Strategic Business Management

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INTRODUCTION

The CFO finance and accounting function is evolving from its traditional role of collecting data, validating data and reporting information to a more value-adding role of supporting analysis for decision making. Progress has been notable. There is much written and discussed about how the CFO function’s role should expand to one of being a strategic advisor to the executive team and an enabler for the workforce. However the upside potential is substantial.

Trends demonstrating progress include the shift from profitability reporting of products and standard service lines to the more encompassing view of customer profitability reporting using activity-based costing (ABC) principles. This is similar in industry to how suppliers often are viewed by customers as a commodity. In response, suppliers are expected to offer ideas and innovation to customers to differentiate themselves. Simply replace ‘users’ with ‘customers’ and ‘suppliers’ with ‘accountants’ in those last sentences. You will then understand what I mean. Accountants inevitably will need to embrace financial planning and analysis with enterprise performance management (EPM), which includes business analytics. To sum up, financial accounting is about valuation. In contrast, managerial accounting is about creating value. This means accountants need to expand from being bean counters or bean growers.

Another example of CFO function trends has been the development of strategy maps to report and monitor both financial ...