www.pwc.com/ca
The CFO of the Future
Making Better and Faster Decisions in
a Disruptive World
November 2016
Agenda
Agenda Item
Slide Number
Start Time
The Changing Role of the CFO
3
2:50 pm
Leveraging Automation
6
3:00 pm
Supporting Strategic Objectives
9
3:20 pm
Rapid Response
13
3:35 pm
Bringing it all Together
16
3:45 pm
The CFO of the Future
PwC
November 2016
2
Traditionally…
Reporting and budgeting
responsibilities dominate the function
of the CFO
Predictive analytics has been focused
on gaining/maintaining competitiveness
in other business areas:
1 Sales & Marketing: Optimizing
1.
product marketing efforts to enhance
customer buy rates
2.
2 Operations: Predicting machinery
failure rates to drive lower
maintenance costs
3 Crime prevention: Ensuring
3.
optimal security force deployment
based upon crime hotspots
In the past 3 years
alone…
85
%
of CFOs have assumed
responsibilities in new
departments, most
commonly HR and IT
Business Area
% of Responses
Human Resources
21%
Information Technology
19%
Operations
18%
Marketing
17%
Sales or business
development
10%
None/role hasn’t changed
14%
Don’t know
1%
1Source:
Robert Half Management Resources - 2014
“From bean counters
to bean sprouters.”
- Jeff Thompson, CEO of
Institute of Management Accountants
Supporting the Transformation
What are the Necessary Capabilities?
• Evolution presents new opportunities and
threats to the function of the CFO:
- Automation of traditionally manual tasks
1. Automation
- Increased focus on risk management,
both market wide and idiosyncratic
- Rapidly evolving business landscape –
requires proactive strategic maneuvering
to maintain competitiveness
- Societal changes: increased focus on
sustainability and globalization
PwC
2. Strategy
Support
3. Rapid
Response
• Increase usage of automation
• Frees up time of Finance staff for highervalue activities
• Allows for increasing complexity
• Explore new market and profit
opportunities
• Democratize decision making
• Validate and monitor ROI
• Reduce risk exposure
• Rapidly understand impact of new
regulations
1. Leveraging Automation
What can Automation do for your business?
The CFO of the Future
PwC
November 2016
The Case for Automation
What are the drivers and benefits of automation?
Globalization: Increased complexity
and volume. More ‘work’ to do than
ever before!
Regulation: We are operating in an
increasingly regulated environment.
Cost of adherence is increasing
rapidly.
Efficiency: Perform low-value tasks
more rapidly and with reduced risk.
Lower costs whilst freeing-up staff to
work on higher-value, strategically
aligned tasks and projects.
The CFO of the Future
PwC
Increased
Efficiency
and
Reliability
Decreased
Costs
Increased Volume
and Complexity
November 2016
The Case for Automation
How do we actually go about implementing automation?
Technology
•Plays supporting role
•Does not drive change
per se
• Embed as much non-judgemental
business logic as possible (i.e. quantitative
logic – if amount is above $X then do
something)
Processes and
Procedures
•Business Process Reengineering
•Change Management
“The first rule of any technology
used in a business is that
automation applied to an efficient
operation will magnify the
efficiency. The second is that
automation applied to an inefficient
operation will magnify the
inefficiency.” – Bill Gates
The CFO of the Future
PwC
• Comprehensive change management is
critical in ensuring automation realizes
purported benefits
• Many good candidates:
• Anti money laundering/transaction
monitoring
• Business-as-usual accounting
• Tax preparation and filing
November 2016
2. Supporting Strategic Objectives
Becoming a strategic partner…
The CFO of the Future
PwC
November 2016
Risk Management
Embedding Data Analytics to Reduce Exposure
• Traditionally: Risk management
concerned with examining past and current
performance
• Opportunity: Enhance risk management
with:
Predictive
modelling
• Risk
quantification
Regulatory
• Maximize
asset
utilization
The CFO of the Future
PwC
Event
modelling
• Idiosyncratic
• Market wide
 Event modelling (e.g. what if these
debtors default?)
 Predictive modelling (e.g. what
equipment is likely to require
preventative maintenance?)
 Regulatory maneuvering (e.g. how
can I maximize asset utilization whilst
maintaining regulatory compliance?)
