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The CFO barometer is a survey taht has been carried out for the 4th consecutive year by CSC, in conjunction with TNS Sofres. It is based on a quantutative analysis of the trends and outlook for ...

The CFO barometer is a survey taht has been carried out for the 4th consecutive year by CSC, in conjunction with TNS Sofres. It is based on a quantutative analysis of the trends and outlook for Finance Managers from a sample group of large european companies.

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CFO Barometer 2011 CFO Barometer 2011 Document Transcript

  • CFO Barometer 2011A TIME OFOPPORTUNITIES?CSC
  • © Copyright CSC 2011. All rights reserved.Opinions expressed by contributors are their own.Reproduction in whole or in part without written permission is strictly prohibited 2
  • CSC IN TOUCH WITH CURRENT TRENDSWithin the framework of its I.D.E.A.S. programme (Inspiration, Debate, ExecutiveAnnual Surveys), CSC carries out a number of “barometers” every year to analysethe trends and outlook for key roles within the boardroom (human resources, finance,IT, procurement, etc.) at the European level. Each of these studies, carried out incooperation with independent market research institutes (IFOP and TNS Sofres),involves the participation of hundreds of managers from the largest businesses andpublic administrations in Europe. The results of these studies are presented at high levelevents, organised in various European cities (Paris, Madrid, Barcelona, Milan, Brussels,Lisbon, etc.), and are also published by partners in the media sector (Les Échos, LaTribune, Challenges, L’Expansion, Liaisons Sociales, Il Sole 24 ORE, and others) andin academia (universities and leading institutes for higher education). 3
  • CFO Barometer 2011 A TIME OF OPPORTUNITIES?4
  • CONTENTS1 SUMMARY PAGE 921 RESULTS PAGE 1531 TESTIMONIALS PAGE 25 26. ALEJANDRO ARANDA. Finance Manager, Spain - Weber Shandwick Spain 28. DANIEL BACquEROET. Assistant General Manager, Finance and Administration - Brinks France. 30. MICHAEL BERAHA. General Manager - BNY Mellon France 32. GIuLIO DELLAMICO. Partner - McKinsey & Company 34. VINCENzO MARAGLIANO. Chief Financial Officer - Elica 36. JEAN-PIERRE MELLEN. Chief Financial Officer - Recticel 38. TATIANA SIMONELLI. Finance Director - Bristol-Myers Squibb Italy 40. FABIO TOMASSINI. Chief Financial Officer - Nuovo Trasporto Viaggiatori 42. HERVÉ VARILLON. Finance, IT and Organisational Manager - Crédit Agricole Leasing and Factoring41 ANALYSIS PAGE 45 46. MARC BENSOuSSAN. Chief Operating Officer, South and West Europe - CSC 5
  • THE CFO BAROMETER IS A SURVEY THAT HASBEEN CARRIED OUT FOR THE 4TH CONSECUTIVEYEAR BY CSC, IN CONJUNCTION WITH TNS SOFRES.IT IS BASED ON A QUANTITATIVE ANALYSISOF THE TRENDS AND OUTLOOK FOR FINANCEMANAGERS FROM A SAMPLE GROUP OF LARGEEUROPEAN COMPANIES.6
  • CFO BAROMETERA EUROPEAN STUDYA TIME OF OPPORTUNITIES?PROCEDURE AND METHODOLOgY TARgET AND SAMPLINgThis fourth edition of the CFO Barometer was produced in conjunction Private and semi-public companieswith the leading market research institute TNS Sofres, based on asurvey carried out among a sample of finance leaders from European • With a minimum of 1,000 employeescompanies with over 1,000 employees. They were questioned about • Located in France, Germany, the united Kingdom, Italy, Spain,market position, concerns, results, the role of the finance department Belgium and Portugal.and information systems. 80 managers were questioned (no detailed criteria were applied regarding activity sector or company size). These managers represent the following target positions:INTERVIEW METHOD • Chief financial officer / finance director / finance manager.The survey was carried out by TNS Sofres using the CATI method(Computer Assisted Telephone Interview) between December 2010 The sample was adjusted in order to ensure that it was an accurateand January 2011. representation of European companies from within the target activity sectors with at least 1,000 employees. 7
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  • 1A TIME OFOPPORTUNITIES? CFO BAROMETER 2011 SUMMARY 9
  • Trends and Outlook forfinance departmentsFINANCE DEPARTMENTS MUST NOW DEVELOP THEIR VISION FOR THE FUTURE, ACTINg AS A gUIDE FORgENERAL MANAgEMENT IN MAKINg LONg-TERM STRATEgIC DECISIONS, IN ADDITION TO ENSURINgPROFITABILITY AND ADEQUATE RISK MANAgEMENT. THIS CAN BE SEEN FROM THE LATEST CFO BAROMETER,A SURVEY OF FINANCE MANAgERS FROM 80 LARgE EUROPEAN COMPANIES.
