How A Six-Decade Old Management Framework Helps Today’s CFOs Thrive
In 1964, the origins of what would later become the “people, process and technology” (PPT) framework for more effective organizational management was first created by Dr. Harold Leavitt. Now, nearly six decades later, and amidst a shifting and uncertain macro operating landscape, that same cornerstone acronym of sustainable enterprise efficiency holds more relevance for organizations and […]
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In 1964, the origins of what would later become the “people, process and technology” (PPT) framework for more effective organizational management was first created by Dr. Harold Leavitt.
Now, nearly six decades later, and amidst a shifting and uncertain macro operating landscape, that same cornerstone acronym of sustainable enterprise efficiency holds more relevance for organizations and decision-making executives than it may have ever before.
Within the C-suite especially, top CFOs have emphasized to PYMNTS during the “Day In The Life Of A CFO” series the operational imperative of having a comprehensive understanding of the interplay between people, processes and tools within both their finance departments and across the broader business.
That’s because, while core elements of the CFO role — like budgeting and financial reporting, cash management and other fiduciary obligations — have remained unchanged since the PPT framework was first popularized, nearly everything else about the responsibilities of today’s finance chiefs has been transformed, and relatively dramatically at that.
Driving that change is a rapid pace of technological advancement that has not only increased the efficiency of financial operations, but also increasingly positioned CFOs as internal leaders and key partners to the rest of the business.
That’s why, for People, Process, and Tools: A PYMNTS CFO series, we are unpacking the importance of process for modern CFOs, revealing why processes are the backbone of financial operations within an organization and highlighting the crucial — and irreplaceable — role they play in ensuring efficiency, accuracy, compliance and risk management.
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The Power of Process in Driving Growth
“Putting in place a process is free, but it is so critical,” Jim Sparks, CFO at Kalderos, told PYMNTS, noting that any process should be “repeatable — a wash, rinse, repeat cycle that everyone can follow. Direct communication is the food of champions… The key thing I would recommend to other CFOs is to know your drivers of value.”
Against an operating backdrop where digital solutions now allow for a more holistic look at business roadmaps, and the cadence of cross-department collaboration is increasing, CFOs can improve productivity, reduce costs and free up valuable time and resources for strategic initiatives by optimizing processes against business drivers — and ensuring that collaboration with the rest of the executive leadership team is a part of that process.
“The role of the CFOs has become a lot more operational. Today’s CFOs are a mix of COO — chief operating officer — and CRO – chief reality officer,” Vinay Bassi, CFO at TruBridge (formally known as CPSI), told PYMNTS. “My advice for other CFOs, is after knowing the drivers of the business, try to segregate them into two parts: what is controllable and what is non-controllable? A non-controllable could be an event like another pandemic, but controllable could be, ‘Hey, if there is an interest rate decline, what do I do? If there is a recession, what is my plan A, plan B, and plan C?’”
As Bloomreach CFO Ninos Sarkis told PYMNTS in an interview posted in November: “You can’t control the geopolitical tensions, but what you can control is making your business stronger and more resilient during these times so that you come out the back of it a stronger company… There’s a lot of relatively low-hanging fruit to make a business more efficient, more scalable and more automated.”
Read more: CFO Partnerships Are Putting the Collaboration in C-Suite
Processes Are Essential for Enterprise Efficiency
By prioritizing process optimization, CFOs can drive efficiency, mitigate risk and support strategic decision-making to achieve long-term financial success for their organizations.
“Chief value officer, or CVO, might be a more suitable title in the future for this position where you’re looking at not just financial analysis, reporting and controls, but value creation and how to use those resources to drive value creation for the company,” LiquidX CFO Abhishek Khandelwal told PYMNTS. “It’s critically important to strike a balance in being a financial steward of the company and at the same time supporting the innovation that can drive future growth.”
Well-defined processes facilitate change management by providing a structured framework for implementing new initiatives, technologies and organizational changes, and by establishing KPIs, metrics and reporting frameworks through which CFOs can provide stakeholders with clear and meaningful insights into the financial health and performance of the organization.
“The job has become a little more strategic partner to the CEO,” Lisa Mogensen, chief financial officer at RiskOptics told PYMNTS in December. “Finance is more of a gatekeeper than they ever were in the past, and it’s critical to make sure that the data’s pulled from the right source, the information is accurate, the information is clean, the right users have the right access to the right information.”
After all, when it comes to devising and implementing a successful business plan, first comes the why, then comes the how, and then the final question is the financial implications of doing so. For sixty years, that process has been an immutable center around which the CFO role has evolved.
The post How A Six-Decade Old Management Framework Helps Today’s CFOs Thrive appeared first on PYMNTS.com.