Business transformation is everywhere. An overwhelming 80% of senior executives surveyed by BIE said their company was going through a business transformation of some nature.
Traditionally, the CEO is ultimately responsible for the vision, direction and strategy of the business transformation. Each line manager then plays their part in aligning the business unit to the overall transformation.
So what exactly is the role of the CFO in business transformation?
Can we afford it?
More and more now, we’re finding that transformation sits under the Strategy Director. The journey of transformation is all about the execution and physical delivery of a strategy. So who better to drive transformation than the person who designed the strategy? The Strategy Director knows exactly what ‘good’ looks like because it’s their design.
If you were building a house, you could go to an architect and design something amazing that’s everything you want and more. But then you have to find out if you can afford it. And it’s exactly the same with business transformation.
The CEO and Strategy Director will paint a picture of what their company is going to do. The role of the CFO is to cross-balance this with affordability, which then sets the trajectory for the transformation. The CFO will have a wrap around it because of the financial benefits and will manage the costs and spending, and make sure the programme stays within budget.
Checks and balancing
When going through a business transformation, all areas of the company will be affected, including finance, HR, technology, and the back-office. In each area, the question you’ll be facing is, ‘where are we going as a company?’
But if you’re running a specific finance transformation, you can be confident that it’s part of an agenda which is to drive cost out.
So would the CFO be the sponsor of a finance transformation? Again, it comes back to strategy, and the CFO remains in charge of checks and balancing of what you want against what you can afford.
There’s got to be a reason for putting your company through a transformation. If you are going to spend £10 million, you need to know what the benefits will be. There’s got to be a real purpose and why behind it, as to take people through an upheaval for no real gain is a waste of time, effort and money.
There isn’t just one person responsible
Ultimately, transformation has got to be about a group of individuals rather than the responsibility of just one person. There is a triumvirate of individuals whose roles are paramount: the CEO, Strategy Director and the CFO.
The CEO sets the vision and direction of travel for the organisation. The Strategy Director challenges their thinking as to where the company go, and together they come up with a plan for the organisation. The CFO then plays an instrumental part in saying whether or not it is achievable.
It’s unlikely that the CFO is behind the business transformation. But with cash savings driving many transformation agendas, it’s critical that the CFO acts as the conscience of the programme. It’s their role to align the finance department to the wider organisation, manage the spend and realise the benefits of the overall business transformation.
What do you think? Is the CFO’s role more about checks and balancing? Or are they the innovators in the business? We welcome your views in the comments section.