  • SUMMARYCFO BAROMETER2011 LARGE EuROPEAN COMPANIES HAVE RECOVERED BOTH BY CuTTING INVESTMENTS AND BY DRASTICALLY REDuCING THEIR COSTS AND WORKING CAPITAL REquIREMENTS. THIS RECOVERY HAS BROuGHT PROFITS CLOSE TO THEIR HISTORICAL LEVELS AGAIN, AND GENERATED COMFORTABLE CASH RESERVES.IN CERTAIN SECTORS, ORDER BOOKS ARE ONLY FILLED FOR TWO OR THREE MONTHSCOMPARED TO SIX TO TWELVE BEFORE THE CRISIS. CORPORATE CYCLES (R&D, PRODUCTION,SALES, ETC.) HAVE SHORTENED, AND TODAY IT IS THE SHORT TERM THAT DOMINATES THEDECISION MAKINg PROCESS.A new world has arisen from the disorder of the present and the past. BUSINESSESThis global upheaval has not been caused by the crisis, however – itserved only to reveal and accelerate it. Firstly, we should salute the In almost all sectors of activity, the crisis is being used as a driver forglobal economys tremendous resilience and emerging markets speeding up the necessary transformation, lowering production costsenormous ability to recover. Having gone up by 4.8% in 2010, the and reviewing old dogmas. In 2009, after the sharp economic slowdown,increase in global gDP is expected to reach 4.2% in 2011, even if this businesses drastically reduced their costs, working capital requirementsgrowth remains unevenly distributed. and investments, with larger companies taking advantage of favourable loan conditions linked to low interest rates. In 2010, the business activityThe change that we are experiencing is characterised by two main of large European groups has improved overall, with profits comingupheavals. The first shock is the upsurge in digital living and life closer to their historical levels. Cash reserves testify to the speed withsciences, which changes human behaviour and reveals radical which businesses have adapted to a worsened environment.changes to working, manufacturing and trading methods. Thesecond shock is the transfer of global economic growth from the This cash has not yet been reinvested, mainly on account of a lack ofAtlantic area (uS and Europe) towards the Pacific area (China and visibility as regards the economic upturn. Going forward, companiesIndia) and the emergence of China as a major power. The influence will have to implement a policy of active investment in order toof emerging markets in the global economy has gone from 25% maintain their position in the new competitive landscape, particularlyin 2000 to approximately 40% in 2010 and could represent 60% in emerging countries where there is growth. In the background behindin 2030. the performance of large businesses, however, many SMEs have not yet rebuilt their profits and are still experiencing difficulties. In France,Not enough has been done, however, to fundamentally correct the savings only finance two thirds of company investments – a very low level.imbalances at the source of the crisis in 2008. Economic revivalpolicies certainly avoided a worst case scenario. Nevertheless, FINANCE DEPARTMENTSChinas recurrent surpluses still create a global oversupply problem.The expansionist monetary policy of the united States continues Finance managers were previously responsible for ensuring profitability,to support commercial imbalances. And the global monetary base managing risk and monitoring the administrative processes of thehas shot up since 2007. This situation means we are confronted by companies they work in. From now on, finance managers must nottwo main challenges. The first challenge concerns the reduction of only ensure the companys continuity, but they must also guaranteepublic debt in developed countries. its reputation. They are increasingly involved more in forecasting than in reporting. They project themselves into the future so that they canThe second challenge relates to restoring growth in developed present a broader vision to general management. Three quarters ofcountries. We must devise new sectors of activity, new ranges finance managers claim to spend half of their time or more on theof goods and services and new areas of technological progress. strategic aspects of their role. 11
