CFO insights audio transcript

Featured speakers: 
Jordan Bennett, Partner, Cloud Finance
Manisha Chen, Assurance Director
Gus Leite, Partner, Digital Enablement Leader

Sabrina Fitzgerald:
Welcome everyone. And thank you for joining us today for "CFO Insights: How the latest wave of change is creating new opportunities for the finance function". My name is Sabrina Fitzgerald, and I lead our PWC private practice.

Today, we're providing you with some insights on our CFO Survey. And our objective today is to provide you with information as you guide your own organization and how you continue and we continue to navigate the pandemic. To present these insights, we've brought together a panel of experts. Let's start with a quick round of introductions.

Manisha Chen:
Thanks, Sabrina. I'm Manisha Chen. I'm a director in our assurance practice based out of the Vaughan office. I spend my time doing audits, assurance work for a lot of private clients, but I'm also part of our national Future of Finance team. And in that capacity, also, working with private clients through finance transformation.

Jordan Bennett:
Hi everybody. Jordan Bennett, I'm a partner. And also out of the Vaughan office, in the Toronto area. I lead our Cloud Finance practice, which specializes in helping clients modernize their finance function and also help with outsource finance solutions for a variety of our private company clients.

Gus Leite:
Hi, my name is Gus, and I'm a partner and the digital enablement leader for the Assurance Canada. I do spend time with my private clients as well as the assurance practice. I lead our efforts in visually upskilling our staff and our clients teams as well as a lot of focus on citizen led innovation, automation, and visualization of the data that we do have.

Manisha Chen:
We know as finance leaders, all of you have played such an important role in helping businesses navigate an ever changing landscape. And this role has truly been vital throughout the pandemic, required so many of you to pivot from a traditional reporting needs of the organization to leading a team, that's really a business partner to the organization, providing insights to support strategic decision making, as business owners, investors, and your broader executive teams are asking more of your finance function. And so as we're seeing businesses emerge from the pandemic, will such a change be sustained? And if so, what does that future of finance function look like as a result?

In our findings, we saw that 83% of your CFO colleagues are happy with the finance function performance. However, only 43% of CEOs agree. And so that's an interesting gap to explore. We've done so by interviewing CFOs across Canada and identifying the key challenges and opportunities as they see it and how they see the role of the CFO evolving as a result. Today we're very excited to share with you four of the key highlights from our 2021 CFO insights. Let's dive into these four themes.

To succeed through the pandemic, CFOs and their finance teams have been asked to play a larger role as a business partner to an organization and really helping drive that success as they navigate through a pace of change we haven't seen before. You and your teams have been doing this while balancing the needs of remote work, leveraging more digital tools, and often, with resource constraints. And so how much of this change is going to continue? The ACCA and the PwC CFO Survey found only 37% of Canadian respondents felt there had been a lasting change in the finance function. 30% felt a change had yet to be realized.

We see that CFOs can play a role as drivers of change. And we've got that fundamental in integrity, controls and accuracy as that will form an important foundation as you balance both the historic function of a department to maintain the books and a future role of analysis and insight that you can bring to the business. Many of you and your colleagues shared that this need for change has really highlighted how impactful these insights from your team can be in supporting business strategy. As teams have been innovating, their driving efficiencies and pivoting in your own processes to take on this new role as a business partner. If this change is to continue, finance leaders and their teams must also continue this path of transformation. That leads me to our second key finding.

We've heard that finance teams are increasingly asked for more analysis and insights to support the organization. Perhaps it's dashboarding more current data, maybe linking operational data with your finance data. Maybe it's simply being able to see a more holistic view of a larger group. This information can be quite impactful, but if your teams in compiling this may annually, perhaps. Depending on how complicated or optimized your systems are, these activities could be done by highly trained and very expensive finance talent who need to reconcile or analyze data, often, in spreadsheets.

We've seen that only 10% of your team's time is spent analyzing or advising the business. But there's real opportunity to transform here and drive greater impact in ROI. So you could leverage process transformation supported with the right technology and empower your team to spend significantly less time doing the basics of a processing. And instead, use that time on value creation activity and providing insights to the business. We'll speak a little bit more on that later. Just think about how much impact you could have to the business and your teams could have to the business if these experienced team members were empowered with the right technology to drive such business insights.

We talked about process transformation and that's the next key highlight. Your teams have been working differently out of necessity. We're hearing many of you have identified processes that are ripe for streamlining. Some may have already been on your agenda for some time, but brought to the forefront more clearly as you've had to change your way of working. And typically, we see the majority of a team's time spent on transaction processing, reporting and compliance, that can take up three quarters or more of their time. This leaves very little for the analysis and advice or insights that we just spoke about and that the business needs. This area has the potential for great impact in terms of spending more time on insights. If you could streamline or automate some of these more routine tasks and free up your team's time for analysis, that could really drive this impact and help along that changing the finance function role.

Lastly, our last insight is around people. And so we saw that in the survey as well, as being top of mind for many of you. Your teams have been through an extended period of accelerated change already. 93% of CFOs believe the availability of talent with technical skills is so critical.  

