Read the previous installments in this series below:
In understanding what makes CPOs tick, it's important to realize that their fundamental risk aversion (see earlier parts of this series for more detail) comes from a not-so-dissimilar fear to procurement's DNA about doing everything possible to keep a production line running (everything else is secondary). But with CFOs, the fear stems from falling out of favor with regulators or shareholders and avoiding litigation at all costs. At the end of the day, CFOs are still always concerned with signing off on financial statements (SOX exacerbated this fear at the time). And new regulations, such as Dodd-Frank, further contribute to this constant CFO uneasiness.
Yet CFOs are becoming more strategic, and are not just signing off on the books. The past decade has seen the decline, in many organizations, of a chief operating officer role and our research suggests that CFOs are picking up much of the slack and responsibilities in this area. As of five years ago, 20% of publicly traded companies had abolished the COO position and many of those responsibilities and former COO reporting relationships would now fall under the CFO, including procurement in many cases!
Beyond signing off on the books and taking on additional operating responsibilities, CFOs are increasingly viewing themselves as keepers of the corporate strategy, especially in the initiatives having a direct impact on improving share prices (and other measurements of success and growth, such as EVA, RONA, ROIC, etc.) It's not just about the numbers, however. Being a storyteller and spinning the financial yarn is as important, especially externally. Whether it's communicating with Wall Street, bond rating agencies, the board of directors, or other parties, the ability of the CFO to tell a broader story has become key in this new hybrid role of "half accountant, half strategist."
As we'll see later in this series, this makes CFOS a particular ripe target for championing certain types of procurement initiatives.