The office of the chief financial officer (OCFO) is increasingly playing a central and strategic role. However, until recently, the OCFO has been limited by legacy systems and outdated technology architectures. But a shift in the OCFO ecosystem is underway that will revolutionize the landscape and present opportunities for finance teams and solution vendors alike.
In this edition of Executive Insights, L.E.K. Consulting explores not only how the role of the OCFO is being transformed, but also how market technologies have evolved, and will continue to evolve, to satisfy the ever-changing needs of CFOs and the broader finance function.
OCFO solution evolution
Historically, the OCFO has been responsible for several critical operational areas, including accounting and reporting, budgeting and planning, audit, tax, and risk management. These functions were served by large on-premises enterprise solutions, with a primary focus on financial and risk reporting, aggregation of data, planning, and budgeting. These legacy solutions are often expensive and difficult to integrate into existing systems and typically involve extended implementation timelines. They are also typically more enterprise resource planning- or general ledger-focused systems and require separate software to run analytics or scenario analysis, making planning onerous.
Recently, the CFO role has been expanding from traditional, more technical functions of reporting, accounting and finance to encompass a greater focus on strategic planning, capital allocation and value creation across the organization. This evolution positions the CFO as a vital strategic collaborator with and thought leader for the CEO and the board, taking over some responsibilities more traditionally associated with the chief operating officer, with influence on human resources, sales, IT and more. These new responsibilities coincide with a growing demand for best-in-class technology within the OCFO ecosystem to drive improved functionality, automation and integration, which has resulted in the proliferation of innovative point solutions with intuitive modern user interfaces, real-time access to data and other benefits.
The desire for a best-of-breed solution for each use case has led to the widespread adoption of point solutions across the OCFO tech stack. Many organizations now find themselves using a different vendor for interrelated functions such as corporate spend, accounts receivable (AR) and treasury.
Figure 1 illustrates the proliferation and variety of these solutions and their providers.
