senior decision makers believe the most important attribute for a business leader in the digital era is the ability to react with pace and make bold decisions. The kind of insightful analysis that leads to brave and decisive action taking can only take place when supported by real-time data.

Until recently, many businesses had not experienced a critical event that would alter their attitude and approach to IT investment. The pandemic has imposed huge changes to the way we work and tested the technologies that organisations had in place. We knew that digital technology could deliver intelligent business insight, remote working and increase workforce productivity, but the variation in adoption has been evident in the way different companies have fared. Early adopters will have found it easier to support mobility, flexibility and to implement necessary changes at speed. This ability to be agile in the face of adversity is key, and worryingly more than a quarter of respondents (28 percent) in our Digital Business Report did not think their leadership team was moving fast enough to keep up with changing technology requirements following the disruption from the pandemic.

Technology has enabled the necessary remote working that has allowed businesses to stay afloat and operational, while keeping employees safe. It also means that organisations can review their requirement for office space going forward, and potentially reduce substantial costs. Over half (52 percent) of respondents in our Digital Business Report said remote working had increased as a priority because of the pandemic. The huge success of team collaboration software has kept disparate teams connected, allowing finance teams to continue to communicate effectively. Where cloud-based financial management systems have been in place, they have enabled working from home to feel seamless, so that very little changed in the working day – except physical location.

It does mean, however, that CFOs have needed to dial up on their reporting, and monitor things more closely while staff are working away from the office environment. Communication has never been more important. Employees, often working remotely for the first time and worried about furlough, redundancy and business survival, have needed their leadership team to understand their pain points and provide regular updates. This more ‘human’ approach to business is emerging, as we all become more aware of the individuals that we are outside of the office. According to 51 percent of respondents in our Digital Business Report, employee physical and mental wellbeing has increased as a priority because of the pandemic.

It seems that business is going to be in a state of flux for some time, but what will remain sticky as we create our ‘next normal’? How do we take the things that have been positive and make them part of our go forward plans? Almost half (46 percent) of respondents in our Digital Business Report believe the current crisis will change working practices for the better. Will we see a healthier balance between remote and office working, improved communications and connectivity alongside increased business agility and innovation? Many organisations have used furlough as a safety net, giving them time to rethink and take stock. It has allowed some to devise new ways of trading and implement new initiatives that have perhaps been on the horizon but are now being brought forward at pace. Industries such as publishing, who have seen fundamental change coming for years, have used this time to up their digital game at speed. As Vinous Ali, associate director of policy at techUK comments, “Over the last few months we have seen digital transformations that would have taken years, or not happened at all, become a reality in a matter of weeks.”

Will this digital transformation be part of a permanent solution? Josh Hardie, deputy-director general of the CBI believes so: “Throughout this unprecedented crisis, digital technology has been a lifeline, helping to keep business operations going and protecting jobs. As firms slowly and securely get back to work, investment in technology will be critical as the UK builds back better and increases resilience against any other long-term disruptions.” As a CFO, and potential digital pioneer, it is important to determine the four or five key things that are vital to the business, and then look at the effectiveness of the technology currently in place. Examine data sources and their interdependencies to ensure there are no disconnects. Determine what is required to steer the business, and then select the technology that will help get you there fast.

 

Some technologies have come into their own during the unforeseen demands of 2020. The cloud has been pivotal, enabling the meteoric rise of software solutions that have given staff instant access to the tools and information they need anywhere, and at any time. It has also ensured employees are storing sensitive company information on a secure shared platform rather than their individual laptops. Over half of organisations (57 percent) in our Digital Business Report have a Cloud strategy in place, an increase of eight percent from last year. And 60 percent of respondents agree the workforce of the future will use remote working – with the cloud liberating employees so they can work from anywhere. Cloud-based tools are simplifying and improving workflows, creating efficiencies, helping to manage documents centrally and enabling real-time collaboration.

 

Business has changed, and there is no going back. Finance leaders will need to employ all their traditional skills but add important new ones as we learn and grow from the challenges of 2020. The agile CFO will embrace the emerging forms of communication, new attitudes to workforce wellbeing, mobile working and business innovation that is required to steer their organisations through these unchartered waters. We don’t know what the future holds, but we do know that if businesses are resilient and flexible they can mobilise in response to whatever challenges and opportunities come their way.

 

 

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