Globally, finance functions have spent much of the past decade dealing with rapidly changing financial reporting standards, corporate governance requirements and/or cost-cutting initiatives. Now, KPMG International’s survey of over 440 CFOS and other senior finance executives in 15 countries shows that the majority are poised to make the necessary investments and embrace intelligent finance models.
While difficult to master, 44 percent of respondents ranked talent management as the single most important factor for success of the finance function. Over 50 percent of respondents expect to see dramatic changes in the people-related processes of “retaining staff” and “increasing technical knowledge” within the finance function. Respondents named talent management and the technical knowledge of staff as the most difficult to improve. Overall, respondents named risk as the second most difficult measure to improve. High-performing organizations seem to have more success in this area; only 22 percent found improving these risk processes to be most difficult (compared to 30 percent overall).
“The finance organization of the future, and indeed of today, must go beyond its business-as-usual bookkeeping and financial reporting role to become a provider of real intelligence that business units can depend on when making strategic decisions,” says Martyn van Wensveen, KPMG’s Global Head of Financial Management. “Intelligent finance functions empower their finance teams to help the business make better and quicker decisions based on the right information delivered at the right time.”
He notes the most forward-thinking finance functions embed intelligent finance concepts by strengthening their business strategy alignment, planning and control, management reporting and analytical capabilities. They also employ the latest business intelligence tools and innovative (big) data and analytics techniques as well as invest in resources for transforming this data into insightful reports that enable actionable decisions across all business functions.
Compared to 2011, 25 percent more respondents in this year’s CFO study say their organizations are “very willing” to spend money on finance function improvements. Over two-thirds say their organization is “very” or “somewhat willing” to spend money to improve the effectiveness and efficiency of their finance function.
The survey compares the results of all respondents against those of high performing organizations, defined as companies with more than 10-percent growth in revenue and EBITDA in the past three years. Key findings from this year’s study show that many, but not all, organizations have had success making this finance transition a reality.
- Forty-nine percent of senior finance executives rate their ability to communicate effectively with their board of directors as a strength, up from 40 percent four years ago.
- Forty-four percent say they are already able to contribute well to the organization’s long-term business strategy development, up from 33 percent four years ago.
- Fifty-six percent expect their finance teams to have an even larger role in developing and executing business strategy in the next five years.
- Over half of respondents believe that providing greater support to the business offers the greatest opportunity for the finance function to add more value.
The report reveals that some of the biggest finance function improvement gains come from leveraging new information technologies to seize evolving market opportunities, for example, through more integrated, cloud-enabled Enterprise Resource Planning (ERP) and Enterprise Performance Management (EPM) solutions combined with user-friendly mobile technologies.
High-performing companies also employ sophisticated business analytic tools and techniques to continuously improve their forecasts, predict and manage risk, reveal new market opportunities and improve financial results. Four in ten (37 percent) of high performers plan to invest more in decision support tools, and 33 percent plan to invest in decision support capabilities, skills and methods.
“A company-wide business cockpit provides a real-time display for all key business value drivers that can be shared across the global finance function and all business units,” says van Wensveen. “Companies gain better alignment between business units, better understanding of movements in their markets and better synchronization of business decisions to support the company’s strategic goals.”
In summary, the CFO survey shows that intelligent finance functions are built on a strong foundation of Lean Finance principles and Finance Shared Services, reliable forecasting techniques, finance and risk function alignment and last but not least, pro-active talent management.
KPMG International’s global survey of CFOs and other senior finance executives of organizations worldwide is one of the most comprehensive and longest-running survey series of its kind. Iterations of our global CFO surveys and supplemental research have been conducted regularly since 2006, charting the evolution of finance departments and identifying leading financial management practices of high-performing companies.
For the 2013 survey, approximately 440 CFOs and senior finance executives in 15 countries and all major industry sectors shared their opinions on how finance functions are adapting to emerging business challenges. To read the current survey report and access previous research and more, go to kpmg.com/cforeport
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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