New Report Reveals Insights into CFO Decision-Making

Virgin Group Founder Richard Branson once famously said of decision-making, “I rely far more on gut instinct than researching huge amounts of statistics.” While few could argue against Branson’s business acumen, in today’s highly disruptive business world—where big data and analytics are making it more possible than ever for businesses to make decisions based on data—it does seem odd that instinct should still hold sway.

In finance, where real money is on the line, the findings of the recent, comprehensive survey “FSN Future of the Finance Function 2016” are perhaps surprising. The survey found that while 81 percent of senior finance professionals believe CFOs will be more influential in decision-making, a testament to the strategic role of finance, fully one-third of CFOs still make decisions based on gut feel.

“Around a third (of CFOs) rely on gut feel rather than hard data . . . .”—FSN CEO Gary Simon

The report provides expert insight from 762 senior global finance professionals across various industry sectors exploring the challenging market conditions facing finance, and how CFOs must evolve to become a more strategic partner able to meet the changing needs of the business.

Gary Simon, FSN’s chief executive officer and leader of the Modern Finance Forum, explains, “On the one hand, CFOs of the future expect to be more influential in decision-making, technology, and data governance; but on the other hand, around a third rely on gut feel rather than hard data, two-thirds admit they have not mastered how to manage and analyse the volume and variety of business data, and a similar number neglect innovation and process improvement. More than half of CFOs say they don’t spend enough time on business partnering.”

Time and Technology Barriers

Despite a clear understanding around the need for change, the survey confirms that for the most part, transformation remains a work in progress. Respondents were very clear and consistent on the reason why: The burden of transaction processing and audit and control tasks leaves little room for strategic partnership and the ability to influence decision-making.

Two-thirds of CFOs say they have too little time to spend on innovation and process improvement.

Technology is often the main source of blame. Because the technology running finance today was designed for simple transaction processing, vendors have bolted additional applications on to add functionality, often held together with the technical duct tape of middleware and integrations. These systems take huge resources to maintain, and painful memories of recent legacy software upgrading projects make the time and cost to replace them unthinkable—or at least a frightening prospect. For this reason, finance transformation efforts have stalled.

This leads to a dilemma: the right technology automates day-to-day finance tasks, freeing up time for more strategic projects, but being saddled with legacy technology means finding the time to innovate is a challenge. The survey found that while 75 percent of senior finance professionals believe CFOs will play a greater role in innovation, two-thirds say they have too little time to spend on innovation and process improvement.

Emerging Models Drive Transformation

However, there is hope for the future. Modern, cloud-based systems such as Workday are designed with transactions, control, analytics, and planning contained in one, single model. While taking advantage of these new models requires replacing legacy systems, new approaches dramatically reduce the time, cost, and risk of deployment. Once in place, these systems drive the operating efficiencies that provide the time necessary to get on with the important work of transformation.

60 percent of survey respondents said that automation directly impacted their ability to make faster decisions.

A recent internal study¹ at Workday found that finance teams that have moved to Workday have not only experienced a 35 percent increase in efficiency, but 40 percent have been able to spend more time on the analysis of financial data—a cornerstone of transformation.

And for those who embark on this path, the FSN survey offers a very optimistic view of the future of finance. In fact, close to 70 percent of those who have started to take advantage of these new solution models cited a reduction in the time spent on transaction processing. A similar number reported active involvement in strategy development, while 60 percent claimed automation directly impacted their ability to make faster decisions.

Readers of the full report can get valuable insight into new ways of thinking about the role of finance in today’s highly disruptive business landscape, and better prepare themselves for the future.

¹Internal Workday Customer Value Study, 2016