The CFO will emerge as one of the C-suite’s most critical roles in reframing the future of the enterprise post pandemic, said EY recently when releasing the results of a survey of more than 800 global CFOs and senior finance executives.
According to the 2020 EY DNA of the CFO report created based on the survey, 86% of respondents say they will be required to protect their organisations today, while enabling future growth.
In additon, 84% agree that achieving a balance between short-term results and creating long-term value will become a priority, EY said.
This will also include traditional mandates, such as corporate reporting, along with new ones like overseeing digital transformation, the company added.
CFOs need to enhance relationships with peers
As they deliver on these priorities, CFOs will also need to enhance relationships with their fellow C-suite peers, according to EY.
The survey, however, found 52% of responding finance leaders reported limited or no collaboration with the chief human resources officer (CHRO) with 44% saying the same of their relationship with the chief marketing officer (CMO).
Senior finance leaders need to look beyond solving today's major issues or even what lies ahead in the near-term future, said Myles Corson, EY Global Strategy and Markets Leader for Financial Accounting Advisory Services.
“Instead CFOs need to imagine what finance could look like five years from now,” Corson noted. “The perception of finance as a risk-averse, cost-conscious team with a back-office mindset will be a thing of the past, with finance defined by a value-focused culture that’s aligned with enterprise purpose.”
CFOs as stewards of long-term value
In a shift mirroring market trends in 2020, CFOs recognize the importance of a purpose-driven strategy, with 82% of respondents saying that they are increasingly seen by key stakeholders as the stewards of long-term value, according to the 2020 EY DNA of the CFO.
In addition, 79% of respondents say that investors are increasingly requiring much more information on how their organization creates long-term value for all stakeholders, said EY.
At the same time, 81% believe there is significant value for their organization that is not measured or communicated using financial KPIs, the firm added.
“It’s imperative that finance professionals take the lead in integrating financial and nonfinancial performance through an enterprise-wide framework for value creation that embraces how crucial intangible assets – including talent, brand, innovation and culture – contribute to long-term value creation,” Myles advised.
Reframing the finance function
According to the 2020 EY DNA of the CFO, the performance of markets is fundamentally changing.
New virtual markets are emerging as platform-based giants connect buyers and sellers in a more seamless way, and new technologies converge to eliminate even more inefficiencies and frictions, EY pointed out.
A more fluid operating model that extends beyond the enterprise’s four walls will likely be a key factor in enabling finance to play a central role in the connected markets of the future, the company said.
Many finance leaders see this more open future for the function becoming reality over the next five years.
More than three-quarters (77%) of respondents believe that, by 2025, finance IT will be cloud-native rather than on-premise, and 74% believe the function will be part of a blockchain-based ecosystem, survey results indicate.
In this hyperconnected world, how organisations create value will shift from behind the walls of the company out into the network space, said Tony Klimas, EY Business Consulting Partner.
“CFOs should look to reframe finance for this new reality,” Klimas advised. “The finance function should become more open, working, as part of an extended ecosystem, in deeper collaboration both within the organisation and also externally.”