Yahoo Finance CFOs in Southeast Asia need to make bolder change for lasting transformation: EY study
In the survey by EY, tech transformation was found to be a top priority for SEA CFOs.
Chief financial officers (CFO) that drive bolder change in their finance teams are able to deliver better performances today. Such CFOs may even position themselves to outperform in the future, according to the 2023 EY Global DNA of the CFO study.
The study surveyed 1,000 global CFOs and senior finance executives, including 110 across Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam in Southeast Asia (SEA).
CFOs need to voice their opinions
In its release on Nov 1, EY notes that CFOs are a valuable resource and can provide insights on the decision-making process, navigating trade-offs, fostering consensus across the C-suite and helping to align decisions with the long-term value strategy.
With this in mind, a CFO with enough credibility and influence to challenge the CEO and executive team, is key, adds EY.
However, its research shows that not all CFOs are willing to voice their opinions.
In SEA, just over one-third – or 38% - of the finance leaders surveyed, said that they “always” speak up and only 25% of the same respondents strongly challenge members of the executive team when they disagree on a key issue.
Tech transformation top priority for SEA CFOs
Among the CFOs surveyed in SEA, only 17% of them found their finance function to be the best-in-class in terms of key change priorities such as the firm’s technologies and operating models. Another 14% say they will be making “bold holistic changes” to transform their finance function for the future.
Technology transformation was a top priority for the 110 CFOs in SEA, with 47% indicating as such. This was followed by sustainability (34%) and advanced data analytics (32%). Talent, at 14%, was the CFOs’ lowest priority.
In addition, 75% of the finance leaders in SEA noted that traditional back-office behaviours and mindsets are slowing the modernization of the finance function.
CFOs looking to drive cost efficiencies and meeting short-term earnings targets amid current market environment
Amid the challenging market environment today, 84% of SEA CFOs agreed that the uncertain macroeconomic factors were putting pressure on them to drive cost efficiencies and meeting their short-term earnings targets.
Of the areas that are likely to see a reduction in funding, technology innovation or transformation (38%) stood at the top. This was followed by strategic acquisitions or divestments (37%) and recruitment, people development and reskilling (35%).
While CFOs bear the task of balancing their companies’ short-term demands with longer-term value, tensions and disagreements between them and their executive teams can undermine their efforts.
Unfortunately, more than half, or 65% of the finance leaders in SEA, said that there are tensions and disagreements within their leadership teams regarding the balance between short-term and long-term priorities.
Over half of SEA CFOs aspire to take on CEO role
Close to half – or 48% - of SEA CFOs have indicated that they aspire to take on the role of CEO in the long-term, either in their current organisations or in other organisations.
At the same time, they recognize that the path to CFO today is increasingly challenging and competitive. To become a CFO, 85% of the respondents said that possessing the capability for strategy is a must-have while another 85% agreed that a network of contacts and relationships at the C-suite and board level are important requisites for aspiring CFOs.
CFOs with emotional intelligence and the ability to connect with others effectively are also important attributes, notes the survey.
According to the SEA respondents, the most important attributes of successful CFOs in five years’ time are highly developed emotional intelligence and experience in people issues like diversity and well-being (36%), strong capability in managing internal and external stakeholders (35%) and ability to work across a complex ecosystem (e.g., suppliers, alliances and service providers) at 28%.
“CFOs that are making bold moves to transform the finance function for the future are more likely to have an above-average or leading finance function than those pursuing incremental change. With the fast-evolving digital solutions holding promise to help enhance productivity and efficiency and spotlight on climate change, it is understandable that SEA’s CFOs are prioritizing technology transformation, sustainability and advanced analytics in their finance transformation,” says Ronald Wong, EY Asean and Singapore financial accounting advisory services leader.
“However, it is also important that CFOs recognize that the lack of a people strategy can be the biggest hurdle to digital transformation. The best systems will not deliver their intended value if finance teams do not rally behind them,” he adds.
“As well, the finance function needs to foster a culture that encourages innovation while maintaining risk management practices. This will help CFOs to position finance as a strategic driver of sustainable growth within their organization,” he continues.
In Wong’s view, soft skills are just as important as having the technical capabilities.
“Aspiring CFOs should seek to gain new skills and experiences beyond finance. As well, by creating business impact, driving functional performance, and focusing on personal growth and development, CFOs can excel in their strategic responsibilities and contribute to the long-term success of their organization. As the role of the CFO becomes more strategic and focus on value-add, the CFO as an enterprise transformation leader is becoming more prominent. By delivering strategic results for their organizations now, CFOs can find themselves in strong contention for the top job in future,” he says.
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