CFOs are the new knowledge executives, says KPMG leader

Don Mailliard, North American Leader for Financial Management at KPMG, discusses the changing role of CFOs, and how they can help create ‘intelligent enterprises’


In today’s data-driven world, companies are under increasing pressure to unlock the insights from their data and create an ‘intelligent enterprise’ – and chief financial officers are in a prime position to do it.

Most modern CFOs have been involved in a wide range of finance-centric initiatives, including shared services, outsourcing, process improvement and process automation. But as financial organisations strive to add more strategic value to their operations, their focus needs to expand to business partnering.

We believe the CFO is becoming the primary funnel for an organisation’s crucial data

How can CFOs provide meaningful analysis to help business units, product managers and other general and administrative expense areas make decisions that are based more on the right information and less on gut instinct?

CFOs have access to a veritable goldmine of information, such as data from enterprise resource planning (ERP) systems, management reporting tools and line-of-business applications. With the right data management and analytics, CFOs are uniquely suited to identify value across an enterprise, providing insights to improve performance, manage risk and drive competitive advantage. Enter the new knowledge executive in the ‘C-suite’.

Turning data into value
According to an IBM study of CFOs, those who embraced business analytics over a five-year period showed an average 20-fold increase in earnings before interest, taxes, depreciation and amortisation (EBITDA), a 49 percent increase in revenue and a 30 percent higher return on investment capital.

What does this portend for the CFO? We believe the CFO is becoming the primary funnel for an organisation’s crucial data. As the new knowledge leader, the CFO can leverage business analytics to connect operational and financial performance.

In manufacturing, for example, the management of plant utilisation, capacity and backlog is paramount to operational success. However, these priorities also have direct ties to revenue forecasts, and the CFO is in a great position to harness this business intelligence and accelerate overall business performance.

The big picture
To thrive in today’s ultra-competitive global economy, CFOs must evolve beyond the finance function, using data to see the bigger picture, while helping their organisations make fact-based decisions and create better processes.

Companies have reported, as a result of data analytics:


Return on invested capital


Improvement in working capital


Inventory carrying cost




Return on assets

With historical, current and predictive analytics, the CFO can develop more accurate forecasts and orchestrate clearer, more compelling paths to value – by partnering with the business units to improve strategy, operations, information technology, supply chain, sales and marketing.

In inventory and warehouse management, for example, some financial executives are using analytics to enable their organisations to better fulfil customer demand while reducing the cost of inventory and maintenance. Others are using analytics to improve functional collaboration among sales, operation and planning, and, as a result, are seeing up to a four percent improvement in return on assets versus competitors.

In supplier management, as another example, some financial executives are analysing data to identify ways to reduce spend through volume discounts and pricing control. In sales and marketing, companies are using data analytics to improve responsiveness to customers, based on a greater understanding of their needs and satisfaction with products and services.

It comes down to managing corporate data as a differentiating asset – by integrating ERP (enterprise resource planning) systems, operational data stores, data warehouses and appliances, reporting systems, analytic engines and more. And it’s up to the CFO, as the new steward of the information asset, to demand the right data at the right time – and then translate it into growth, cost savings, and other significant financial and operational benefits.

What are the best opportunities for new markets? Where is the best use of capital investment? What products and services should a company expand or phase out? How can operations be optimised? How can business units more effectively deploy capital?

To answer these kinds of questions, CFOs can help harness an organisation’s data in a programme that includes analytics, executive dashboards, benchmarking, reporting, leading practices and intimate knowledge of the business strategy. When treated as a key competency, with discipline around people, processes and technology, this kind of business intelligence can influence decisions in areas such as product profitability, customer profitability, emerging markets, commodity analysis and acquisition analysis.

Intelligence through technology
To build an intelligent enterprise, many CFOs need to improve their companies’ information systems – by making better use of current technologies, adopting new ones and consolidating disparate systems.

Indeed, business expansion and the development of new service lines are top strategic priorities for many companies, but some are in the mere developmental stages of translating data into usable information – usually because of inferior technology. Other companies, striving to improve the value of financial planning and analysis, are realising that their current enterprise information systems are duplicative and overcomplicated.

Many times, management can’t access the financial and performance information they need to make decisions, and finance functions simply don’t have the ability to proactively analyse information before it’s stale or out-of-date.

In response, some finance organisations are exploring cloud solutions to implement these changes more quickly or cost-effectively than with traditional on-premises systems. Others see an increasingly urgent need to embrace mobile technology, making financial and operational information available to business partners whenever and wherever they need it – so they can react quickly, change direction and create competitive advantage.

Today’s CFO understands how to meet the information needs of all stakeholders – bridging the gap between knowledge needed and knowledge in hand – by providing a platform for intelligent and informed decision-making

Successful CFOs must be nimble as they strive to keep pace with technology, while continuing to balance costs with potential returns. Indeed, tomorrow’s competitive position will be driven in part by a company’s ability to identify and manage the complex information inside and outside its walls – the success of which depends on robust analytics and new technology that decision-makers can use to turn information into insights.

Even though it will be challenging to find the right technology, oversee the implementation and fully leverage its potential, savvy CFOs see these planned changes as an imperative, not a luxury. And the payoff will come in the form of a more intelligent finance organisation that drives the business.

Indeed, according to a KPMG survey of senior finance executives from companies with more than $1bn in annual revenue, the right technology is helping them improve profitability by 25-50 percent, while reducing costs by nearly 13 percent.

Paul Farr, Executive Vice President and CFO of utility holding company PPL Corp., characterises the imperative well: “We don’t ever want to be in a position where the system environment, or the financial information environment, in any way creates a barrier to continued strategic decision-making that would somehow limit the growth of the organisation or prevent us from taking advantage of opportunities as they come up over time.”

The evolution of the CFO can be a significant journey. In fact, in a KPMG study of executives worldwide, 94 percent said complexity is their greatest challenge, and information management ranked as one of the top two reasons why. However, 84 percent of respondents said that information management is also a key way to manage complexity.

Driver for change
To create a new intelligent business model, CFOs will need to see analytics not just as a series of reports with different views, but as a core competency, with a clear line of sight between business objectives and the information and insight needed for sound business decisions. CFOs will need to view business intelligence in hierarchies, insist on clear metadata ownership and management, and turn their organisations into masters of analytic tools.

Many companies are at a critical convergence of old and new technology, striving to make the best use of their historical investments while improving capability. At the same time, many companies are simply not confident in their data.

That’s why it’s critical to understand the root causes of the data issues and develop a strategy for creating an intelligent enterprise. This strategy should include a holistic view of stakeholders’ needs, coupled with a methodical, end-to-end process for transforming data into a valuable asset. And, as with any change programme, organisations need to ensure they have assessed their risk and readiness, while considering how best to manage stakeholders.

The good news is that the evolving CFO is better suited than ever to step up to these challenges. Today’s CFO understands how to meet the information needs of all stakeholders – bridging the gap between knowledge needed and knowledge in hand – by providing a platform for intelligent and informed decision-making. The CFO also knows how to integrate data and technology with key performance indicators, enabling many views of the same trusted data so that stakeholders across the enterprise can access relevant, timely information.

And with access to transactional data that tracks performance throughout the organisation, today’s CFO has the key to unlock significant business insights and become a strategic information leader. By taking charge of data governance and business analytics, CFOs are in a prime position to transform their organisations into data-driven intelligent enterprises.

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