As companies transform themselves to compete in an on demand world, experts in a wide range of disciplines are seeing their roles change, deepen and grow more meaningful. Within finance departments worldwide, the former “corporate policemen” are becoming strategic business partners, and a new kind of CFO is emerging: the Chief Focus Officer.

This CFO will assume an increasingly prominent role in helping the CEO define the organization’s core competencies and develop its unique strengths. In doing so, the Chief Focus Officer is poised to transform finance from a department to a discipline, promoting the sound, fact-based decisions that realize business value — and shareholder profit.

Beyond reporting key financial performance metrics, this new breed of executive will specify what to globally source, what to outsource, what markets to pursue, and how to optimize the business portfolio. In short, he or she will become the champion of business focus and steward of the enterprise’s core assets.

An extensive study by IBM defines this new role. It also shows how the new CFO, working in concert with an on demand infrastructure, will play a critical part in ushering in the next era of e-business, driving the key attributes of focus, responsiveness, variability and resiliency.

Putting on demand to work

As the head of finance, the CFO will be a key integrator of the on demand business model and will play a pivotal role in transforming the organization.

This change has already begun, but the steps that lie ahead are even more dramatic than those taken thus far. This article highlights recommended actions for today’s CFOs—actions that will help to build an on demand infrastructure and unlock the true potential of the enterprise.

While the on demand operating environment integrates business processes end-to-end across the enterprise and beyond, the new CFO must leverage this technology to further distance finance from back-office tasks. The need instead is to concentrate on defining the company’s core competencies and developing its unique strengths.

He or she can first implement these principles on a “micro” level within the finance organization itself. Then, as finance grows from a department to a discipline, the new CFO can work across silos to transform the entire enterprise.

Integrate variable cost structures

“Nearly 90 percent of CFOs have implemented some form of shared services.”
—CFO Survey, IBM Business Consulting Services

In order to effectively sense and respond to an ever-changing business climate and match the enterprise’s cost profile with the ebb and flow of market conditions, the on demand business must integrate variable cost structures into its operations. The new CFO is uniquely positioned to integrate this variability, but doing so requires a new look at outsourcing and process improvements.

Outsourcing data collection and consolidating value-added finance activities—like capital structure management, for example—will better serve the CEO and stockholders. Such moves allow the CFO to determine appropriate performance metrics and use them to optimize the business portfolio. The officer can thus become the champion of business focus, and the steward of the enterprise’s core assets and true value.

Of course, outsourcing and shared services are already being utilized within finance organizations. But efficiencies and cost reductions realized in recent years have largely been achieved by leveraging internal systems and automating non-value-added activities like transaction processing. While this has freed finance to better concentrate on value-added activities like capital structure management, achieving the next level of efficiency and cost reduction requires a more aggressive approach.

The new CFO must work to employ a blend of business process outsourcing, global sourcing and continuous improvement techniques like Six Sigma. Doing so will allow finance — and the enterprise — to further reduce its costs and focus on its core business.

Drive responsive business performance management

“70 percent of CFOs indicate that information is a major asset requiring significant investment … the same number view it as an asset that needs to be managed better.”
—CFO Survey, IBM Business Consulting Services

Traditional financial measurement and spreadsheets still dominate the planning processes in today’s finance organizations. For many companies, this amounts to a financial model that “looks out the back window” and fails to recognize strategic business opportunities until they’ve long since past.

By championing an on demand operating environment, the CFO will implement a more effective and productive model that identifies available opportunities and pursues them opportunistically. This will drive responsive business performance management and enable the enterprise to make better decisions faster.

Achieving this change will require improvements not only in the types of data collected, but in how data is accessed and disseminated. For example, information about customer and product management is vital, but often unavailable. To address this shortcoming, the CFO must define a balanced set of performance indicators and work with the CIO to retrieve the necessary information from the company’s business systems.

Developing this robust information architecture will provide CFOs with self-service access to the data they need and embed decision support and controls into the business. More than that, it will allow the enterprise to adopt best practices for dynamic planning, so that it is better able to weather fluctuating business conditions.

Implement resilient corporate governance structures

“Over half of the CFOs interviewed indicated that managing governance, controls and risk was a top priority.”
—CFO Survey, IBM Business Consulting Services

Using the on demand infrastructure’s enhanced reporting, measurement and financial management tools, the new CFO will be better able to manage the company’s value net and dictate the appropriate business portfolio mix. More than reporting key financial performance metrics, he or she will actively specify what to globally source, what to outsource, what markets to pursue, and how to optimize the business portfolio — an action map historically associated only with the CEO.

Culminating in these resilient governance structures, the on demand enterprise’s dynamic planning capabilities and cost variability will not only ensure profitability in the short term, but promote stability in the long term, by safeguarding the enterprise from unexpected changes and threats external to the organization.

What to expect

The transformation of the CFO and the arrival of the on demand enterprise will bring together all the benefits of focus, responsiveness and variability, to create a business that is truly resilient.

Using the new reporting, measurement and financial management tools made possible by an on demand infrastructure, the Chief Focus Officer will be better able to manage the company’s value net and dictate the appropriate business portfolio mix—ensuring both profitability and long-term stability.

The road ahead for finance organizations and their CFOs is clear. On demand business is both the spark to ignite this coming revolution and the key to unlocking the hidden value and true potential of your enterprise.