The role of the CFO is evolving to span far beyond core financial tasks to focus on delivering value and maximizing revenue. A recent EY study, titled "The DNA of the CFO," discusses this shift:
"As disruption unfolds, transparency issues gain reach and regulation spreads, the world is in flux for finance leaders. How organizations deliver value is being reset for a digital age. Forcing the blur is the increasing amount of risk, connected and volatile markets, and the rapid advance of technology. To reinvent itself for a new age, the finance function is transforming into a data-driven decision center, where smart people and smart machines help make better financial, strategic and operational decisions.”
Although the role of the CFO is becoming more complex and unforgiving, the new dimensions of the role in 2017 make it more interesting and rewarding. Organizations look to CFOs to offer innovative solutions to business issues, whereas in the past, creativity was often discouraged.
In this blog post, we'll talk about how the role of the law firm CFO has expanded and which key areas CFOs must be engaged in to deliver the highest level of value to their firms. Here are four ways in which CFOs can embrace the new challenges and show that they are a full partner to the company CEO:
#1 Take Part in Innovation, Technology & Vendor Selection
When a CFO becomes involved in the firm’s strategic planning and more tactically in vendor selection, he or she can bring value to their organization beyond approving the budget. As the CFO takes a leadership role in the vendor selection process, it is possible to choose vendors based on the firm's growth strategy, understand what it will take to drive technology engagement and make decisions based on the best use of the firm's resources, such as painless implementations and ruling out solutions that will reach obsolescence within a short period of time.
The EY study (part 2) talks about the evolving nature of this role: “In addition, many CFOs are now key players in driving adoption of these technologies more broadly in the organization, and in leading the transformation that ensues from technology innovation.”
#2: Invest to Protect Against Security Risks
According to the 2016 ILTA Technology Survey, security compliance and risk management continue to be one of the top concerns for law firms in 2017. It's vitally important for CFOs to understand all the security risks facing law firms in 2017 and take steps to address them. They have the responsibility to ensure that the firm, and its vendors, are keeping the firm's data safe and that the security standards of these third parties match those of the client.
#3: Data-Driven Approach, Understand What Happens Before the Invoice
The EY Study (part 1) mentions “Data” as one of the four forces disrupting the role of the CFO. 57% of CFOs that participated in the study believe that the delivery of data analytics will be critical for tomorrow’s finance functions: “Data and analytics are changing the way CFOs think about business problems”.
While most of the data analysis occurs based on invoice and billing data, law firms leak a lot of potential revenue before an invoice is created due to poor timekeeping habits. The right timekeeping solution gives CFOs insight into data on timekeeping performance within the firm. With this information, law firms can quickly identify sources of inaccuracies and time leakage, and address them in order to maximize revenue, speed billing and collection cycles and reduce client rejections.
#4: Drive Change throughout the Firm
Part of the CFO role in 2017 is to drive behavior changes that contribute to the financial health of the organization. This involves selecting solutions and technologies that will help employees become more efficient, increase productivity and adopt better habits and rolling them out across the organization, providing everyone with the training they need to make the most of the new technology. In this way, the CFO can drive the adoption of new habits that will make the law firm more profitable. Mobile timekeeping is one example of a technology that can help law firms cut costs and therefore improve their bottom line.
As the role of the CFO continues to evolve more rapidly than ever before, are you ready for what lies ahead?
“Technology is changing so rapidly and arriving so fast, there is a certain motivation to be cautious and take a wait-and-see approach. You might think, ‘I’m going to be smart and sit back a little bit and see what happens before I make a decision.’ The problem is that the change is so significant and the new capabilities so advantageous, that if you take a wait-and-see approach, you run the risk of being put at a severe competitive disadvantage.”
Tony Klimas, EY Global Finance Performance
Today's challenges provide CFOs an opportunity to work their leadership muscle in order to create tangible and lasting change in their firms.
Are you ready for 2017? How do you plan to address these challenges in your firm? Share your comments below.