Only 17% of SEA finance leaders surveyed perceive their finance function as best-in-class in terms of key change priorities, such as technology and operating model, and 14% say they are making bold holistic changes to transform the function for the future. Their top priorities are technology transformation (47%), sustainability (34%) and advanced data analytics (32%); talent (14%) takes the spot for lowest priority.
Further, as they seek to elevate their talent agenda to achieve their digital transformational objectives, three quarters (75%) of SEA finance leaders say traditional back-office behaviors and mindsets are slowing the modernization of the finance function.
Ronald Wong (黄健维), EY Asean and Singapore Financial Accounting Advisory Services Leader says: “CFOs that are making bold moves to transform the finance function for the future are more likely to have an above-average or leading finance function than those pursuing incremental change. With the fast-evolving digital solutions holding promise to help enhance productivity and efficiency and spotlight on climate change, it is understandable that SEA’s CFOs are prioritizing technology transformation, sustainability and advanced analytics in their finance transformation. However, it is also important that CFOs recognize that the lack of a people strategy can be the biggest hurdle to digital transformation. The best systems will not deliver their intended value if finance teams do not rally behind them.
As well, the finance function needs to foster a culture that encourages innovation while maintaining risk management practices. This will help CFOs to position finance as a strategic driver of sustainable growth within their organization.”
Balancing near-term and long-term investment priorities
The survey also revealed that CFOs face complex and contradictory demands as they strive to balance short-and long-term investments while re-inventing the finance function.
A strong 84% of SEA finance leaders agreed that the challenging market environment today is putting pressure on them to drive cost efficiencies and meet short-term earnings targets. The key areas that are likely to see funding being cut include technology innovation or transformation (38%), strategic acquisitions or divestments (37%), as well as recruitment, people development and reskilling (35%).
Effectively balancing short-term demands with long-term value require collaboration and trust between CFOs and the executive team. However, tensions and disagreements can undermine this collective effort. Sixty-five percent of SEA finance leaders said that there are tensions and disagreements within their leadership teams regarding the balance between short-term and long-term priorities.
The survey highlights that the CFO can play an important role in resolving those tensions and balancing short-term and long-term priorities. They can provide valuable insight on decision-making, navigating trade-offs, fostering consensus across the C-suite and helping to align decisions with the long-term value strategy.
Fulfilling this role will require a CFO with the credibility and influence to challenge the CEO and executive team. However, the research suggests that not all CFOs are willing to voice their opinion all of the time. Just over one-third of SEA respondents (38%) “always” speak up when they have a differing opinion from the consensus, and only 25% of SEA respondents strongly challenge members of the executive team when they disagree on a key issue.
Balancing the evolving role of the CFO with traditional skill sets
Many finance leaders view the CFO role as a stepping stone to the CEO position. In fact, close to half of SEA respondents (48%) aspire to take on a CEO role in the long term, either in their current or other organizations. At the same time, they recognize that the path to CFO today is increasingly challenging and competitive, with strategy capability now seen as a must-have (85%) and a network of contacts and relationships at the C-suite and board level (85%) being important requisites for aspiring CFOs.
The survey also suggests that CFOs are prioritizing attributes like emotional intelligence and the ability to connect with others effectively as they assess potential talents in their teams. According to the SEA respondents, the most important attributes of successful CFOs in five years’ time are highly developed emotional intelligence and experience in people issues like diversity and well-being (36%), strong capability in managing internal and external stakeholders (35%) and ability to work across a complex ecosystem (e.g., suppliers, alliances and service providers) (28%).
Wong says: “Given the evolving role of the finance leader, soft skills are as critical as technical capabilities. Aspiring CFOs should seek to gain new skills and experiences beyond finance. As well, by creating business impact, driving functional performance, and focusing on personal growth and development, CFOs can excel in their strategic responsibilities and contribute to the long-term success of their organization. As the role of the CFO becomes more strategic and focus on value-add, the CFO as an enterprise transformation leader is becoming more prominent. By delivering strategic results for their organizations now, CFOs can find themselves in strong contention for the top job in future.”