Increasing demands also means asking more of the same team that has gone through all this change. And now we're talking about building a team of people who can manage a changing environment, again, potentially, some digital savvy individuals, potentially those capable of that higher level analysis that the business is asking for. With this rapid shift to a digital workforce, many CFOs are thinking more holistically about the skills and tools that their teams need to thrive, as well as the structure of the workforce they'll need going forward. This is a fresh opportunity to look at how the digitization of the finance function can create new possibilities around automation, around addressing your team's capacity challenges and unlocking that valuable time of your key professionals for analysis. Overcoming these challenges and building these skills to empower your teams will be key to successful finance functions in this evolving role.

Now the question, of course, is this all sounds ideal in theory, but how do we actually get to that picture of a future finance function? At PwC, we've been deploying small and large transformations for more than a decade and each one was different. And it was not different because of technology, it was different because of purpose. What was the purpose of the finance function? What was the purpose of the transformation? Purpose will fall into one of the three Ps as we call them, people, process or performance.

How do we lead with the three Ps? What does leading with people mean? I often use our own example at PwC. We upskilled and developed our own workforce. We've provided training on data analysis, visualization tools and bots to our entire practice of staff and partners. We now have people empowered with the right tools. They're working alongside analytical tools to do the normal course and recurring tasks more efficiently. They can now contribute back to insights for our clients or other ideas to continually transform our practice. We're now in a mindset of this transformation, a mindset of how can we do things differently or provide greater impact, provide greater efficiency? This is what we mean by leading with people.

What about leading with process? Looking at the underlying, processes are essential. A bot following an inefficient process is really not desirable. You're not going to get the result you're looking for. But a streamlined or well designed process, that will unlock the true benefit of your transformation. That's leading with process. 

What about when we lead with performance? Where technology is leading the transformation, you see that reporting is an afterthought. You put the system in and then you figure out how to get the numbers you need out of it. But to truly move the needle on reporting and gain value added insight, those insights that the businesses are telling us they're asking for, you need to define the information and the decision making needs at the beginning, and to use that to implement technology and to processes that you need. In other words, envision what you want to in the end, what insights you need and lead with that.

Depending on your strategy and depending on your team's experience with change, you will likely have different approaches to leading this change within your team. Based on what we've heard from a group of your peers, we'll explore this through three lenses. Firstly, a new CFO. Second, the CFO with a legacy system. And third, a transformational CFO. Jordan, what do we mean by a new CFO? Can you share the characteristics here?

Jordan Bennett:
Yeah. Thanks, Manisha. We come across a few different, I guess, personas in the work that we do. What you typically see with somebody who's new in the role is, in their mandate, it's different. They've got a bit of a blank slate. As they came into the role, they've probably had some dialogue about what's working well, what's not working well in the finance function. And they have some clarity and purpose around where they're going to. And you'll see as we talk about a couple of other personas, that's a key distinguishing factor. And it's also an enabling factor because you don't have the history of why certain things are done a certain way. And you also have somebody pretty motivated to make an impact on their new role and with their new team. It's actually a great way to enable some change. But there's ways that you can do this if you're not a new CFO. And we'll talk about those in a second. 

Manisha Chen:
As this new CFO starts on a path to affect this change, what challenges might they encounter?

Jordan Bennett:
They're going to have a good strategic vision and mandate typically. But they've got a brand new team that they're coming to learn how to work with so they need to assess the skills and capabilities of that team. And I'll map those against where they're trying to get to. They also have inherited a system. And not just the IT system and the accounting system, but a whole series of processes and habits and working styles that collectively form the system that provides the financial reporting for a business. But they also may lack some of the resources. Right? That insight that you shared earlier, Manisha, where CFOs think on average that they're meeting the needs of the CEO and the board, but the CEO and the board have a slightly different take on that. And within that disconnect, there's always a disconnect on budget, typically. You'll see that as a challenge, for sure. 

Manisha Chen:
Let's move on to our second persona here. We heard from CFOs who had a legacy system, but are embarking on this transformation journey. What does this CFO look like and what are the challenges we're hearing from this group?

Jordan Bennett:
Yeah. Inherently with either inheriting a legacy system or being, perhaps, the constructor and owner of a legacy system, one of the difficulties that you face is that you're very ingrained in your current solution. And it's difficult to see what the art of the possible is. But if you see the art of the possible, then the challenge that you have is, you may be operating on outdated technology so you may have not moved to the cloud yet. And so interconnectivity of systems, sometimes a challenge. But you might also have a system where support and maintenance and integration is not feasible, not possible, not cost effective. And so you have to understand that's where you're coming from and craft your plan around transformation, taking that into mind, taking that into account in terms of what's possible to accomplish within a given budget on a given time scale. 

Manisha Chen:
And so, as you're working with this legacy system, we'll say, there's still transformation that can take place and still wins and benefits that those teams can get. What does that look like? 

Jordan Bennett:
What this can really look like when it's successful is applying automation to certain processes with analytical tools. But really, taking the foundation that you have and saying, we can still make some significant improvements in our people work experience types of tasks you're having them do without having to completely blow up and replace your ERP system. There's a lot of opportunity there. And if you are in a situation where a new ERP system is not possible, then looking for those smaller wins can be really good at building a case for something bigger that you might want to do. But also making some just incremental, meaningful improvements to the day to day work experience for your teams and for your customers and your internal stakeholders, too. 