November 2016
Sustainability
Supporting Sustainability in the Finance Function
• Business value of sustainability is well
understood, however:
 Challenging to quantify: energy and
resource usage, greenhouse gases, supply
chain performance.
 Even more challenging to drive change:
What are the factors influencing resource
usage? Where do we have opportunities
to improve our supply chain
performance?
 How do we measure ROI of strategic
initiatives around sustainability?
The CFO of the Future
PwC
1. Consume
• Consume and organize large
volumes of disparate data
4. Monitor and Refine
2. Analyze
• Monitor response of business
to quantify response
• Tune process and repeat
• Perform analysis to uncover
trends
• Utilize statistical methods to
define influencing factors
3. Implement
• Implement business process
improvements and
modernizations
November 2016
“Aligning people to the business,
the changes, the expectations and
our purpose is absolutely key.” Susan Lloyd-Hurwitz, CEO and
Managing Director of Mirvac
Group
Human Resources
Making Better Hiring and Retention Decisions
Gambling on talent
Despite the importance of getting the right talent, just
30% of CEOs are making changes to their focus on skills
and adaptability in their people. And despite their
embrace of technology in all things customer-related,
companies are doing little to change either how they use
technology to improve productivity or their use of
workforce analytics, with only 4% of CEOs seeking
change in that area.1
Key Benefits:
• Understand what factors lead to staff
turnover and establish more representative
performance metrics.
• Gain insight into what makes for a highperforming hire vs. a low-performing hire.
• More accurately align requisitions to
business need. Prevent excess resource
overcapacity.
30%
5
The CFO of the Future
PwC
• Balance costs with market demands
through greater insight into market salary
changes.
November 2016
1Source:
PwC 19th Annual CEO Survey
3. Rapid Response
Responding quickly to market trends
The CFO of the Future
PwC
November 2016
Exploiting Opportunities
Using Data to Achieve and Maintain a Competitive Advantage
• Collecting, analyzing, modelling and
reporting on data has traditionally been a
time-consuming, expensive process.
PwC Approach: Supplement corporately
mandated data with the ability to explore ad-hoc,
unstructured data in parallel.
• Technology is accelerating the rate market
data is analyzed, rapidly uncovering new
opportunities.
• Organizations that are able to exploit these
new opportunities are more likely to disrupt
the market and emerge as a leader.
The CFO of the Future
PwC
November 2016
Performance Management
Failing-fast and providing ROI measurement and assurance
• Tomorrow’s CFO will need to:
1.
Demonstrate alignment of initiatives
to business strategic goals.
2. Predict future ROI, risks and
mitigation strategies.
3. Measure and monitor ‘in-flight ROI’
– i.e. real-time performance monitoring
of new programs and initiatives.
4. ‘Fail-fast’ – respond rapidly to
initiatives that are not producing the
desired (and predicted) results. Iterate
and repeat.
The CFO of the Future
PwC
5. Iterate and
Inform
1. Strategic
Goals
• Fail-fast
• Integrate learnings
• Identify key
strategic goals
4. Measure
and Monitor
2. Key
Performance
Indicators
• ‘Real-time’
response
monitoring
• Derive KPIs (e.g.
GM%)
3. Business
Drivers
• Model ‘drivers’
(e.g. Total Cost
and Gross Rev)
November 2016
4. Bringing it all Together
Deploying capabilities rapidly and efficiently
The CFO of the Future
PwC
November 2016
Bringing it all together
Building out an ‘Action-Platform’ to
Enable Smart Decisions
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Bringing it all Together
Key Messages
The role of the CFO is fundamentally changing:
Change is market-driven: failure to evolve with the marketplace presents
opportunities for competitive disruption.
Automation is key: Appropriate implementation of automation is necessary to
free-up resources for higher-value activities.
Transformation must be business driven: Technology is an enabler, and it is
crucial for it’s implementation to support a value-adding process, not the
reverse.
Data is at the heart: We collect huge volumes of data which enables us to make
more accurate decisions more quickly. The applications for better, faster
decisions are multiple and a common approach and platform is necessary to
realize these benefits.
The CFO of the Future
PwC
November 2016
Thank you…
For a deeper conversation about how data and analytics
can help you with your big decisions, please contact:
Dean Lancaster
Data and Analytics Consulting
416 687 8296
[email protected]
This content is for general information purposes only, and should not be used as a substitute for consultation with professional
advisers.
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