I think one of the biggest challenges of being the CFO of midsize company (one with between 100 and 1,000 employees) is actually being the “Chief Financial Officer.” What I mean by that is making the transition from being a ‘shirtsleeves’ head of finance and administration to one that creates a more strategic role for themselves. This isn’t as much of a challenge for those heading the finance function in larger companies because the latter have the resources and the expectations of taking this role (although there are plenty of beancounter CFOs in the Fortune 1000 league).
Unfortunately, it’s just too easy to fall into the shirtsleeves rut. For many, it’s a more comfortable and besides, in midsize companies even senior executives have to handle a lot of petty stuff – there’s no one else to do it. The two combine to hold back the professional development of finance executives. Solving the first issue isn’t the point of this blog: it’s addressing the second issue.
Technology has been a blessing and a curse for executives and managers when it comes to providing – and chewing up – their most precious resource: time. Technology, especially information technology, has automated a large number of routine jobs that used to require dedicated personnel. On the other hand, technology has also shifted some tasks back to managers – especially in resource-constrained midsize companies – who now have to handle their own administrivia (typing, scheduling and even making their own travel arrangements).
Midsize companies face unique challenges. They are no longer the small and nimble firms they once were and they need many of the same capabilities larger companies have. Yet they lack the resources (money and people) of big businesses. I believe the finance organizations in midsize companies must play a more strategic role. They – and the CFOs that run them – can be an important force in fostering agility and making better use of people and other resources. Information technology is a key tool in this regard and the finance department plays a key role in collecting and disseminating information vital to running a company. Today, midsize companies can use information technology to provide managers and executives with greater visibility and insight into company operations. (“Visibility” is the ability to access relevant, detailed information quickly to address a business issue or provide alerts that attention is needed.) They can manage more by exception and less by brute force.
Midsize companies can and should make better use of IT to plan more effectively , make better use of their people and anticipate how best to respond to competitors’ moves or changing conditions. They can enlist IT to reduce administrative burdens through more automation, elimination of paperwork and an increased ability to manage by exception. And they can use IT to free up time for the finance organization to take on a more strategic role by making it more efficient in its execution of repetitive, low-value tasks. Midsize companies need to make better use of their ERP/accounting systems , eliminate spreadsheet-based planning and budgeting and implement spend management.
Information technology for midsize companies has evolved considerably over the past decade. Software capabilities that once required large budgets to buy and many technicians to run are now within their reach. Given these opportune changes, CEOs, CFOs and other finance executives in midsize companies must take a fresh look at what is possible. If they do, they likely will find ways to innovate and take more of a strategic role in their company.
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Robert D. Kugel CFA. – SVP Research