  • CFOs are expected tobe able to respond torequests for informationin real time. Theyhave to rethink theirmanagement andforecasting processesin order to increase theirown responsiveness andmake up for the lack ofvisibility.THE ACCELERATION OF TIME MANAgINg THE SHORT TERMThe short term dominates our decision making processes, be they The crisis has reinforced the changes that companies are confrontedeconomic, financial or political. This cult of the immediate keeps on with. Visibility has been sharply reduced. Order books in some sectorsshortening the time we have for reflection and is accompanied by are only filled for two to three months compared with six to twelvecollective memory loss. Both finance and the company as a whole are months before the crisis. Automotive manufacturers, whose businessfeeling the impact of this diktat of the short term. model was for a long time based on long cycles with low volatility, must adapt themselves to short cycle times with severe fluctuations inThe crisis played a role in accelerating timelines in all sectors of business demand and high volatility in the prices of raw materials. In cosmetics,activity. Corporate cycles (R&D, production, sales, marketing, etc.) have the accelerated rate of new product launches is allowing revenues tobecome even shorter. The timeline is changing the way executives make grow more quickly. Bioderma thus succeeded in doubling its revenuesdecisions. Companies must be able to react at any point in time and since 2004 by increasing the number of new product ranges.be capable of immediately reviewing the allocation of their resources.Risks and opportunities on a three-month horizon must be reassessed In order to face this challenge, CFOs must be capable of respondingon a continuous basis in the same way as those over three years. to requests for information in real time. They have to rethink and adapt their management and forecasting processes in order to increaseThe crisis has confirmed the fact that managing on the basis of costs responsiveness and make up for the lack of visibility. They need toand margins alone remains inadequate. While the priority for finance gain control over all the parameters that are likely to have an impactdepartments in 2009 was to manage company cash flows and to on planning so they can provide business leaders with the elementssurvive, their objective going forward is to project themselves beyond required for decision making.the crisis and take advantage of the upheavals in progress. They mustrespond to accelerated cycles by more effective management over The crisis has forced companies to improve the quality of theirthe short term and by getting more involved in the long-term strategy. management processes and forecasting abilities. Improving the reliability of forecasts is a priority for improvement for 56% of financeHow can the short term be managed while still seizing opportunities managers. Achieving profitability objectives remains a major concernover the long term? Executives use a dual reference as regards the time for 64% of them, while 66% of CFOs consider that management controlhorizon in order to manage a company. There are two management and reporting plays an ever more important part in their daily role.methods adapted to the different company cycles that need to existin parallel: Finance managers need to have management tools that enable• In the short term, reactive management aimed at keeping an them to make strategic decisions in a very short time period. eye on risks (which most often appear to be unpredictable) and Organisation 2.0 is a response to the issue of organisational ensuring that the results are achieved; management. It enables information gathering and reporting• Proactive management in the medium to long term aimed at applications and tools to be connected to collaborative portals, identifying new opportunities and steering the business while while still meeting the demand for increased analysis, compliance taking operational and financial factors into account. with standards and key performance indicators. 12
