The Pandemic CFO: How is the crisis re-defining the role of finance organisation for the business.
The CFO and the finance organisation have once again become the key direction holder and has also assumed a lead role in redefining the business strategies, objectives and charting the way forward. Most CFO’s I have interacted have told me about the short-term tactical and long-term strategic changes that they have managed within their organisations during the period since lockdown and have in most times acted as the catalyst to accelerate change to better cope the uncertain times.
Lockdowns have created a pause in revenues for many industry sectors, our sector aviation included – however, the costs or cash outflows continued, maybe at a slower rate. Speaking for the aviation business and airports, the perception around travel globally have altered and questioned the need for air travel for business. This is also true for many other sectors such as hospitality, retail, food & beverages, auto sector etc. with certain key existential question to be answered and deciphered. There is no single panacea and requires leaders to find unique solution to meet their need.
My key takeaways from the pandemic and the lockdown has been one of digital transformation of the finance organisation and a quick ability improvement for remote team management. Covid has been a great teacher in digital transformation for the entire business. For us, the new need to manage social distancing in the airport has quickly given rise to a new ‘contactless’ airport process which covers the passenger journey from the kerbside alighting to aircraft boarding. The future design of airport terminal and the digitisation need will be defined from a new start point.
My essential list for the CFO has been
Setting up effective communication – Keeping a open, clear and pro-active communication with the investors, boards of directors, employees and vendors to inform on the key directions that the organisation is planning and detailing on how it is managing the crisis. The first few months are most critical to ramp up the frequency and transparency of communication and the responsibility lies in the hands of the CFO.
Digital transformation – Technology is ubiquitous throughout modern businesses and because CFOs have such a deep understanding of all the organization’s units, they are a natural fit to oversee the technology that integrates with all these units. Some of the key transformation projects that I have supported in acceleration have been
- Implement Analytics solutions – like queue management systems, e-pos integrations and payment gateways to enhance Non Aeronautical Revenue
- Have an effective Asset Management System that will work on predictive analysis to have scheduled maintenance of our machinery which reflect in opex savings when implemented correctly
- Extensively use data analytics to have a real time information dashboard that will populate data from a monthly MIS to reflect the current business scenario and facilitate timely decision making.
Becoming a Agile Leader – On a continuing basis, CFOs must ensure that their organizations are effectively measuring and tracking results versus internal and external benchmarks.
In a such a scenario, cash is not just king, but emperor! – Calibrated budgeting and having detailed forecasts in the continuously changing times will help optimize costs in the short and long terms. In this context, the finance chief would be required to
- be the business partner in identifying, understanding and supporting the CEO and other executive peers as recovery begins. Teams likely will need different support than they have historically.
- evaluate how financial teams can become more agile and effective even while working remote and improve process & cost efficiency by implementing flexible methodologies like rolling forecasting and zero based budgeting.
- identify high-potential staff members who are fluent in the use of information tools and can help operational leaders plan for recovery.
The impact analysis for different organisation or industry could vary, but the effect of uncertainity and the need for change cannot be denied. I see a continuing need for the CFO to be in the forefront leading the change and guiding the organisation to emerge more leaner, more responsive to change and much more agile.