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Strategic Role of Today’s CFO : The New CFO Agenda
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Strategic Role of Today’s CFO : The New CFO Agenda

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Keynote address at the "CFO Strategies Middle East 2007" Conference, December 2007

Keynote address at the "CFO Strategies Middle East 2007" Conference, December 2007

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  • 1. Strategic R l of T d ’ CFO S i Role f Today’s The New CFO Agenda Sanjay Uppal Group Chief Financial Officer EmiratesNBD CFO Strategies Middle East 2007 3 – 4 December 2007 Dubai. UAE
  • 2. Forces Shaping the CFO Agenda in Middle East Meeting the demands of strategic stakeholder base The Th CFO Toolkit: Are you well equipped ? T lkit A ll i d CFO Agenda in the new economic order 1
  • 3. Forces Shaping the CFO Agenda Traditional changes continue to …However a l H larger shift is occurring hift i i define and evolve the role of the due to a fundamental shift in CFO … expectations from the role Evolving Market conditions Organizational ‘pull’ Regulatory to move from changes CFO ‘Controller’ to ‘Strategist’ Growing scope and scale of business 2
  • 4. CFOs have traditionally had 7 core & 5 extended Finance responsibilities Core Extended responsibilities Description responsibilities Description Manage financial controls Oversee administrative 1. Control & reporting 8. Administration functions (e g HR legal) (e.g., HR, 2. Financial planning Plan & measure Manage corporate & analysis performance management 9. IT infrastructure systems 3. Accounting / Report proper book Manage infrastructure audit accounts 10. Operations operations (e.g., order management) Fulfill & optimize tax Lead & execute 4. Tax requirements 11. M&A transactions 5. Finance & Manage the use & sources Responsible for Treasury T of funds 12. 12 Strategy corporate & Business Unit strategy 6. Governance & Ensure compliance & compliance quality governance 7. Investor Manage investor relations communications 3
  • 5. CFO has been thrust into ‘Number 2 role’ : CFO eclipsing COO & feeling pressure COO position is declining as CFO becomes . . . turnover indicates increased pressure on CFOs more important . . . Total COO Positions* CFO Changes: 1994-2006 P bli C i ith Revenues >$1 Billi * US Public Companies with R $1 Billion 600 500 225 400 300 200 200 100 0 175 2001 2002 2003 2004 2005 2006 94 95 96 97 98 99 00 01 02 03 04 05 e 06 19 19 19 19 19 19 20 20 20 20 20 20 20 30% of CFOs do not co e from o C Os ot come o 75% of CFOs have less t a 5 yea s 5% o C Os a e ess than years finance tenure “The Chief Operating Officer is becoming an endangered species in corporate America. As that p g g g p p role goes away, more often than not, the CFO is being given all or part of those responsibilities in addition to other duties—responsibility for execution, efficiency, performance, and organizational design at the enterprise level” – CFO, Consumer Products Company** 4
  • 6. CFOs are moving to a more complex role… From budgets to value creation Controller Strategist Primary Reporting on use of Developing and managing core elements objectives financial resources of the business Protecting financial Corporate/portfolio strategy resources Investment strategy (M&A, business Complying with development) financial reg lations regulations Financing strategy Ensuring proper risk Acting as “Deputy CEO” & board member management Using financial tools to g gain strategic advantage g g Typical CPA Corporate development background Accountant / controller Line management Investment banking / management consulting 5
  • 7. Forces Shaping the CFO Agenda in Middle East Meeting the demands of strategic stakeholder base The Th CFO Toolkit: Are you well equipped ? T lkit A ll i d CFO Agenda in the new economic order 6
  • 8. Stakeholders expectations from the CFO & the finance organizations have increased... • Strategic Business Counselor • Integral part of management team to support value/ wealth creation • Identifies opportunities and provides critical information • Focused on and analysis to make superior decision support operating and strategic • Provides sound decisions financial analysis to management • Focused on processes and • Dominated by risk minimization reporting and compliance functions Stage I Accounting II Controlling the III Planning & IV Integrated functional manager business analysis excellence Role Bean counters Process managers Business partners Value Managers Key • Financial • Management • Performance • Superior decision capabilities accounting reporting management support to invest wisely • Tax • Analysis • Business development • Audit • Enterprise risk • Treasury management • Provide thought leadership 7
  • 9. Leading-edge CFOs can showcase finance as the driver of value creation From To Finance staff optimizes Finance creates tangible value for around avoiding mistakes of business leaders by delivering select routine processing / analysis pieces of insight & personally shaping key business decisions y Finance staff seen as the Finance staff become the primary “numbers guys” to have on option for driving initiatives within & cross-functional teams across BUs Finance supports business Finance actively orients the company decisions made by the rest dialogue around shareholder value of the management team creation Finance resources seen as Line managers see Finance staff as capable quantitatively, but prime talent pool for management remain pigeonholed as “staff” staff positions people 8
  • 10. Forces Shaping the CFO Agenda in Middle East Meeting the demands of strategic stakeholder base The Th CFO Toolkit: Are you well equipped ? T lkit A ll i d CFO Agenda in the new economic order 9
  • 11. Preparedness for the future Are CFOs positioned to effectively meet these demands on a sustainable basis ? 10
  • 12. Preparing for & managing this change Organization structure changes Tools, T l IT systems t & processes Some Personal Perspectives Skills & Capability enhancements Changes to Performance measurement t 11
  • 13. Forces Shaping the CFO Agenda in Middle East Meeting the demands of strategic stakeholder base The Th CFO Toolkit: Are you well equipped ? T lkit A ll i d CFO Agenda in the new economic order 12
  • 14. Forces shaping the CFO agenda IAS / IFRS Economic Environment Cost Reduction Global Capital CFO Markets Agenda Corporate Disclosures Governance Basel II 13
  • 15. CFO : The new economic agenda Cost Efficiencies & Shareholder Value Enhance E Financial People, Processes Transparency Drive Transform & Technology Effective Eff ti Finance function Risk Management into business Approach operations 14