  • IN ADDITION TO MANAgINg OVER THE SHORT TERM, MANAgEMENT FORECASTINg NEEDS TO ALLOW CFOs TO IDENTIFY NEW OPPORTUNITIES SO THAT THEY ARE ABLE TO SUPPORT THE COMPANYS STRATEgIC DECISION MAKINg AND NEgOTIATIONS RELATED TO INVESTMENTS, ACQUISITIONS, DIVESTMENTS, ETC., BY BEINg HIgHLY SELECTIVE WHEN CHOOSINg PROJECTS, WHILE STILL ENSURINg THE RETURN ON CAPITAL EMPLOYED.MANAgINg THE LONg TERM AND TOMORROW…The nature of risk and the regulatory framework have been subject to Actual growth is not achieved by way of excessive public debtcontinuous change for the last two years. Increased currency volatility, but rather through innovation, trade and profit, which remain theskyrocketing raw materials prices, mistrust of banks, difficulties in only ways of ensuring our development. The global economy hasanalysing hedging operations, the emergence of new environmental outstanding drivers at its disposal. The entry into the modernrisks – all of these factors make planning and forecasting activities world of the middle classes in emerging markets, an increase ofall the more difficult. A predictive approach is essential to providing almost 3 billion in global population in a few decades, and a wavefuture direction for the business going forward. of exceptional innovation that has only just started to unfurl all mark the beginnings of a cycle of strong growth for a long period.One of the challenges linked to the economic upturn is the abilityto redefine development and investment plans. Finance managers Some observers note that since 2000, the world has been at the centreare taking part in strategic decisions and negotiations related to of a new economic "super cycle". A super cycle is characterised byinvestments, acquisitions, divestments, etc. They have to be highly increased global growth for at least one generation, strong growthselective when choosing projects while still ensuring the return on in international trade, rapid urbanisation and investments driven bycapital employed. technological innovation. Global GDP has doubled in ten years and could triple by 2030.They are now supporting operational personnel and helping themmake growth opportunities a reality. They are implementing more Large Western companies wish to gain access to the middle classdecentralised organisations with operational personnel being given markets in emerging markets, whereas companies in these countriesmore responsibilities. Rhodia is thus giving more responsibility to the are interested in the mature markets of Europe and America.managers of its business units. According to experts, the major corporations of emerging markets should have collective revenues of uSD 8 trillion by 2020 comparedGaining control over the time horizon in forecasting activities is a to uSD 1.3 trillion in 2009. The battle will be over access to resources:priority for 72% of finance directors. They need to take into account raw materials, energy, capital and technology. The rivalry betweenboth short-term risks and long-term opportunities. Now more than Western powers and China will intensify in all these areas.ever, general management needs clarification on the future andneeds to have alternative scenarios available. There is still demand forhighly detailed reporting, but this is now accompanied by a searchfor forecasting tools that will provide a more strategic vision for thecompany. Société Générale, Biomérieux and Valéo have all revealedstrategic 5-year plans. Lastly, some companies are consideringimplementing processes to identify and monitor risk overall, withsimulations that allow developments in financial areas to be forecastin accordance with the associated risks. 13
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  • 2A TIME OFOPPORTUNITIES? CFO BAROMETER 2011 RESULTS 15
  • THE ROLE OF THE CFOCHANgES IN THE ROLE OF THE FINANCE DEPARTMENTThe current period is marked by the end of an unprecedented financial crisis during which finance departments were subjectedto major pressures. The CFO Barometer 2011 shows that the role of the finance department has continued to develop comparedto 2010. This year, the role of the finance department seems to revolve around compliance with standards and regulations (58%).A total of 54% of respondents also attach more importance to making strategic decisions, while in 2010 the CFOs role consistedmainly of enhancing the spread of a financial mindset among operational personnel. 33 % 58 % 54 % 51 % 50 % 49 % 47 % 42 % 36 % 2010 2011 Respect des normes Prise de décisions Amélioration de Diffusion de la culture Compliance with et réglementations Making strategic stratégiques Improving de la rentabilité Spreadingauprès financière a standards and decisions lentreprise company financial mindset des opérationnels regulations profitability among operational personnel 16
