The CFO and the Digital Boardroom: The Key to Success for Professional Services in 2020
In today’s digital age, it’s more important than ever that Professional Services firms adapt and evolve, making use of the wealth of information available at the click of a mouse – lest they risk losing market share to more agile competitors.
But in boardrooms of Professional Services organisations around the world, the C-suite is still being asked to discuss ‘make or break’ decisions based on numbers printed on pieces of paper and handed around the table.
And it seems that the finance function – the place where, arguably, the ability to interrogate the available data would be most valuable – is no exception to this.
A recent study, Innovation in Financial Reporting, from finance forum FSN, found that 56 per cent of finance professionals believe their reporting is not “responsive” to ad hoc queries in the boardroom. A similar number (58 per cent) said their board reporting is simply not “insightful” enough and does not deliver useful forward-looking insights.
“Even when working with some of the world’s biggest Professional Services organisations, we continue to see many of them making some of their most important decisions based on static figures that don’t stand up to question or analysis,” says Deborah Chantler, Professional Services Lead at Board International. “Too often, the board remains focused on the traditional statutory profit-and-loss structure, which is useful for reviewing historical performance, but offers little insight into what might happen in the future – a critical need for many Professional Services organisations at this turbulent time.”
A digital boardroom, providing valuable real-time data and analysis, is key to success for many sitting at the C-Level of Management Consultancies, legal firms and others.
The Boardroom of the Future
A digital boardroom is one built using software that puts data at the C-suite’s fingertips for real-time reporting and easier, faster data interrogation than ever before. The digital boardroom also takes into account everything from strategic key performance indicators (KPIs) to operations, as well as distilling instant insights – providing an unprecedented view of the businesses’ performance to improve decision-making across every function.
“Reporting should be so clear that the answer to ‘what happened’ is obvious,” says Ms Chantler. “The discussion should be about which actions to take to move the KPIs that really matter, to progress the company’s strategy and vision – not putting together the pieces of a historical data puzzle.”
Sitting at a unique crossroads within the business, the chief financial officer (CFO) is poised to become even more strategically important; wrapping analytical, operational and strategic value into a single role. This makes the CFO an ideal candidate to transform the boardroom – and even the wider business.
Yet to realise this potential, Professional Services organisations must take a leap and empower the CFO to become a digital leader by implementing technology that enables the finance function to be more agile. Few are currently managing this shift in mindset with ease.
“Historically, the finance function has been behind the technology curve. Yet now they are being required to move away from being data guardians and become a major strategic player within the business,” says Ms Chantler. “This is hard to do with the current unintentional experience gap about current technology, the returns it can bring to the company and the ease of adoption that many of today’s finance functions have.”
A Technological Gap
In practice, this knowledge gap means that many functions within Professional Services firms, including the finance function, are doing some of their most important work – including for clients – on Excel and other systems that are far from risk free. Subsequently, CFOs are unable to bridge the technological gap that would move the finance function to where their organisation needs it to be.
However, the technology exists to bring complex modelling and analytical capabilities into the boardroom, allowing the CFO to better interpret data and forecast strategic possibilities.
Consider a board meeting that is discussing strategy and the company’s direction for the year ahead. With multiple routes available, how should a decision be made? The digital boardroom provides the answer by enabling the CFO to perform complex scenario modelling and build strategic plans on the fly, shaping the debate around the table in real-time.
Want to know what happens to revenue, bookings, cash and EBITDA if sales staff increase by 10 per cent in three out of ten markets and customer success representatives increase by 20 per cent across all markets? What would be a laborious scenario to calculate in Excel instead becomes available with a few clicks of a mouse, quickly modelled and clearly displayed.
“With the technology available to us today, it’s inconceivable that decision-makers can’t react at the speed their organisation might require,” says Ms Chantler. “Implementing a digital boardroom is a key step in a company-wide technological transformation and the best way for the CFO to be recognised as a strategic player by their most important stakeholders.”
The radical transformation of the CFO’s role is putting them at the forefront of an organisation’s digital transformation – a journey that Professional Services organisations can’t afford to put off. Ms Chantler concludes that “if the CFOs is to truly become a key strategic player within their organisation, then it is imperative they embrace technology now available. Only then will the CFO be empowered to enable their organisation to become as agile, strategic and forward-thinking as Professional Services firms need to be in 2020 – and beyond.”