We often think of innovation and finance as being at odds.

In this arrangement, the innovator says, “I have this great idea!” and the responsible financial person will respond, “OK, but how are we going to pay for that?”

But that’s not how organizations operate, especially today. The responsible financial people in a business today have unprecedented, real-time insights into their companies’ financial resources. In practice, they’re often allies to the innovator, not the gatekeepers.

Jason Dess, Aneel Delawalla, Cherene Powell and Michela Coppola at Accenture wrote about this in late 2022. Accenture’s research shows chief financial officers have more decision-making power in their organizations than that role has ever had.

“CFOs today have a unique vantage point,” they write. “Their responsibility for financial discipline, coupled with modern analytics, gives them cross-enterprise visibility. It allows them to connect the dots in ways their C-suite partners can’t.”

There is a caveat to this responsibility. This decision-making power must be supported by robust data. Without the modern analytics Dess, et al. allude to, CFOs cannot be drivers of innovation. They slip back into the role of financial gatekeeper instead.

Below, we look at why digitalization, better data and automated processes empower CFOs to be their organizations’ drivers of innovation.

The evolution of the CFO’s role

Technology has widened the scope of the CFO’s mission in recent decades.

As Oracle writes, the CFO’s responsibility today includes:

• • Opening up pathways for new business.
  • Shepherding company growth.
  • Facilitating strategic planning.

“Successful CFOs rely on accurate and real-time data to illustrate the company’s financial performance, create real shareholder value and drive transformation,” the Oracle team says.

This is far from the caricature of the CFO who pumps the brakes on any innovative initiative. The CFO has already become the innovator’s ally.

The next move is for the CFO to become the innovator themselves.

Amy J. Radin, principal and executive advisor at Pragmatic Innovation Partners LLC, outlines what a big step this can be. It involves upskilling or hiring the right talent to orient the organization’s finance function toward supporting innovation, then investing in the tools and capabilities your team needs to work toward this mission.

“CFOs must embrace the reality that to be an innovation enabler, many of the decisions they will be asked to make will be ‘and’ decisions, not ‘either/or’ choices,” she writes.

“They will be faced with polarities. To identify, shape, test, launch, and scale innovations requires financial management approaches that may feel at odds with traditional ways of operating. But the adoption of fit-for-innovation methods is essential to nurturing new ideas and allowing them to grow into commercial successes.”

Many CFOs already recognize this and have begun to take the leap. According to a 2022 PwC pulse survey of Fortune 1000 finance leaders:

• • 43 percent of CFOs were planning to invest in new automation capabilities.
  • 48 percent were planning “to double down on digital transformation efforts to deliver both near-term operating efficiencies and long-term top-line growth.”

“The key to all of these?” PwC’s Kazi Islam and Christopher Dimuzio write. “CFOs are prioritizing investments in digital upskilling and capabilities in data analytics, artificial intelligence and cloud to improve cost structure, reinvigorate the workforce and drive company revenue strategies.”

The unique problem payroll presents

Payroll is the biggest expense in most organizations. As a result, it’s a center of gravity for any organization’s strategic decisions and plans for the future.

The problem for many CFOs is that payroll is usually treated as an HR function or a standalone function. If payroll is siloed away — procedurally and as a data source — then it becomes difficult for CFOs to use payroll data in their planning.

The difficulty rises by an order of magnitude when an international organization relies on aggregators — payroll provider businesses that partner with multiple in-country vendors to process several payrolls for a global employer under a single contract — or Big Four accounting firms to handle the entire payroll function.

Payroll then becomes a black box, and getting useful payroll data from vendors can take days or weeks (or not at all if the provider’s system isn’t designed to facilitate reporting beyond basic figures).

We use the term global payroll management framework to describe the alternative to this model of payroll delivery. Within this framework, payroll data harmonizes and integrates easily across finance departments and those teams’ software tools. Payroll gets treated as part of the ecosystem of functions that support the business, not an isolated operation.

And so to build upon the points that Radin, Islam and Dimuzio make above, some necessary steps toward a CFO’s role as an innovation leader are:

• • Include payroll in larger digital transformation initiatives.
  • Digitize global payroll.
  • Automate global payroll dataflows.
  • Make payroll analytics easily available to the finance team.

How CFOs can champion innovation across departments

How to drive innovation is a much trickier question than why to do so. Below are three steps any CFO can begin to take today to position themselves along their organization’s cutting edge.

Secure buy-in from other departments’ leaders

CFOs mustn’t push unilaterally for change.

In 2022, Versapay, which helps automate the accounts receivable function in a company and brings that data into the decision-making ecosystem, surveyed 500 finance and IT leaders about accounts receivable transformation. The survey found that in most cases, 60 percent of the time, IT teams were only looped in after the project kicked off.

Such transformations are intended to bring departments, their work and their insights closer together. Honor that spirit of collaboration by ensuring any innovation gets the buy-in it needs from all stakeholders.

Link digital transformations across HR, finance and payroll

HR, finance and payroll are three connected departments from the perspective of data sharing, even if they’re managed separately. Digitizing all three as part of a larger project would certainly demonstrate a commitment to innovation.

Dr. Christian Campagna, who retired in February 2022 as the global lead for Accenture’s CFO & Enterprise Value practice, evangelized the idea that financial executives should be digital stewards.

In 2021, Campagna wrote about how Accenture’s own finance function underwent a digital transformation of its own. “We reorganized our structure, eliminated hierarchies, and simplified policies and processes to improve collaboration and empower local market leadership,” he wrote.

“That we could do this at speed was in large part due to our single instance enterprise resource planning (ERP) solution, fully in the cloud.”

The common thread across so many transformations — at Accenture and elsewhere — is in companies’ decisions to implement collaborative, cloud-based tools and workflows. This is what allows executives to see the big picture at a glance, recognize opportunities and make decisions quickly.

Get comfortable making resource decisions more quickly

Budget cycles often lag behind innovation cycles, Ankur Agrawal, Matt Banholzer, Eric Kutcher and Scott Schwaitzberg at McKinsey write.

In order to facilitate innovation — that is, to clear a path for people with innovative ideas and to ensure the resources are in place for them to push forward — CFOs and other leaders must be able to adjust budgets at frequent intervals.

“To be an innovation ally, the CFO must work with the rest of the senior-management team and the business units to change the pace and intensity of (and the dialogue around) resource decisions,” they write.

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