Most CFOs (Chief Financial Officers) within the San Francisco Bay Area (and especially Silicon Valley) likely would agree that their job has only gotten more demanding in recent years.
Taking on and adapting to new roles outside of the finance function is of increasing importance for savvy CFOs. While that’s subjective, a new analysis may offer some objective evidence.
A recent study from KPMG studied the backgrounds and experience of CFOs at 100 different technology and communications companies globally, as well as the immediately prior finance chiefs at 75 of the 100 companies for which such information was available.
According to KPMG, the chosen sectors are currently at the front of digital innovation, where continuous change, constant adaptation, and rapid innovation have become part of everyday business operations. It added that these segments “offer very relevant learnings for other industries that have yet to feel the full force of digitization.”
Here are some notable differences between the current and former CFOs, all of which speak to companies’ wish to have more broadly experienced executives in the CFO role:
79 percent of the sitting finance chiefs were external hires, compared with 58 percent of the prior ones.
40 percent of the existing CFOs had “strategy experience” prior to taking the job, against 24 percent of the former ones.
36 percent of the new-generation finance chiefs had prior operating experience, where the same was true for just 20 percent of the former CFOs.
The proportion of today’s CFOs with MBA degrees is 55 percent, 11 points higher than their predecessors.
The premium placed on strategic and operational experience may be particularly relevant to a current CFO’s success.
KPMG offered several questions that CFOs should be able to answer in order to be set up for success:
1. Have you prioritized the key technology or market trends that will have the biggest impact on your company’s P&L in the next 36 months?
2. Are you actively involved up-front in strategy formulation efforts driven by your CEO, COO, or chief strategy officer?
3. Have you provided clarity on the financial requirements and expectations of delivering on your strategic priorities?
4. Are your strategic, financial, and operational planning processes closely aligned with common metrics and quarterly review cycles?
5. Do you manage your investments (opex, capex, and talent) allocated to “run the business” separately from those allocated to “transform the business”?
6. Do you know how your company’s portfolio of transformation initiatives is performing versus expectations since last quarter?
7. Can you quantify the ROI on your company’s investments in key initiatives that are driving operational or transformational change?
From business acumen to data-driven innovation and strategy, the CFO is a kind of person a company uses to ensure all business operations and financial decisions are sound. In addition to being a data analyst and risk assessor, CFOs are moving into more strategic roles than ever at organizations that need experienced, level-headed decision makers in markets that are rapidly changing and uncertain. Moving outside of the fixated scope they are comfortable in, CFOs are reacting more quickly and effectively to the needs of the company, creating better cohesion between business units, and a more successful business environment as a result.
If you are a business owner or CEO within the San Francisco Bay Area or Silicon Valley, in need of an experienced part-time CFO to help your company improve cash flow, business process design, accounting and billing process management, as well as profit margins, our highly skilled outsourced CFO services provide direct access to high-quality expertise in a cost-effective manner.
CFO Growth Advisors (CGA) specializes in unique and highly effective growth strategies that are tailored to help companies grow more quickly and efficiently while improving sales & profit growth. Contact us to learn more.