CFOs can help CEOs balance investment for growth

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Corporate investment decisions must achieve a balance between short- and long-term performance objectives to sustain future growth.

Achieving that balance has become trickier than ever in a world where technology is disrupting business models and blurring industry lines. As CEOs shift their perspective to viewing business disruption as an opportunity rather than a threat, some of their best guidance on how to balance immediate and long-range goals will come from the corporate accountants—those individuals working under the CFOs and controllers.

Rapidly evolving technology creates competing priorities for an organization, thus putting the executives with financial acumen into more strategic roles.

Meanwhile, executives in the corporate financial function can become even savvier through effective internal networking—especially with the CIO and COO—to heighten collaboration on which technology tools will best support the organization’s current business model, while building and investing in technologies that will shape their future.

Those in the financial function should take heed that, while speed to market is a top strategic priority, many CEOs are taking a long-term view. CEOs will need the right advice—an opportunity for the financially equipped executive—on where to invest in technology as part of the organization’s strategy to remain competitive and grow.

Disrupt and Grow, KPMG's 2017 survey of 400 U.S. CEOs’ business outlook, found chief executives are highly confident about their organizations’ marketplace prospects over the next three years—and 60 percent view technology disruption as an opportunity.

The KPMG report found that 79 percent of CEOs acknowledge that shareholders and boards of directors view both long-term and short-term performance as equally important. Yet, 69 percent of CEOs say a culture of "short-termism" has had a negative impact on achieving long-term strategic objectives.

In an effort to move beyond the short-term views, nearly three-quarters of CEOs say rather than waiting to be disrupted by competitors, their organizations are actively disrupting their own sectors in a strategic decision to emerge as leaders in their industries.

Data integrity, for instance, is where CFOs and the accounting and financial teams play a key role. In this new world of threat and opportunity, it is the CFOs and their teams of accountants and financial advisers who can best compare the company’s financial reports and balance sheets against economic forecasts and department budget requests to guide future investment. CFOs and their teams should be central—perhaps even the ultimate referee—to the next spending plan for short- and long-term performance objectives.

Whether it’s a cost-benefit analysis of new data analytical tools for growing the customer base, weighing the potential benefits of cognitive abilities, or investments in their own financial analytics, accountants and other financial executives can add incrementally to the bottom line by offering insights into potential efficiency and effectiveness.

While CEOs want to harness the power and potential of new technology to meet both long- and short-term goals, many are concerned about how well their organizations are leveraging such capabilities today.

More than half (57 percent) say their organizations do not have the sensory capabilities and innovative processes to respond to rapid disruption; 61 percent are concerned about integrating cognitive processes and artificial intelligence and 49 percent are concerned about the integrity of the data they base decisions on, the KPMG survey found.

Opportunities are many, but so are the challenges, and separating the wheat from the chaff in this ever-shifting environment requires financial vision and depth of financial expertise that go beyond mere numbers.

CFOs’ and accountants’ intimate knowledge of a company’s financial picture, including their broad view of anticipated available revenue, expected growth, return on investment, and corporate infrastructure and resource needs puts them in a unique position to balance long- and short-term investments, and help drive growth.

Here’s how CFOs can help achieve future corporate vision:

• CFOs can best compare the company’s financial reports and balance sheets against economic forecasts and department budget requests to guide new investment.

• As CEOs begin to view business disruption as an opportunity rather than a threat, CFOs and their financial teams can provide the best guidance to achieve an immediate and long-term balance.

• To solidify their role, CFOs must forge or enhance relationships with the Chief Operating and Chief Information Officers.

• The investment acumen of CFOs can help steer the organization to buy and build the right technology tools that support the current business model, while envisioning and budgeting for technologies that will shape their future.

CFOs and the finance function should be driving the next spending plan for short- and long-term performance objectives.

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Corporate finance Big business Financial reporting Performance-based management tools Analytics KPMG