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Advice and Information for Finance Professionals

3 Bold Moves CFOs Can Make Today to Outperform the Market

For years, finance leaders have been seeking ways to leverage technology to make their organizations future ready. The current pandemic exposed the shortcomings of outdated platforms and accelerated the pace of innovation, even as some organizations battle for their very lives.

In the second of the five-part webcast series Agile Finance Reimagined, produced by Association of International Certified Professional Accountants (AICPA & CIMA) and sponsored by Oracle, top experts discussed innovative ways finance organizations can reimagine their businesses and adapt to the sweeping industry and regulatory changes ushered in the COVID-19, with the end goal of outperforming the market. Joining Ash Noah, Managing Partner at AICPA, for the webcast were Kyle Hawke, a partner in McKinsey & Company’s Corporate Business Function practice, and Rondy Ng, Senior Vice President of ERP Applications Development at Oracle.

The bold moves draw from research conducted by McKinsey & Co. on the financial performance of 1,500 companies following the global financial crisis of 2007-2009, to understand how the top 25% in terms of total returns to shareholders, were able to outperform their competitors after the downturn.  These “Resilients,” the research found, shared key characteristics, including an aggressive approach to reallocating resources and investing in productivity initiatives within the organization.

Bold Move #1: Adopt a transformation mindset when reallocating resources.

In the June 9 webcast, the conversation kicked off with a discussion of how the upside to any economic crisis is that it presents a logical and necessary opportunity to rethink every aspect of the business. Contrary to what one might think, now is not the time to invest resources in small, incremental adjustments; rather, it’s the time to focus on bold, transformational moves that can deliver outsize productivity gains and returns on investment.   

Bold moves during a crisis also require powerful tools, yet many companies found themselves ill-equipped to maintain the business, let alone accelerate innovation.  As Oracle’s Ng pointed out, “Many of our customers were running on-premises systems from the early 2000s which lack crucial capabilities that are integrated into Oracle’s current Cloud ERP.” He went on to say that the current generation of Cloud ERP software is giving companies outsize productivity gains now—when they are desperately needed—as well as the flexibility to adopt new business models that support subscription-based revenue streams or digital sales channels.  Getting on the cloud today also provides access to continuous innovations being architected now into the software’s roadmap, from digital assistants and chatbots to AI-driven predictive and prescriptive analytics.   

Bold Move #2: Pursue pragmatic M&A and divestitures to improve the company’s portfolio

Based on McKinsey’s research of the past and assessment of current conditions, the current economic downturn is an ideal opportunity to embark on a programmatic approach to mergers, acquisitions, and divestitures that can increase your business’s competitive advantage.  Organizations using outdated technologies will be challenged to gain visibility into the profitability of their current business models, assess the potential of new M&A activities or spin-offs, and operationally support the choices they make.

Oracle’s Ng pointed out that Oracle uses its own Cloud ERP to support its M&A strategy and realize expected synergies.  “Oracle is very acquisitive,” said Ng. “We've been buying a number of companies over the years, over 100-plus in the last 20 years—many of them large-sized organizations.”  Over 25 of those acquisitions were completed during the Great Recession of 2007-2009, to support Oracle’s pivot into enterprise applications and hardware. Ng noted that true cloud financial management systems are continuously updated with the latest capabilities to provide scalability and flexibility, rapidly integrate new entities, and provide the ability to model the impact of individual acquisitions or divestitures on both the bottom and top lines.

Bold move #3 – Boost productivity through digitization

Innovation in finance has been a priority for years but is now become urgent as a result of the pandemic. More digitization and automation of finance processes has long been on the to do list of finance leaders.

According to the McKinsey report “Get in front of digital finance,” more than 75 percent of tasks can be automated in areas such as cash disbursement, revenue management, and general accounting operations. As organizations move toward digitization and high levels of automation, Oracle’s Ng stressed the importance of advanced data and analytics to drive visibility and collaboration across an organization.

“At Oracle our strategy has always been to provide a single integrated service: connected enterprise, connected data, connected view of the business processes to help you actually drive these big transformations,” Ng said. “The view from the front office to the back office is critical, not just to operationalize all these new business models, but to also help manage ongoing changes.”

He went on to add that, through a single unified platform that facilitates more automation and better collaboration, CFOs and finance teams can more easily adopt modern practices such as continuous forecasting and planning, and predictive capabilities to better respond to the next crisis. Plus, they gain the ability to execute more work remotely—such as the critical task of closing the books.

Ng shared the story of how Oracle was able to increase productivity during the pandemic, shortening the monthly close by an additional 20% while working from home. In fact, Oracle is reaping the benefits of its own cloud solutions across hundreds of processes, every day. More stories like these on how Oracle uses its own cloud software to continuously transform the company can be found on our Oracle@Oracle web site.

Next Steps for Reimagining Finance

Finance teams in every organization must move towards resiliency and finance reimagination at their own pace. There is no cookie cutter approach. The primary goal of this webcast series is to help each organization chart its own unique path to new levels of productivity and prosperity.

To learn the next steps to reimagine finance, download our white paper or watch the webcast replay. And don’t forget to join AICPA, McKinsey, and Oracle experts on July 15, 2020 for our third webcast in the Agile Finance series, as they explore how leading finance organizations are reimagining themselves for the new normal.  

Register now for the next webcast in this series.

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