CFOs find their roles changing

From...

March 19, 2001
Web posted at: 12:24 p.m. EST (1724 GMT)

by Stephanie Sanborn

(IDG) -- Tamara MacDuff has seen the CFO job description change quite a bit during her time in the business world."The role of the CFO is not just as number cruncher any more," says MacDuff, CFO and executive vice president of finance and operations at Brio Technology, noting that 10 years ago, she "absolutely wouldn't have said the CFO was a visionary role."

Shifting business models, a faster-paced market, and better financial technology tools -- not to mention an investor community that demands near real-time information on a company's financial status -- are all forcing the CFO role to evolve, breaking out of the long-held image of a stodgy, bottom-line-obsessed "bean counter."

"There are far many more assets in your company than those that come up on the financial statement," MacDuff says. "Managing a company successfully involves more than just managing the stuff on the balance sheet."

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Katherine Jones, managing director of Enterprise Applications at Boston-based Aberdeen Group, notes that it is usually the CFO, thanks to input from high-tech tools, who really feels the pulse of the company.

"[A CFO] is like the keeper of the keys," explains Jones. "His or her finger is always on that pulse, and the reason that even works is because of the vast improvement in financial software and applications."

With the Internet, companies can get information faster and make decisions more quickly, but must be prepared to deal with the sudden appearance of new competitors or bad market news, says the CFO of a large manufacturing company who requested anonymity.

"You have to keep an eye on the industry at all times, for the good and the bad," he says. "In a smaller company, it might be easier for a CFO to move quickly and take on some of these more strategic responsibilities. A big company [is] a harder ship to turn, especially if we have to turn on a dime. But that doesn't mean I'm stuck in the traditional CFO role; I have to change to make sure our big company stays as current as the little guys."

Becoming a visionary

According to MacDuff, the need to get information out to the entire company quickly is giving executives a chance to "act like more of a team than separate people and functions." A CFO should be aware of the business' strategy as well as the company's financial and technological health, she says.

"The role of the CFO is becoming much more visionary," MacDuff explains. "It's an opportunity to do much more, recognizing that everybody is a resource. 'Counting beans' is [dealing with] historic information, and that's relevant to the extent that you can learn from it and do things better in the future. It's much more exciting to be looking forward."

MacDuff adds that she is now more involved with selling Santa Clara, Calif.-based Brio's business intelligence products, acting as an internal resource for sales teams to try out new pitches as well as a contact point for potential customers -- often executives -- looking for someone who understands and deals with similar business problems. CFOs are also more directly involved with investor communities and boards of directors than in the past, says Jones.

The growing need for CFOs to deal with the external world gives them a chance to bring the information they learn back into the company, says Kevin Yeaman, CFO of E.piphany, in San Mateo, Calif.

"To some degree, CFOs have obviously always had a role outside the organization, but what is making it more so is the rapid change to the business models, the business planning process, which requires us to get out of our offices and be out in the business, seeing where it is going in real time," he explains.

With better reporting and forecasting tools, CFOs can become stronger strategic members of the company because "they have much faster access to the information that is vital to the company, allowing them to be proactive rather than 'Let me shuttle out of my office two weeks after the quarter ends and tell you what we did,' " Jones adds.

Yeaman agrees, noting that a CFO holds the information that executives rely on to plan the company's future.

"You have to be focused on providing relevant information about where the organization is headed, what today's decisions are doing to affect tomorrow's results, and what decisions need to be taken to affect tomorrow's results," says Yeaman.

Condensing financial knowledge and using it to make quick decisions for the good of the company proved especially relevant during the recent "instant recession," says Jones. "People were just aghast at how a corporation could act so fast and lay off people. It's because they have damn good tools. They can tell up front that their forecasts are coming in lower than expected or energy costs are much higher."

The right financial reporting technology helps CFOs make sure that they're making the best changes for the best results: If there's a downturn, they might change to a truck-shipping company from their usual air shipping, or they might move a manufacturing location rather than automatically cutting travel expenses, says Jones. These tools can also be beneficial "if something goes wildly right, that still needs to be managed, and managed carefully," she adds.

Reaching out to the masses

With a wider audience -- everyone from Wall Street industry analysts to market newbies trading stocks online -- paying closer attention to companies' financial figures, a CFO continues to be a bridge between the world of hard numbers and the external community.

"I think CFOs will increasingly be viewed as not just the drivers of strategy and business models, but also as the conduits to the external world," says Yeaman. "Clearly, in a world where people are watching CNBC every five minutes and looking at tickers across their computer screen, the financial performance of the company has taken on more of a center-stage role externally."

MacDuff, for one, sees the role of a CFO continuing to change as technology gets better and businesses figure out where they want to play in an economy that must now deal with the Web on a daily basis.

"What you really want to do, at least from my personal view, is add value [to your company] and be able to make a difference," MacDuff says. "I can make far more of a difference by going out and explaining to people how they can use our technology and [thereby] make their jobs easier. That makes my job so much more interesting than just processing financial statements," MacDuff concludes.

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