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Nick Araco 

Four themes for growth-conscious CFOs 

By Neil Amato 
May 05 2014

The time for accepting flat revenue numbers has passed, say the CFOs with whom Nick Araco (above) has spoken in the past six months. And the era in which CFOs let others handle the technology initiatives also seems to be fading, reflecting the continuing change of the CFO role.

Araco, the chief executive of The CFO Alliance, a network of nearly 5,000 finance chiefs in the US, said that CFOs are pushing for growth in their companies, despite concerns about the domestic and global economy.

“The overriding sentiment is that it will no longer be acceptable to be top-line revenue flat,” Araco said in an interview. “From 2008 until even the middle of 2013, it was OK to say that your top-line revenue was flat, you’re doing your best to maximise profitability and margins. The attitude now is completely different from a year ago, where we were cautiously optimistic that the environment we were heading into was going to present us some opportunity. That sentiment is replaced with a sense of purpose that it’s time to grow. And if we don’t grow, we’re not going to survive.”

And finance chiefs seem optimistic that they can grow revenue in 2014. Seventy-five per cent of CFOs surveyed by The CFO Alliance expect to see higher revenue this year, up from 64% who expected higher revenue a year ago.

From round-table discussions around the country and from The CFO Alliance’s annual survey, four themes are emerging for CFOs to reach those growth goals:

1. Talent still matters

Talent continues to be the main issue that will affect a company’s ability to grow. In The CFO Alliance’s 2014 CFO Sentiment Study, 66% of about 500 respondents plan to increase spending on wages and benefits, up from 57% the previous year and 52% in 2012.

Sixty-five per cent of CFOs said finding and retaining the right talent was an area in which they planned to spend more and realise a high return on investment (ROI), and 55% identified employee development and training as an area in which they would devote more resources and realise a high ROI.

2. Technology plays a greater role

Technology ties into the talent issue. Companies know they must improve technology but also make sure they have the right people in place and improve training. And CFOs are often part of those initiatives.

“Technology is having a major impact on talent, not only in finance, but in all areas of the company,” said Araco, whose organisation will host a session on CFOs and technology Wednesday at the AICPA CFO Conference in National Harbor, Maryland. “It’s presenting them both an opportunity and an issue that you have the talent that knows what to do with the technology, and uses the information that is at their fingertips now and was not available before.”

Sixty-three per cent of CFOs expect to increase overall spending in 2014, and Araco says 70% of CFOs say they’ll increase spending in technology, a move that goes beyond fixing older systems.

“It’s not because Band-Aids have fallen off,” Araco said. “It’s because some type of innovation has found its way into the marketplaces in which they serve, and they are having to invest in this technology simply to compete.”

Eighty-two per cent of CFOs list implementation of new technology or data security as a top operational challenge in 2014.

3. Focus on the customer

CFOs are devoting more time to learning about the customer experience and applying finance principles to forecast future customer needs.

“If we can’t measure it, we don’t want to talk about it as CFOs,” Araco said. “Now, thanks to social media interaction and other technology, marketing is now more quantitative than ever before. Regardless of providing a product, a service or something in between, there’s no excuse now not to have an ability to identify, engage, analyse and act on the information and intelligence as it relates to the customer experience.”

About three-quarters (76%) of CFOs rate improving responsiveness and meeting customer expectations as a top operational challenge for this year.

4. Role change continues

In the most recent survey, 79% of CFOs said they expected their role to change in the coming year. That’s up from 72% in 2013 and 71% in 2012.

And 60% say they will have greater involvement in setting corporate direction and strategy and in creating long-term shareholder value.

More than 30% report greater ownership of shorter-term projects and initiatives such as a technology implementation or organisational restructuring.

Related CGMA Magazine content:

North American CFOs, Wary of Regulation and Talent Issues, Continue to Push for Growth”: Some companies are expecting changes in the form of strategic initiatives or M&A activity, according to Deloitte’s latest quarterly survey of finance chiefs. CFOs remain positive overall but have lowered expectations for sales and earnings.

Spending and Sentiment on the Rise for US Finance Professionals”: Economic optimism amongst US finance professionals in business and industry continued a steady rise in the latest quarterly survey by the American Institute of CPAs. See which industries are leading and which are lagging and how the list of top concerns has changed.

Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.

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