Financial Times - From finance to corporate leadership

Most CFOs already know that an important part of their job performance is based on their ability to act as a strategic partner to the CEO, providing sound advice on how to drive performance, enable compliance, and remediate risk. Exceptional CFOs also work hard to expand their influence with corporate boards, general managers, customers, and external stakeholders. Gaining credibility with these constituencies is key to becoming a trusted advisor to your CEO and taking your career to the next level

If you’re in finance, you probably know from personal experience that finance executives are an ambitious group. According to a recent survey by the CFO Executive Board, more than 25 percent of CFOs want to become president or chief operating officer, and another 25 percent have their sights set on the CEO or chairman’s title. But not just anyone is qualified to make the move: The same CFO Executive Board survey demonstrated that only 12 percent of CFOs actually become CEOs, and even fewer assume the chairmanship.

So just what does it take for CFOs to move up the corporate ladder? I’ve been asked to speak on that subject quite frequently since I made the transition from Oracle CFO to chairman of the board in June 2004. Having been a CFO myself for 25 years, I can tell you that there’s no magic recipe for success or substitute for hard work, but there are some basic strategies that every CFO can adopt to improve his or her chances of moving into the corner office.

Focus on performance
Every CFO knows that he or she is evaluated on the company’s performance, but it’s not always apparent just how that performance translates into career promotion. As a participant in the CFO Executive Board’s December 2004 study on CFO personal performance, I discovered that those of us who had made the transition to CEO or chairman shared two success factors: We delivered total shareholder returns (TSRs) well above average during our tenures as CFO; and we had extensive operational experience, either through strong partnerships with our general managers and business units, or through direct line manager experience.

Today, the most exceptional CFOs are leading their industries in TSRs by narrowing the focus of their finance activities to those that directly impact performance, such as strategic planning, operations planning, and M&A. They are reorganizing and centralizing their finance structures to reduce their involvement in administrative areas such as procurement and real estate, in order to focus more time and resources on strategic issues such as corporate governance, strategy and planning, outsourcing, and profitable growth.

Take my experience as Oracle’s CFO. In 1998, we were among the first to move to a centralized finance function based on shared services, creating service centers in California, India, Ireland, and Australia that now act as hubs for our finance operations supporting four operating divisions in more than 90 countries. We also invested in Oracle E-Business Suite to automate, streamline, and standardize finance and business processes across the globe to allow us to run one instance of our financial applications in Austin, Texas, for the entire world. These moves resulted in a 25 percent reduction in finance head count and a 30 percent reduction in finance and accounting costs. Finally, we pushed to adopt self-service wherever possible to enable local account teams to concentrate more on strategic planning, payroll, and corporate strategy.

Although it was tough getting people to accept a shared services strategy in the beginning, we began with low-hanging fruit such as payables and receivables to achieve some quick wins. After that, it became much easier to get people to embrace a shared-srvices approach, to the point that we now run some of our decision analysis and support out of India. The results of our approach to centralization and shared services have been impressive and have been replicated through virtually all the other functions inside Oracle, such as human resources, legal, marketing, IT, and support, which largely accounts for the doubling of Oracle’s profit margins in the last six years.

Expand your influence
Most CFOs already know that an important part of their job performance is based on their ability to act as a strategic partner to the CEO, providing sound advice on how to drive performance, enable compliance, and remediate risk. Exceptional CFOs also work hard to expand their influence with corporate boards, general managers, customers, and external stakeholders. Gaining credibility with these constituencies is key to becoming a trusted advisor to your CEO and taking your career to the next level.

Exceptional CFOs who have made the transition to CEO or chairman have a number of traits in common when it comes to expanding their influence. Since Sarbanes-Oxley, they take the time to meet often with corporate board members who want to bone up on auditing, risk management, insurance, and IT issues.

They meet weekly or biweekly with general managers to understand operational strategy and how finance can support that. And they get together frequently with customers and analysts, to better understand where their industry is headed and how they can compete more effectively.

I can’t stress this last point enough. During my 13-year tenure as CFO, I was called Oracle’s top salesman because I often met with at least three customers a day to find out what products and services they needed and where we could improve Oracle’s offerings. I also met frequently with analysts and institutional investors to give them as much information as possible to effectively evaluate Oracle, and I instituted a comprehensive investor Web site to give individual investors equal access to SEC filings, press releases, financial analyses, and investor presentations. I’ve carried this commitment to external stakeholders into my new role as chairman, and still meet almost daily with customers to get their take on Oracle’s strategies and product offerings.

Integrated view of the business
To make the leap to CEO or chairman, it’s not enough to deliver strong performance or become a trusted advisor. You need to have an integrated view into your business, one that combines the financial view, the operating view, and the market view. Achieving an integrated view into the business means gaining deep operational knowledge by meeting often with IT, your business units, your overseas subsidiaries, and even with competitors. Many CFOs were helped in this process by Sarbanes-Oxley Section 404, which exposed their companies’ operational strengths and weaknesses. In fact, many headhunters now evaluate a CFO’s fitness for the top job based on his or her ability to boost corporate performance from work done on Section 404.

The most-exceptional CFOs are also getting an integrated view into their businesses by investing heavily in performance management strategies, business processes, and technologies. At Oracle, I equipped my finance team with a variety of decision support tools to track performance and keep Oracle on track even during the most-volatile stock market swings. Everyone on my finance team used Oracle Financial Analyzer to monitor both financial and nonfinancial key performance indicators, such as our days-sales-outstanding and book-to-bill ratios. We also relied heavily on Oracle’s customer relationship management products to track all our sales activities, from revenue by customer and product to win-loss data.

One of the legacies I left Oracle was the constant feedback we gave to our internal software development team on the functionality and best practices we wanted built into the next generation of Oracle’s corporate performance management solutions, such as our new enterprise planning and budgeting product.

I feel strongly that providing your finance team with the right tools and intelligence gives them the integrated view they need to partner more effectively with the business and drive profitable growth and shareholder value. And if you’re a CFO with ambitions to move up the corporate ladder, that might just be your ticket to the corner office.

(Henley is the former CFO of Oracle and currently Oracle’s chairman of the board. He has been at the company since 1991.)