One of the positive trends we’ve seen recently is the finance function’s growing role in helping the business drive performance excellence. This came through in the recent CFO survey conducted by PwC and the Association of Chartered Certified Accountants, in which 57% of Canadian respondents—compared to 44% of global participants—said their finance function’s role in providing business insights had increased as a result of the COVID-19 pandemic.
The chief financial officers we interviewed for this report offered several examples of how they’re doing this. One talked about how they’re working more closely with the business to analyze operational data to uncover new opportunities as the organization faces disruption to its business model. Others described the rising demand for a wide range of business insights, from scenario analysis to resource allocation to benchmarking data that compares their organization’s performance to other businesses.
Organizations increasingly want to access these insights in real time, which is leading many CFOs to look for ways to create dashboards that deliver information faster than traditional financial reports.
In a crucial shift for finance leaders, CFOs are paying close attention to the need for organizations to improve and expand their environmental, social and governance (ESG) reporting capabilities.
This is a quickly evolving area as organizations like the International Sustainability Standards Board move to bring more clarity to climate change disclosure and reporting and regulators from the US Securities and Exchange Commission to the Ontario Securities Commission consider what they’ll be requiring from companies. While this is a complex issue, it’s clear that responsibility for ESG reporting will increasingly shift to finance functions given their ability to help organizations meet changing regulatory requirements and the demand for high-quality, timely and trusted data in this area.
So far, it appears CFOs are at the early stages in this evolution of their role, with many interviewees noting ESG reporting remains largely the responsibility of others in the organization, like a chief sustainability officer. In some cases, organizations are assigning finance professionals to work on ESG reporting with colleagues tasked with sustainability or corporate responsibility matters.
To generate these and other insights the business needs, many interviewees say their organizations are investing in cloud-based enterprise resource planning (ERP) systems.
“Moving to a new ERP system has never been more important than it is now,” one interviewee told us.
Cloud technologies were also a key priority in the CFO survey. Among Canadian respondents, more than half said the pandemic had increased their plans to use cloud computing, which can help finance functions analyze larger amounts of data and support the tools that will be increasingly important to fulfilling a more insights-focused role.
But as they plan for or pursue these digital investments, some told us they’re struggling to make the most of the opportunities they present.
Many of these issues go straight to the heart of the broader challenges facing CFOs: rising expectations to use technology to deliver deeper insights faster and in new areas, like ESG reporting. While some are struggling to figure out the best way forward, there are some approaches that can help:
Learn more about what the cloud can do for finance functions. Some CFOs leave the transition to the chief information officer, which may limit the value of cloud adoption in addressing the finance function’s needs. Taking a proactive approach to working more closely with your information technology counterparts will be key to setting your vision for and delivering the full potential of the cloud-based ERP software you adopt. If you can’t devote the time to learning about the cloud, designate someone from your team to work on this.
Consider your role in working with your information technology counterparts, such as the chief information security officer, to address cybersecurity threats arising from your digital investments. The CFO survey found cybersecurity risks are a top concern for Canadian respondents, and interviewees cited this as a major priority when adopting cloud tools. But our recent digital trust insights report found there’s room for greater collaboration between CFOs and chief information security officers on these issues.
In embarking on your cloud journey, it’s important to also streamline your data so you can integrate both internal and external sources to generate the real-time insights and predictive and prescriptive analytics the business wants. This will require you to identify the best sources and understand how to measure, maintain and manage quality data on an ongoing basis.
Consider other elements of the journey besides adopting new cloud-based ERP software. For example, there are other data visualization and analytics tools that can deliver faster and better insights without introducing a new ERP system.
Delivering real-time data to the business doesn't necessarily require the same rigour as traditional financial reporting. Accuracy is always important, but it’s possible to create the types of dashboards the business needs to make faster decisions without the same level of rigour applied to your monthly, quarterly and annual reports.
While the ESG imperative is undoubtedly challenging for CFOs, it’s important to remember that this is a journey. Some steps for CFOs at the earlier stages include learning more about these issues themselves or hiring or developing subject matter experts for their teams and thinking about what regulators are likely to require of them in the near future.
ESG reporting is another area where technology can help given the emergence of specialized solutions to manage your requirements. The ESG imperative is also a good reason to focus on your data. Pulling ESG data continues to be a manual process for many organizations, and with expectations changing quickly, identifying ways to extract this information more seamlessly and consistently will go a long way in helping you accelerate the journey.