EY survey navigates the paradoxes of the CFO role in Southeast Asia

Bangkok, 27 September 2023: Southeast Asia’s businesses are grappling with ongoing economic uncertainty, challenging market conditions and new stakeholder expectations. In response, CFOs are under pressure to digitally transform finance operations to provide faster, more insightful reporting and support evidence-based decisions across the enterprise.

DNA of the CFO Survey: Southeast Asia Perspective 2023, a survey of 110 CFOs and senior finance executives from Southeast Asia through three paradoxes arising from the evolving CFO role which are near-term vs. long-term value; safety vs. boldness; and strategic leadership role vs. traditional skill set. The survey shows how finance leaders in Southeast Asia are responding to these challenges as they strive to become value-adding partners to their organizations.

Waraporn​ Prapasirikul, Assurance and Financial Accounting & Advisory Services Partner, EY Thailand, says:

“CFOs can reconcile these paradoxes by adapting their approach across each dimension. However, success can largely depend on having a high-performing finance function. Without it, addressing these tensions and excelling in the role is likely to continue to be difficult.”

Balancing near-term and long-term investment priorities

38% of respondents state that they are more likely to cut technology innovation and transformation investments which is considered as long-term priorities in order to meet near-term goals.

Moreover, almost two-thirds (65%) say that there are tensions and disagreements within their leadership team on how to balance short-term and long-term priorities.

“Balancing long and short-term priorities requires a collective C-suite effort. Long-term priorities focus on building sustainable growth, innovation and competitive advantage, while short-term priorities address immediate operational needs, financial targets and customer demands. Collaborative efforts allow the C-suite to assess and manage risks more effectively.” Waraporn adds.

The top-two attributes that CFOs need to effectively influence the executive team's decision-making are the abilities to use data-driven insights to inform decisions and the ability to build trusted relationships with key investors or the board.

Balancing risk with innovation and bold transformation

Despite there being significant room to improve, only 14% of CFOs are making bold, holistic changes to transform the function for the future. The majority (63%) are instead taking a medium-risk approach, making significant changes in one or two specific areas of the finance function.

CFOs should elevate the talent agenda to achieve their digital transformation objectives. Those CFOs focused on culture change are more likely to have a bolder approach: 86% of respondents agree that finance culture change is a major priority. They know that even the best systems would not deliver their intended value if finance teams do not rally behind them.

Also, as the nature of the finance function changes, so do the skills required. Putting in tools for data-driven visualizations will likely not provide much value if finance lacks people who can interpret the output and translate it into value insight for business leaders or external stakeholders.

However, given Southeast Asia’s talent shortage, local finance leaders should also invest in upskilling existing team members and change their hiring profiles to strategically upgrade existing skill sets.

Balancing the evolving role of the CFO with traditional skill sets

As the CFO role becomes more strategic and value adding, 42% of finance leaders in Southeast Asia are moving away from setting their sights on being CFO and expanding their ambitions to pursue the CEO position. As CFOs prepare themselves to be chosen for CEO role, local leaders say their two greatest challenges are “finding time to build knowledge and expertise through exposure to external expertise and access to thought leadership” and “managing a wide range of operational responsibilities, including IT and HR.”

Increasingly, CFOs will be chosen for their strategic and inspirational leadership rather than pure finance domain expertise. Already, more than two-thirds (69%) of local finance leaders say 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.

When it comes to prioritizing the development of the next generation of leaders. Finance leaders in Southeast Asia feel they perform well, particularly when it comes to mentoring. 64% say they are investing enough time mentoring aspiring senior finance leaders. Two in five also say they are identifying high-potential employees at the start of their finance careers and 47% have a formal and robust process for CFO succession.

“While confronting the three fundamental paradoxes arising from the changing role of the CFOs, the Finance leader should also consider taking steps to deliver greater impact on three levels: business impact by creating value for the whole enterprise; functional impact by driving the performance of the finance function; and personal impact by achieving CEO ambition by developing future CFOs. By creating these impacts, CFOs can excel in their strategic responsibilities and contribute to the long-term success of their organizations.” Waraporn says.

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APAC no. 15001209