CFOs Face Critical Transformational Challenges, According to IBM Survey

CFOs Say Finance Departments Need Significant IT & Skills Improvements, Better Information Management & Governance Structure, While Lowering Costs

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SOMERS, NY - 25 Nov 2003: A new global survey of more than 450 Chief Financial Officers (CFOs), conducted by IBM Business Consulting Services, found that CFOs are unprepared in many key areas for the new business dynamics impacting their departments. While progress has been made over the last five years, the survey found that there are still fundamental issues that need to be addressed as the role of the CFO shifts from that of financial policeman to more of a strategic business advisor.

Underscoring this shift in responsibility, the survey found that two thirds of respondents see business performance management and increasing shareholder value as their top priorities. As a group, they expect to see their performance management activities more than double over the next three years. Less than 40% viewed managing the balance sheet as a key activity.

As the role of the CFO continues to change, the survey highlights the significant challenges faced by finance departments, as CFOs attempt to extend their influence beyond the executive suite into all areas of the business. Only 50% of CFOs felt that their finance organizations comprise high quality, business-oriented professionals, with more than a third of CFOs believing that their organizations are understaffed to perform current tasks or that their existing staff are underskilled.

A significant challenge called out by CFOs in the survey is that business performance management processes are not keeping pace with business complexity. More than 70% of CFOs indicated that information is a major asset that needs to be managed better, while only 20% of business managers have access to integrated enterprise data to aid in decision making.

Information management is viewed by most CFOs surveyed as a major opportunity to improve governance and control, a key business issue for them. While it is clear that governance requirements must be turned into a competitive advantage, only 25% of CFOs feel that current execution of governance frameworks is weak.

In addition, the survey finds that investments in technology are far from being fully leveraged. Only 19% of CFOs feel they exploit the full functionality of their Enterprise Resource Planning (ERP) systems. Less than one third of CFOs claim processes have clear ownership and accountability.

"CFOs recognize that they are central to driving performance management and governance processes that lead to competitive advantage," said Jim Bramante, Partner and Financial Management Leader, IBM Business Consulting Services. "The challenge is making those significant changes in service while at the same time dramatically restructuring the cost of service."

Automation, outsourcing, and shared service delivery processes were all highlighted by CFOs in the survey as potential means to cut delivery costs and make the cost of finance more variable. Indeed, more than 60% of CFOs predicted that they plan to outsource specific processes and activities in the immediate future.

The IBM BCS report views the future role of the CFO at the nexus of business strategy, process and information, uniquely positioned to integrate key components of a more dynamic 'on demand' business model. The CFO Survey Executive Report highlights several key directions:

CFOs will drive responsive business performance management architectures. Development of a holistic, integrated framework is required for success in an on demand world.

It is clear that CFOs understand their evolving role, as over two thirds cite "supporting shareholder value creation" as their highest priority. To support this direction, CFOs plan to continue to re-focus finance by significantly reducing transactional activities from 50% to 34%. Enabling this shift will be a 200% increase in the exploitation of their ERP systems over the next three years, providing real-time information for their heightened roles in decision support.

The study also highlights that CFOs need to be more aggressive in the adoption of best practices in the area of performance management, in considering outsourcing to reduce and variabilize cost, and in driving improved processes for staff development.

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