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Three priorities for Southeast Asian CFOs making the leap to CEO

Photographic portrait of Ronald Wong
Ronald Wong

EY Asean and Singapore Financial Accounting Advisory Services Leader; Partner, Assurance, Ernst & Young LLP

7 minute read 27 Oct 2023
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CFO agenda

A new EY study examines how CFOs in the region can unlock strategic business value and potentially realize the ambition of becoming a CEO.

In brief
  • CFOs in Southeast Asia are well-placed to play a more strategic role that could qualify them to take on their organization’s top job in the future.
  • To help realize this, they must demonstrate the ability to build consensus across the C-suite and balance risk with innovation and bold transformation.
  • They also need to adapt their skill sets to change and develop the next generation of senior finance leaders.

While the CFO role has grown more demanding and complex, it has also become one of the most rewarding and exciting positions in the C-suite, according to the 2023 EY Global DNA of the CFO study. It is no wonder that finance professionals in Southeast Asia increasingly see the CFO role as a stepping-stone to the CEO position. The study, which covered 1,000 CFOs and senior finance leaders worldwide, found that 48% of respondents in the region are targeting the top job in the long term. Only 42% in Southeast Asia were content with the CFO role as their long-term goal, lower than the global average of 47%.

To help achieve their CEO ambitions, CFOs will need to embrace boldness, unlock value for their teams and drive success across their organizations. Businesses in Southeast Asia are grappling with ongoing economic uncertainty, challenging market conditions and new stakeholder expectations. Therefore, CFOs are under pressure to digitally transform finance operations to provide faster, more insightful reporting as well as support evidence-based decisions across the enterprise.

Unlocking value: navigating the paradoxes of the CFO role in Southeast Asia

This report explores how finance leaders in Southeast Asia can effectively address three paradoxes arising from the evolving CFO role.

Request a copy

Those who step up boldly to the challenge have important opportunities to demonstrate vision and enterprise-wide leadership. Ambitious CFOs should address the following priorities.

Build consensus across the C-suite to better balance near- and long-term investments

Balancing short- and long-term investments is a defining challenge of the CFO role, particularly in Southeast Asia. The study noted that compared with 76% of global peers, 84% of respondents in the region agreed that today’s challenging market environment is increasing pressure on finance leaders to drive cost efficiencies and hit short-term earnings targets.

Long-term efforts focus on building sustainable growth, innovation and competitive advantage, while short-term efforts address immediate operational needs, financial targets and customer demands. Getting the balance right requires a collective C-suite effort. However, Southeast Asian finance leaders reported disagreements in the top leadership team like their global peers. 

Tensions within leadership teams
of Southeast Asian finance leaders in the study reported tensions and disagreements within their leadership teams on how to balance short-term and long-term priorities.

In the process of elevating their leadership importance, CFOs are well-positioned to build consensus across the C-suite’s different perspectives and conflicting priorities. They can help resolve tensions by providing valuable insights to inform decision-making, navigating trade-offs and facilitating the alignment of decisions with the long-term value strategy. 

Building consensus will require a CFO with the credibility and influence to challenge the CEO and executive team. But finance leaders are not always prepared to speak up when their opinion differs from the status quo or challenge their C-suite colleagues even in private. For respondents in Southeast Asia, the top two abilities that CFOs need to effectively influence the executive team’s decision-making are as follows:

  • Use data-driven insights to inform decisions so that challenges can be addressed with evidence.
  • Build trusted relationships with key investors or the board so that C-suite colleagues know the CFO has the confidence of these critical stakeholders.

CFOs are well-placed to build consensus across the C-suite by providing valuable insights that inform decision-making, navigating trade-offs and helping to align decisions with the long-term value strategy.

Balance risk with innovation and bold transformation

The study found that only a small number of CFOs in Southeast Asia are pursuing a bold finance transformation agenda. Despite significant room for improvement, only 14% of CFOs in the region are making bold, holistic changes to transform the function for the future. 

CFOs recognize they need to build digitized finance functions that can proactively support their organizations in achieving sustainable, long-term growth. Their priorities are technology transformation, ESG data capture and assurance, and advanced data analytics. But the majority of Southeast Asian CFOs in the study are taking a medium-risk approach by making significant changes in one or two specific areas of the finance function but not embracing holistic digital transformation.

With many enterprise resource planning systems approaching end of life, CFOs have a perfect opportunity to demonstrate their ability to set a vision and drive transformation. By successfully rationalizing, harmonizing and streamlining their technology ecosystem, CFOs can drive efficiency and agility in the finance operating model. This will achieve much-needed cost reductions as well as provide data and commercial insights to elevate finance as a better business partner.

How EY can Help

Shrinking the finance technology footprint is an important cost optimization move. Running too many systems results in higher maintenance costs not only in terms of license fees but also data integration. CFOs can leverage unified solutions that allow the integration of data used for different reporting across the enterprise. By seamlessly connecting as “middleware” across various systems, unified solutions support the speed, accuracy and agility that businesses need in the current reporting environment.

Develop required skill sets and mentor aspiring senior finance leaders

The aspiration of many CFOs for the CEO role raises two key considerations: the need for finance leaders to stretch their skills and the importance of developing new talent to fill the CFO role when incumbents move to a CEO position.

The study found that CFOs will be increasingly chosen for their strategic and inspirational leadership rather than pure finance domain expertise. More than two-thirds of Southeast Asian finance leaders said their companies are willing to appoint CFOs with limited finance experience. Businesses are now considering CFOs from business development, investment, analytics, operations management or legal and compliance pathways.

How EY can Help

Required skill sets are also changing, with many respondents considering highly developed emotional intelligence as the top attribute for successful CFOs of the future. Half said they are updating the finance career path in the organization to include the new skills and experiences needed to succeed.
 

When it comes to prioritizing development of the next generation of leaders, almost two-thirds (64%) said they are investing enough time in mentoring aspiring senior finance leaders, compared with less than half (49%) of global peers. As CFOs prepare themselves for the CEO role, respondents said their greatest challenge is finding time to build knowledge and skills through exposure to external expertise and access to thought leadership. 
 

To free up more time for their own professional development opportunities, CFOs could delegate more responsibilities to the next tier of emerging finance leaders. For example, CFOs could delegate financial reporting responsibilities to financial controllers. As financial reporting becomes largely automated, some finance roles could be repurposed to support the CFO in partnering with the business.
 

Despite the challenges of the finance function, there has never been a better time for CFOs in Southeast Asia to showcase their leadership skills and commercial acumen. Whether acting as a C-suite consensus builder, delivering successful digital transformation or embedding financial insights into business decisions, the CFO is becoming more prominent as an enterprise transformational leader. By delivering strategic results for their organizations and continuing to mentor future finance leaders, CFOs could find themselves in strong contention for the top job down the track.

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    Summary

    CFOs are under pressure to play a more strategic role as businesses continue to face economic uncertainty, challenging market conditions and new stakeholder expectations. By taking several key actions, they could become a strong contender for a future CEO position. These include building consensus across the C-suite to better balance short- and long-term investments and balancing risk with innovation and bold transformation. Adapting to changes in required skill sets and mentoring the next generation of senior finance leaders are crucial as well.

    About this article

    Photographic portrait of Ronald Wong
    Ronald Wong
    EY Asean and Singapore Financial Accounting Advisory Services Leader; Partner, Assurance, Ernst & Young LLP
    Financial accounting advisory professional with deep accounting and reporting knowledge in SFRS, IFRS and US GAAP. Vast finance and accounting transformation consulting experience.
    Related topics
    Assurance
    Financial accounting advisory services
    Managed services
    Workforce
    CFO agenda

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.