The Role of CFOs in current business and external environment context

In an interaction with Asia Business Outlook Magazine, Kaushik Mitra, VP and CFO, PepsiCo India and South Asia, shared his views and thoughts pertaining to the evolving role of the CFOs. With 30 years of diverse experience, Kaushik is responsible for leading the Finance function and agenda for PepsiCo’s Food, Beverage and Nutrition business in India, Bangladesh, Sri Lanka, and Nepal.

How has the role of the CFO evolved in recent years in response to changing business environments and economic uncertainties?

What do the shareholders or owners look for in the CFO. I believe the answer is someone who enhances shareholder value. So, the primary role of the CFO is that of a value creator and value enhancer. I have always thought about the true role of Finance in an Organisation, and I have concluded that Finance is the true representative of the owner of the Company. In any meeting, in any business situation, if the owners were in the room what would they do? How would they be thinking about the issue we were discussing and trying to solve. What would be their objectives? Over the past thirty plus years I have worked in Finance in different organizations and across geographies, this realization has stayed true for me. Even today, I apply the owner/shareholder lens to any decision I make, any opinion I give or in the role I play in a team. In organizations where ownership and management are separated from day to day running of the business and decision making, someone always needs to wear the hat of the owner and Finance, particularly the CFO does just that. That is the reason this role has a seat on the table. That is also why owners always have a say in deciding who the CFO would be. In Board run listed organizations, the independent shareholders have a veto power on CFO appointment to make sure that minority shareholder interest is protected.

While the above remains true, the role of the CFO has significantly evolved in recent years, driven by changing business environments and economic uncertainties. Traditionally focused on financial reporting, risk management, and budgeting, today’s CFOs are playing a far more strategic and multifaceted role within organizations.

Strategic Leadership: CFOs now contribute to broader business strategy beyond just managing finances. They act as key advisors to CEOs, ensuring that financial insights align with long-term goals. For example, in response to economic uncertainties such as the COVID-19 pandemic, CFOs like me had to quickly pivot financial strategies, reallocating resources to maintain liquidity and operational stability. This required close collaboration with other departments to sustain business continuity.

Digital Transformation: The increasing reliance on data analytics, automation, and AI has also reshaped the CFO's responsibilities. CFOs are now at the forefront of driving digital transformation, implementing advanced financial technologies (fintech) to improve forecasting, decision-making, and operational efficiency. At PepsiCo India we have embraced digital tools in financial management to streamline operations and gain a competitive advantage.I call it SSAEO. Simplification, Standardization, Automation, Elimination and Outsourcing. At PepsiCo India we have outsourced most of the non-core finance work such as transaction processing. We have ruthlessly simplified processes and standardized reports. As a result we are able to embrace digital tools in financial management to provide real time analytics to support business decisions. The finance function is now truly playing a navigator and catalyst role in supporting both the perform and transform agenda in PepsiCo India.

Risk and Sustainability Management: With rising global concerns over environmental, social, and governance (ESG) issues, CFOs are playing a critical role in ensuring that companies are financially sustainable and compliant with regulatory demands. They lead initiatives to incorporate ESG metrics into financial reporting and guide sustainable investment strategies. CFOsnow are playing a pivotal role in ensuring that sustainability goals were integrated into financial planning.

In summary, the modern CFO is not just a financial overseer but a key strategic partner driving business growth, innovation, and resilience in a dynamic and uncertain world.

In a time of economic challenges, what innovative approaches are CFOs implementing to optimize costs without compromising growth or operational efficiency?

CFOs are constantly looking for and leveraging innovative approaches to optimize costs without compromising growth or operational efficiency. These strategies are focused on maintaining business resilience, driving efficiencies, and preparing for long-term growth.

Automation and Process Optimization: One of the most common methods CFOs are adopting is automating repetitive financial tasks and processes. For example, the use of robotic process automation (RPA) to streamline accounts payable, invoicing, and expense reporting reduces operational costs and errors while improving productivity. Companies like PepsiCo have used automation to significantly reduce financial processing time, freeing up resources for more strategic activities.

Data-Driven Decision Making: CFOs are increasingly relying on advanced data analytics to identify cost-saving opportunities and enhance decision-making. By analysing financial data, they can predict market trends, optimize resource allocation, and uncover inefficiencies. I gave the example of how in PepsiCo we have standardised and simplified reports and presentations focusing more on the insight, scenario planning and centre cut forecasting.

Zero-Based Budgeting (ZBB): This ZBB approach, where every expense must be justified from scratch for each new period, is being used by many companies to scrutinize their spending habits. It allows CFOs to prioritize essential expenses, reduce unnecessary spending, and redirect resources toward growth opportunities. In PepsiCo we drive a rigorous cross functional productivity council including applying theZBB approach for our plans, which has led to substantial cost savings without negatively impacting business growth.

Outsourcing Non-Core Functions: To further optimize costs, CFOs are increasingly outsourcing non-core functions such as IT support, HR, or certain accounting tasks to third-party providers. This approach enables companies to focus on their core competencies while reducing operational expenses. I have spoken about how in PepsiCo India we have been continuously following the SSAEO approach over the years to good effect.

By integrating these innovative approaches, CFOs can strike a balance between cost optimization and continued investment in growth opportunities; ensuring businesses remain competitive even during economic uncertainty.

In an era of increasing regulatory scrutiny, how are CFOs ensuring that their organizations remain compliant while also driving innovation?

CFOs are being increasingly tasked with ensuring their organizations remain compliant while simultaneously fostering innovation. To strike this balance, CFOs are adopting forward-thinking strategies that align with both regulatory frameworks and business goals.

Embedding Compliance in Business Strategy: The risk discussions are no more the domain of the fiduciary functions such Control and Legal. CFOs are driving proportional ownership of the compliance and risk management agenda by integrating compliance into the overall business strategy rather than treating it as a separate function. This approach allows organizations to innovate within regulatory boundaries, ensuring that new products, services, or processes are compliant from the start. In PepsiCo India, the CFO with the finance team plays a key role in aligning the company’s financial strategies with evolving global regulations, particularly around funding for environmental, social, and governance (ESG) reporting. As ESG standards become more stringent, PepsiCo is aiming for a higher compliance standard while also investing in sustainability initiatives, such as reducing water usage and transitioning to renewable energy. At the centre of this strategy is to drive proportional ownership and embed the risk discussion into the business must win battles.

Leveraging Technology for Compliance: CFOs are using digital tools to automate compliance processes, ensuring real-time monitoring and reporting while freeing up resources for innovation. Many companies, including PepsiCo, use advanced analytics and artificial intelligence (AI) to detect potential regulatory risks and ensure that data reporting complies with international standards. This proactive approach minimizes the risk of violations while maintaining a focus on business growth.

Collaborative Governance Frameworks: CFOs are working closely with legal, risk, and IT departments to build governance frameworks that encourage innovation within compliant practices. At PepsiCo India, as CFO, I am required to collaborate with multiple functions to ensure that innovation—such as the development of new sustainable packaging solutions—meets regulatory standards without hindering progress.

By embedding compliance into strategy, leveraging technology, and fostering cross-functional collaboration, CFOs can ensure their organizations navigate regulatory complexities while driving innovation and growth.