This is the image that today’s CFOs must change. CFOs must instead utilize their talents in risk management and keen ability to measure and analyze, to enable projects to be successful and ensure the most return for an organization’s investment in its project portfolio.
Be an Enabler, Not a Gatekeeper
CFOs can start by helping managers to develop business cases for their projects. Many department and project managers have strong subject matter expertise, but lack the financial expertise to do comprehensive cost-benefit analyses. They also tend to only focus on their own projects, rather than evaluate their projects in relation to all projects that could benefit the organization.
By working with departments to develop these analyses, CFOs enable managers to better understand why a project should (or should not) be funded (or continue to be funded). Sometimes success is not starting a project or halting a project, but CFOs must help managers to see the limitations in their projects from an organizational perspective, enabling managers to understand why another project provides greater value or less risk to the organization as a whole.
Adding Value Through Risk Management
Throughout a project’s life, CFOs should continue to work with the project team to identify, assess, document, and mitigate a project’s business risks. This includes establishing and supporting a framework for monitoring project performance against KPIs established as part of the project charter. A lot of quantitative data passes through transaction support systems and general ledger. CFOs are perfectly positioned to help obtain and analyze this data in support of the project.
Stay Involved to Make Your Work Easier
Instead CFOs should remain involved in a project, applying their expertise in measurement (the process of obtaining quantitative and qualitative data) and business analytics to evaluate the performance of a set of predefined project metrics against a baseline or industry benchmark. In this way, CFOs can provide value to a project by helping to identify trends or statistics that may indicate that a project is heading toward trouble—enabling project teams to take proactive steps to address issues before they become problems.
If the project is affecting business processes or systems, the CFO should also be on the design team to ensure that proper internal controls and audit trails are incorporated into the business process/system. This enables the CFO to take a proactive stance that will allow auditing to be done though a process/system rather that around it. This increases the value of the project to the organization as a whole as it will keep internal and external auditors off of managers’ backs (and the CFO’s back too!).