For Controllers, a New Agenda: Delivering More Value
With CFOs bearing down on areas like growth and transformation, controllers may find their roles elevated in the post-pandemic economy.
Over the past year, many CFOs have had to deal with higher demands and expanded responsibilities thanks to the COVID-19 pandemic. Across industries, those expanded duties have included leading transformation efforts—both within finance and throughout the overall organization—as well as driving enterprise growth as companies seek to capitalize on post-pandemic opportunities.
That doesn’t mean the job of managing finance has become less important or time consuming. Instead, as CFOs shift more of their attention to enterprise-wide performance, growth, and business transformation, they are increasingly asking their controllers to elevate their own roles to improve finance operations and deliver timelier information, insights, and automation. This shift has, in turn, expanded controllers’ agendas and reallocated more of their attention from the traditional operator and steward faces of the role toward the strategist and catalyst faces. As their emerging agenda for the remainder of 2021 and beyond takes shape, so too does the challenge ahead of them: delivering more value to the CFO and the enterprise.
Seven Opportunities to Increase Value
Controllers have traditionally been focused on overseeing compliance, managing risk, and reporting accurate financial statements and disclosures. These roles generally fall into the steward and operator faces of the controller, and such responsibilities typically had clear monthly, quarterly, and annual timelines. The COVID-19 crisis, however, dramatically shortened timelines for providing critical information for management decision-making. At some companies, the pandemic even brought to a halt the issuance of earnings guidance.
While the demands on controllers have been rising for some time, this new environment has dramatically increased the calls for controllers to add more value—from transforming the finance organization to deepening the insights provided internally and externally. Moreover, changing expectations for in the finance function going forward will likely only increase the demands on controllers.
Consider, for example, how quickly routine accounting and finance work is being automated and access to data is becoming self-service. The greater use of technology requires higher-end judgment and data analytics skills to effectively partner with the business—skills squarely housed in the controller function. At the same time, routine work is increasingly being outsourced, often to shared service centers in lower-cost locations. In fact, in Deloitte’s first-quarter 2021 CFO Signals™ survey, 76% of responding CFOs expect more of their finance work to be completed remotely post-pandemic compared with pre-pandemic levels, and 21% expect more outsourced finance services.
These trends clearly have implications for the controller’s future agenda. And whether the pandemic crisis abates or is resolved, CFOs have targeted controllership as an area ripe for change. In fact, in the first-quarter 2021 “CFO Signals” report, some 25% named it as one of the areas they would most like to improve.
In response, below are several areas for controllers to consider in their efforts to extend the value they provide to CFOs and the enterprise:
Reporting critical metrics and value drivers of the business in near-real time
Rethinking disclosures to support investor decision-making
Improving capital allocation decisions and investment performance
Driving information and data governance and systems initiatives
Enhancing resiliency and risk management
Driving finance transformation and efficiency and
Developing talent throughout the finance organization.
Reporting Critical Metrics and Value Drivers
Controller organizations typically provide extensive reporting on critical accounting information to the businesses on a regular basis and offer key disclosures to investors—primarily quarterly. As the COVID-19 crisis unfolded, however, so did the need to understand business performance and new value drivers in real time, given rapidly changing market, supplier, and financial conditions. In turn, the need for more and different information in a far more condensed time frame created demands beyond traditional outcome measures at a regular frequency.
In some organizations, providing such management reporting and predictive insights is traditionally the province of FP&A, but these boundaries may blur if critical data for these insights comes from accounting systems in the controller’s organization and other sources within and outside the company. Since the onset of the pandemic, we have seen controllers work more closely with FP&A leaders and often take the lead in defining the key value drivers, metrics, and reporting to support management decision-making. As a result, controller functions are assuming a greater role in enabling predictive insights and scenario planning.
The COVID-19 crisis has led to substantial changes in many businesses and, in some cases, even their business models. Those changes, in turn, have driven the reconsideration of disclosures.
For example, many retailers moved substantial parts of their businesses online. Some shifted their sources of supply, and others introduced online subscription models. As investors seek reliable predictors for future performance, the metrics typically provided—such as same-store sales—may no longer be relevant. Instead, retailers may have to provide indicators such as subscriber growth or unique website visits. At the same time, companies in other industries are being pressed by regulators, consumers, and investors for additional disclosures related to sustainability and corporate responsibility.
Controllers can add strategic value by working with business leaders, including the CFO, to reassess disclosures and report on accounting treatments, as well as other metrics that matter to investors, to best unlock or convey the value of the company. Beyond disclosure content, controllers driving finance transformation through automation and process improvements can increase the speed at which critical information can be made available to investor relations.
Another question controllers may be able to answer: Does consolidated reporting help investors better understand the company’s value and potential future growth? Although there may be benefits to consolidated reporting, sometimes greater segment-level disclosures can highlight promising growth areas that could drive higher multiples.
Improving Capital Allocation Decision-Making
In many organizations, CFOs are grappling with how to improve the capital allocation process and ensure funds support high-value opportunities. One key issue: Once a capital allocation decision is made, teams often go into execution mode and tend not to reevaluate the critical assumptions underlying certain decisions when circumstances change.
Controllers, as independent observers, are in an ideal position to bring more structure and discipline to decision-making processes, ensuring value is realized from capital allocation. They can review the efficacy of past business decisions that relied on assumptions that may no longer be valid and help develop a disciplined, yet agile, process for adjusting future capital allocations. Ensuring there is an evaluation and feedback loop for decisions in the event conditions or facts have changed, as well as a process for course-correcting, falls squarely in the controller’s domain. In fact, this responsibility is one the controllership should own as an unbiased, independent arbitrator of the decision-making process in the organization.