Manisha Chen:
Let's look at our third persona now and take a look at a case where a CFO has the mandate to effect change, has experienced some success with transformation, perhaps, shown some of those quick wins you spoke about. And now is looking to build towards leading practices with information and insights to support the business. Can you paint a picture of what that looks like?

Jordan Bennett:
The transformational CFOs is kind of the other two personas we talked about. But if you look at the objectives here, regardless of where you are in the journey, if you've identified a business case to do something different, then bringing that vision to life and demonstrating the impact it can have on the business on the needs of your stakeholders, I'm thinking your CEO and your board, but also internal business stakeholders, is really important. And being good at articulating that vision and having clarity with that vision, is really important to getting your team and also others around you motivated and interested in supporting you on this. You, often, will paint a picture of near term benefits, because you need to come back to ROI all the time. But you're also laying the foundation of what the future looks like and where we see success is when you have the ability to have quick, not so much quick wins, but things that you can demonstrate success with early, to build that comfort and build the energy around what you're actually trying to do longer term. 

So what are some of the challenges? There's a need to engage, often, IT and other parts of the business to understand what kind of the requirements are, what are the enabling pieces of technology dealing with things like data security. Bringing in the right expertise into your team, and this is for really understanding your team's capabilities and gaps is really, really important. But bringing in IT, bringing in other stakeholders in the business to make sure that you're specifically answering one of the questions that they're looking for you to answer. 

Going back to our key themes, there's a people element here, getting the people within your team and within other parts of your business to work together and to have a common vision in mind. That's really critical. Understanding what your team is capable of is really critical. And more importantly, where they need support and where are you going to look to, to fill that gap and at the end of the day, teach them maybe skills that they don't have today. That's part one. On the process side of things, we always get, it's easy to think about the technology because that's a solution. It's easy to think about training because that's critical. But the thing that sometimes gets forgotten is the process. And you can't affect significant change in a finance team or really in a business, unless you've ironed up the process for something that happens repeatedly. I would say, don't forget about the process because it's easy to, but actually, is the enabler of many of the things that we just talked about. 

Manisha Chen:
Okay. Thank you, Jordan. I now would like to pass it over to Gus.

Gus Leite:
Thank you. We believe that your digital journey should be about bringing value to their organization through digitally upskilling your staff, because that's the foundation. That's how you're going to get them to buy in and actually execute on it without depending on somebody else. And that's easier than you think, by the way. A lot of people have this mystique about, oh my God, this is going to take forever. It's going to be very expensive. It is more affordable than you think. And it is faster than you think. And I'll talk a little bit about that. And then also, you could potentially engage with somebody, with a partner, for example, to do some custom-swift third party building solutions, or you could be both, which is what a lot of our clients are actually doing with us.

But either way, by doing these kind of approach, being tactical and focusing on your own team and your own problems, instead of trying to buy something that it's pre-made and trying to fit your team and your processes to that external thing, might as well build something that is actually meant to fix whatever challenges or problems that you have at a hand. We believe that... Not we believe, but we've seen it. We believed before we did it. But now that we've done it, we've seen it, that the perks that you get of going with this strategy is about you overcome complexity, unlock human potential. Intuitive tech, it's blooming right now. You don't need necessarily a very expensive like multi-implementation of the ERP to solve the problems. Some of these things or a lot of these things can now be solved within the hands of your own team.

And then if you go through that kind of a path, you control the pace of it. Maybe it's too fast, maybe it's too low. And then you can also scale when you're ready for it. When you feel that you can actually go without risking it too much, without breaking anything. Again, like I said, it's cost effective and it has a proven ROI. We've seen it over and over again, including ourselves. I mean, to give you a sense, like Manisha was saying, we upskill 3000 people in the assurance practice alone at PwC Canada. And the very first thing you got to do in order for digital to work very well for you, you need to figure out that problem statement first. Because from there, you're going to figure it out. Okay. Now I do believe that digital is going to help me solve this problem. How is that going to happen? Well, then you have to make that distinction, which is like that management's focus. That's the focus that management should go. 

But the other big component here is trusting quality. When you automate something, you are ensuring that things are processing exact the same way over and over again. So the human error is removed from the equation and that builds trust and that builds quality. But by going through this journey of upskilling your own staff and giving them the tools so they can be better at what they do. And that's a very important distinction on upskilling.

By upskilling your team, you're not making them become developers or computer scientists or analytics people. None of that. What you are doing is making them better at what they already do. You are adding a layer of knowledge to what they already know. And that includes, not only their technical expertise, the technical expertise, but also the understanding of the organization. Which means, you're making them future ready with a higher morale. Because that's the thing on talent war, making them understand that leadership is investing in them, giving them new knowledge, how to execute their job better. That's something that goes a long, long way with any team.

Sabrina Fitzgerald:
Just want to say a big thank you to, Manisha, Jordan, and Gus, for a great discussion. With that, thank you and have a wonderful rest of your day.