In today’s competitive economy, an organisation can only be successful if it has a high-calibre CFO supporting the business, says Mr Thiru Vengadam, Managing Director and CEO, IFS Solutions India Pvt Ltd, Noida ( >http://bit.ly/F4TThiruV ). “The traditional view has been that the CEO provides strategic direction and leadership to an organisation, while the CFO supports him/her with numbers and reports. Subtly, though, there has been significant evolution in the CFO’s role,” he adds, during a recent interaction with Business Line .

As a result of globalisation and various legal, economic and capital market changes, the CFOs’ role has undergone a tremendous shift – from that of a finance manager to one of a Chief Financial Officer – with a larger emphasis on their professional judgment, strategic and commercial acumen, rather than books of accounts and data, observes Thiru. “Over the last 20 years, I have met a large number of CFOs in India, in connection with their implementation of enterprise solutions (ERP-centred applications). The finance function as a ‘support’ function is fast fading. In many large companies, the CFOs are proactively helping the business.”

The modern CFO, as he describes, is not just a custodian of company finances, but an active player in the business value addition. Our conversation continues over the email, on the theme of enterprise systems.

Excerpts from the interview.

What are the top expectations of CFOs from enterprise systems?

1) Managing the operations and decision making:

In order to take control, the CFO needs to make informed decisions using readily available, accurate and effectively managed information. Speed will be the essence here, but there also needs to be a focus on the right data, as well as a keen understanding of where to find the right sources of information – both internally and externally.

By tapping into the intelligence of their value chain, and the ever-increasing quantities of data, CFOs need to move a company’s disparate, non-specific and often duplicated data sources towards a more integrated and organised structure. In order to play this enhanced role, the CFOs can get a strong support from the enterprise systems, as follows:

Financial and managerial reporting – Enterprise systems offer the flexibility to report performance by business unit, organisation, or cost centre on a real-time basis.

Effective account closures – CFOs can streamline accounting, consolidation, process scheduling, workflow, and collaboration.

Improve cash flow and liquidity – By automating management of dispute, credit, and collections, and offering electronic invoicing and payment capabilities that supplement traditional accounts receivable and accounts payable functions to accelerate and manage cash flow.

Optimise global cash management – With the help of enterprise systems, CFOs can report, analyse, and allocate cash in real-time; and integrate risk and treasury transactions with core accounting and financial reporting processes.

Reduce overall finance costs – Enterprise systems help you operate effective shared-services, collaborate with customers or suppliers, and streamline operations to reduce costs and resource demands.

Decision support:

With the support of real-time integrated enterprise systems, CFOs can see trends and patterns within the organisation, the effect of external shifts on the company and identify areas of disconnect that spur them on to decisive action. They may recognise financial leakages in the form of undisciplined expenditure, or the potential to generate new revenue streams or plug revenue losses that may have been identified by initially attempting to understand a puzzling bit of analysis or the recognition of a trend. Enterprise systems provide the foundation to quickly read, evaluate, and respond to changing business situations with timely, and accurate financial data.

Corporate governance:

While the requirements of corporate governance apply to the entire management of company, it is the CFO who has a greater role to play in this direction. It is an interesting balancing act that the CFO needs to do in supporting the value creation of the company and maintaining integrity in their operations. The CFO is the repository of actual corporate information. He or she has the regulatory knowledge and the closeness to the business to be able to judiciously use that knowledge to help the CEO form corporate decisions. Enterprise systems provide broader support of accounting standards, federal regulations, and improved administration of internal controls.

How can boards leverage enterprise systems and make the deliberations effective?

In these days of high level of adoption of information technology, the board can very well use the enterprise systems of the organisation to get direct inside view of the operations. Here are a few suggestions:

By understanding the background of each of the members of the board, the enterprise system can be extended with the required type of user-interface depending on his/her level of sophistication of use. This would increase the transparency and also improve the confidence of the director concerned as he/she is able to directly access and obtain the information; and drill down if required to check its veracity.

While the members of board participate through electronic mode, they can as well have access to the data that they are to review through electronic mode from their enterprise systems.

Directors are focused not just on internal data. They review the business risks, strategy, audit, finance, investment, compensation, etc; and they are also looking at loads of external data. Enterprise systems can provide access to such external data as well.

On how unified communications help mitigate risks, when synchronised with enterprise systems.

Unified communications (UC) is a new trend offering integration of various communication channels such as instant messaging, traditional or IP telephony, audio and video conferencing, instant sharing of data, controlling of the calls during the session, presence information, emails, SMS, fax, etc.

When the board members plough through voluminous data, generally led by a few ‘knowledgeable’ members, and have limited access and time, they tend to go with the flow and become a rubber stamp. However, with technology, they can quickly and efficiently look into any level of data, analysis, discussions and deliberations based on the unified presence of the board members (whether they are in the same room or not) and common understanding of the affairs of the company, and improve their decision-making. With unified communication and underlying integrated information systems, boards can now comprise directors with individual areas of expertise including independent directors who can significantly contribute to the functioning of the board.

For instance, one of our customers – a public sector organisation – has quickly adopted the information and communication technologies to effectively manage the organisation and provide information to the board. This large organisation is currently implementing a KPI-based management system, which takes real-time data from underlying ERP system in the company and provides it online, real-time to the decision makers in their fortnightly meetings. Summary of such information is also used by the board, when it meets.

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