How the CFO Can be an Effective Partner to the CEO in Navigating the Pandemic’s Economic Storm

How the CFO Can be an Effective Partner to the CEO in Navigating the Pandemic’s Economic Storm

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  How the CFOcan be an effective partner to the CEO in navigating the pandemic’s economic storm V. Ramakrishnan Formerly Chief Financial Officer, Tata Consultancy Services Author
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  2 CFO-CEO partnership willsee off the economic crisis CFOs are key contributors to an enterprise’s digital transformation. Despite the pandemic, spends on digital transformation are expected to grow by 10% As enterprises battle declining revenues, the pressure on the finance function has been immense A strong CFO-CEO partnership can help tackle the digital-economic turbulence. CFOs must work closely with CEOs to steer their enterprises through the worst economic crisis in a generation
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  3 The CFO’s rolein a crisis The risks and responsibilities of a CFO rise during a crisis. The CFO’s focus areas during a crisis include: External business risk: Monitor commercial and business interests, alert and mitigate risk, and assist in maintaining growth and profits Talent management: • Strengthen employee and employer relationship and engagement • Ensure pay is sent on time and the workforce is treated with empathy • Retain excess staff to boost productivity, post normalcy Drive growth: • Relook at business operations and add new frameworks and processes • Analyze and forecast the impact of changes • Investigate and invest in business opportunities that align with long-term goals Smart financial management can bring in organizational agility, which is essential during a crisis. Accurate forecasting: • Consider market volatility and maintain transparency while forecasting • Manage and mitigate treasury risk to help the CEO office operate optimally Mergers and acquisitions: Planned M&As could present attractive valuations during a crisis, and divestment of non-core business can generate funds to meet long-term business goals
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  4 The CFO andCEO are strategic partners Digitalization of the finance function can help improve financial and enterprise efficiency. Highly digitalized finance functions operate more efficiently, help in strategic decision-making, ensures on-time deliveries, and reassures stakeholders of smooth operations Digitalized finance teams can easily identify issues, quickly address them, manage cost and cash exchange better, and be more alert to risks to mitigate them in advance Digitalization of the finance function helps the CEO make better, strategic decisions.
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  5 How digitalization helpedTCS’ finance function For over two decades, TCS has been investing in digitalizing its finance function for an integrated, enterprise-wide, single-instance financial accounting and reporting system. Digitalization has helped TCS’ finance team work remotely and yet seamlessly manage and deliver per schedule This experience can be a guide to other industries during similar crises.
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  6 Lessons in buildinga powerful digital finance function Years of experience of digital transformation have helped TCS build a powerful digital finance function that supports a strong, strategic CFO-CEO partnership. Here are the four lessons gleaned from TCS’ experiences: Digitalize the entire finance value chain across all locations. Invest in technologies to do routine and repeatable jobs and free-up time for employees to perform more value adding jobs Non-financial metrics related to financial performance, such as customer demand, customer satisfaction, project delivery and employee retention must be identified and tracked All business units must have dedicated finance professionals to help run the unit in harmony with the CFO office. These professionals provide unified data-driven insights, analysis, and communication across the enterprise A digital finance function ensures that a single, sacrosanct version of the truth is shared across the entire value chain. The same data points are used by different managers to meet different business needs
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  7 Maximize the digitalizedfinance function Enterprises need a fully digital finance function that can be resilient and agile in the face of market volatility. Digital transformation enables the CFO and C-suite to better understand, alert, mitigate and manage financial and associated risks It empowers the CFO and CEO/CXO to reassess and re-strategize An effective digital transformation needs time, money and adaptability, and needs to be aligned to the organization’s goals.
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  How the CFOcan be an effective partner to the CEO in navigating the pandemic’s economic storm Read the Article Contact Us