MUMBAI, (GNI): CII-Deloitte report on ‘The Future CFO – Thriving in Chaos and Driving Change’ was released today by Narendra Singh Tomar, Union Minister of Rural Development, Panchayati Raj & Drinking Water and Sanitation, Govt of India during the CII’s 10th CFO Summit 2017.
This thought leadership publication brings out the multiple disruptions which a business faces in the current environment and how a CFO needs to tackle these changes to create value for business.
Driving Change: The Strategic CFO: As the CFO role continues to evolve, it is imperative that finance executives raise their game strategically. It means being able to advance the organisation’s growth or improve its competitive position by identifying the key constraints holding it back, and then using finance to free it from those constraints. The key questions to answer here are: (i) Are you a strategic CFO? (ii) Are your conversations strategic?.
Leveraging opportunities beyond urban: While agriculture continues to be integral to the rural economy, industrial and services sector have grown over the last couple of decades to become the mainstay of the rural economy. With about 70% of the rural Net Domestic Product (NDP) coming from non-agricultural activities, it has transformed into an industry focused economy from a predominantly agricultural economy a couple of decades ago. Therefore, as rural markets evolve and companies look to increase their addressable market by entering rural areas, CFOs should be poised to respond to new market and consumer demands.
Digital Revolution: Time to re-think:
The six discernible trends that will define the future of finance are:
- Processes will be run as utilities – automated and inter connected.
- Information will be ubiquitous and real time; cyber security will emerge as the largest frontier of risk.
- Predictive analytics from structured and unstructured sources will be the norm and not the exception.
- Finance talent will come from non-traditional sources with Gen Y-Z leadership.
- Finance leaders will don roles of Tsar of Cash, Risk and Economics – CFO being the Chief Performance Officer.
- Crypto currency transactions will test the stewardship role of finance.
GST: Set for Launch: A thorough preparedness of the organisation before the actual implementation of the GST is the need of the hour. GST proposes to replace the complex indirect tax laws prevalent and rooted in the Indian tax system since decades and brings in a whiff of fresh air for corporates. It is however a challenge for most organisations to restructure the existing business processes considering the multiple stakeholders in an organisation. GST is expected to affect every part of the business including cash flow, capital budgeting, pricing of products and services, financial reporting, tax accounting, compliance processes, supply chain, procurements, contracts and the technology framework currently enabling this ecosystem. In addition, there will be significant training needs for personnel to understand and operate effectively under this new regime.
CFO: Overcoming Challenges:
- 23% of CFOs consider industry regulation/ legislation as a key industry challenge over the next 3 years.
- 22% of CFOs maintain that the difficulties in maintaining compliance is an impediment to the business environment.
- 57% of CFOs expect that matters relating to tax laws and the impending GST reform to have the biggest potential impact on operations.
- 62% of CFOs have accepted that compliance to changing regulatory environment will remain an important near-term priority for them.
- 65% of CFOs however maintain that strengthening and streamlining internal controls will continue to remain an important near-term priority for them.
- The M&A space has a number of issues that need to be addressed by the government to create a more favourable environment for firms and individuals to operate in. Three most significant challenges for the CFOs are complex/ multiple regulatory approvals, governance structures and unrealistic valuations.
V S Parthasarathy, Chairman – CII CFO 10th Summit and Group Chief Financial Officer and Group CIO, Mahindra & Mahindra Ltd., said, “In the current environment of churn and disruption, CFOs are strategists & catalysts for business transformations. It is thus imperative for the CFOs, whether from large or small corporates or from rural, urban or multinational background, to align with the national priorities of speedy economic growth, creating the connect between macro-economic goals and industry’s contribution to achieve them. Inclusive agenda is not a discount…it’s a premium to business and the only way to long term value creation”
Parthasarathy further added, “in the changing paradigm for value creation, CFOs have to balance zero tolerance for non-compliance in a dynamic and complex regulatory regime with co-creation of strategies for rural economy and inclusive growth as pivots for stake holder value. In this mission of the CFO, he/ she has to be the purveyor of appropriate technology that is not merely an enabler but embedded in business to leap frog rural divide. From integrated reporting to inclusive development is the mantra. In short a CFO occupies the centre of business operations and it is important that he needs to renew himself with professional summits like these”
Deloitte India Spokesperson: “As the waves of change continually hit business in the form of changing regulations, new technologies and the evolving social environment; the role of a CFO has changed from that of an accounting professional to a business strategist. Automation and technology is rapidly advancing to replace human interaction. Analytics has become an integral input to the CFO to understand future trends and help build growth plans for the organization. While CFOs are adapting themselves to be strategists and help the CEOs in key business decisions, it is imperative for them to protect the organization from the threats and risks that the new environment is bringing. CFOs need to set the standards and be the role model for the changing requirements and help rest of the organization to adapt to these regulatory and technological changes in a way that the organization’s culture and ethical practices are not compromised.”ends