  • CFO BAROMETERCONCERNS OF FINANCE DEPARTMENTSPRIORITY IMPROVEMENT ACTIONSThis year, 94% of CFOs have made improvements in forecasting a priority, in terms of better control of the time horizon.This was already one of the most important factors in 2010, but in 2011, it is positioned above all other improvement actions.Following the crisis that demonstrated the limits of current management modes, CFOs have concentrated on the relevanceof the time horizons being examined, and the relevance of information, in order to cope with companies lack of visibility andeffective forecasting. 33 %%% 3333 94 %% 94 93 %% 93 92 % 88 %% 88 85 %% 85 86 %% 86 84 %% 84 83 % 83 % 80 % 81 %82 81 %% 81 % %81 73 % 74 % 68 %% 68 2010 2010 2010 2011 2011 2011 NANA NA Maîtriser l’horizon et Améliorer lala Gagner en agilité Simplifier les Maîtriser l’horizon Qualité Améliorer Développer des en agilité Simplifier les Mettre en place Gagner Refonte de Gagner en Gagner en Controldans les Improve thedes Increaserépondre Simplify temps the temps dans les pertinencedes pour agility pertinenceoutils d’aide àrépondrel’organisation pour méthodes des autonomie méthodes NA autonomie pertinence des outils de pilotage time horizon informations ofà desefficacement aux methods exercices de exercices de relevance à des toefficacement aux structures respond informations informations la décision des d’analyses «ouvert» Increase des d’analyses financière financière accessible prévision prévision entrepôtsfins d’analyse et effectively todes ofdonnées in forecasting information et questions des des et de pilotage à l’ensemble des fins d’analyse questions etanalysis de pilotage financial (budget, BP, PMT) (budget, de données de contrôle BP, PMT) de contrôle dirigeants (référentiels) dirigeants collaborateurs activities used for questions from and autonomy des risques des risques (budget, analysis management supervision forecast, and risk medium-term management plan) purposes 17
  • CONTROLIMPROVEMENTS IN DASHBOARDS EXPECTEDAccording to the majority of CFOs in Europe (59%), dashboards must concentrate more on managing profitability. The relevanceof time horizons in management tools is also questioned: 45% of finance managers intend to review the time horizon in orderto improve management control. 59 % Measure of profitability Mesure de la rentabilité 54 % Financing costs Coût du financement 45 % Time horizon Horizon de temps 44 % Managing operational margins Top 2 (5+4) Top 2 (5+4) Pilotage des marges de main dœuvre 5- Veryimportant 5- Très important 4- Important 4- Important 3- Medium importance 3- Moyennement important 43% 2- Lowimportant 2- Peu importance 1- Not du all important 1- Pas at tout important Coût du of risk Cost risqueINTEREST IN THE DIFFERENT TIME HORIZONS BEINg CONTROLLEDJust like last year, CFOs are showing strong interest in having greater medium and long-term visibility. In fact, half of theCFOs questioned are more interested in a 3-year horizon, and 56% of them attach greater importance to a 1-year horizon. Theshort-term horizon (1 to 3 months) on the other hand is considered to be more important by only 37% of those interviewed,while this figure was 49% in 2010. 33 % 56 % 55 % 51 % 50 % 49 % 37 % 36 % 29 % 27 % 23 % 2010 2011 Budget Plan à Court terme Cycle économique Exercice 1-year budget à 1 an 3-yearans 3 plan Short term Companys (1 à 3 mois) propre à Financial year fiscal (1 to 3 months)own l’entreprise economic cycle 18
  • CFO BAROMETERGOVERNANCESIgNIFICANCE OF RISKSince the crisis, CFOs have kept their important roles in the areas of governance and risk management. The risks associatedwith IT security (82%) and with regulations (87%) remain the most significant concerns for CFOs in 2011. The risks that have atendency to surface during crises, i.e. the risk of customer default and the risk associated with the financial markets, no longerfigure among CFOs major concerns in 2011. 88 % Risk associated with regulations 93 % Risque lié à la réglementation 91 % 87 % 88 % Risk associated with IT security 96 % Risque lié à la sécurité informatique 82 % 82 % 85 % 85 % Risque opérationneland fraud Operating risk et fraudes 82 % 73 % NA NA 2008 Risque lié au marché financier 78 % Risk associated with the financial markets 2009 68 % 2010 2011 47 % Risk of customer default 76 % Risque de défaillance client 74 % 61 % 19
  • COMMUNICATIONSIgNIFICANCE OF FINANCIAL COMMUNICATION OBJECTIVESAccording to European CFOs, financial communication mainly serves to establish management credibility (90%) and toimprove the companys corporate image (93%). Financial communication is becoming more and more comprehensive andintegrated into corporate communications. Above and beyond the accounting aspects, it is becoming more concerned witheconomic and strategic topics, and increasingly resembles financial marketing. Attracting new investors, which was a lowpriority in previous years, is even less important in 2011 according to the CFOs questioned. 78 % 87 % Améliorer limagecompanys corporate image Improving the institutionnelle de lentreprise 87 % 93 % 87 % 92 % Establishingcrédibilité du management Asseoir la management credibility 89 % 90 % 83 % 91 % Increasing visibility ofde la strategy Renforcer la visibilité the stratégie 95 % 83 % 71 % Satisfying demands from investors 81 % Satisfaire les exigences des investisseurs 65 % 59 % 2008 35 % 2009 Attracting new investors 45 % 2010 Attirer de nouveaux investisseurs 2011 46 % 26 % 20
  • CFO BAROMETERPERFORMANCE OF FINANCIAL MANAGEMENTPRIORITY gIVEN TO PROJECTS RATHER THAN PROCESS IMPROVEMENTReducing lead times is still the priority for finance managers. However, more emphasis is placed on producing budgets (94%)than on drawing up financial statements (80%). This again confirms the priority given to budget forecasts rather than tohistorical accounting data. Efficiency in statutory reporting is of increased importance compared with last year for 89% ofCFOs – compliance with standards and regulations is still an important point for CFOs in 2011 in this area. Process improvementis also possible thanks to process optimisation initiatives such as Lean Six Sigma. Even if these types of projects are not apriority, their importance is increasing year on year. 94 % 89 % 89 % 87 % 86 % 83% 80 % 79 % 69% 61 % 56 % 53 % 2009 2010 2011 Réduire le temps Gagner en efficacité Diminuer les Mettre en place une Reducing d’élaboration Increasing dans la production Reducing délais de Implementing démarche d’optimisation time needed budgétaire efficiency réglementaire lead times production process des processus de type to produce in statutory des comptes for drawing optimisation Lean Six Sigma budgets reporting up financial initiatives such as statements Lean Six SigmaDEVELOPMENT OF SSC FUNCTIONSThere have been some developments in the centralisation of various activities within the accounting and finance roles. Accordingto the CFO Barometer 2011, general accounting (34%) and the production of statutory, fiscal and regulatory reporting (32%)are the functions that will develop the most in shared service centres in the short term. Yet, fewer financial managers want tocentralise functions such as IT operations and maintenance and bank accounting than in 2010. 33 % 34 % 34 % 32 % 30 % 28 % 28 % 27 % 26 % 24 % 24 % 23 % 23 % 2010 2011 Comptabilité Production Exploitation Comptabilité Comptabilité Comptabilité General générale Production des reporting Operation et Supplier fournisseur Bank bancaire Customer client accounting (production ofde type maintenance accounting(rapprochement accounting and accounting des données (production réglementaire, regulatory, des SI maintenance bancaire) (bank comptables) statutaire et of IT systems of statutory, reconciliation) fiscal accounting and fiscal data) reporting 21
  • FOCUS ON IT SYSTEMSPRIORITY OF IT ISSUESThe most significant IT systems issues according to the finance managers questioned are integrity (93%), security (90%)and data accessibility (90%). 93 % 49 % Integrity 44 % Intégrité 4% 1% 1% 90 % Security 59 % 31 % Sécurité 6% 2% 1% 90 % Data accessibility 45 % 44 % Accessibilité aux données 9% 0% Top 2 (5+4) Top 2 (5+4) 1% 5- Très important 5- Very important 4- Important 4- Important 78 % 3- Moyennement important 3- Medium importance 29% 2- Peu important 2- Low importance 49% Statutory developments Evolutions réglementaires 1- Notdu tout important 1- Pas at all important 17% 5% 1%PRIORITY PROJECTS FOR IMPLEMENTINg NEW IT SYSTEMSThe investment projects for implementing new IT systems in 2011 are aimed mainly at the quality and relevance of informationfrom data warehouses for 92% of finance managers. The next priority relates to the development of decision supporttools. The aim of these projects is to facilitate the decision making process for management and to manage performance. 33 % 92 % 83 % 83 % 82 % 80 % 73 % 74 % 2010 2011 NA Qualité et Développer des Refonte de Mettre en place quality and pertinence des Developing outils d’aide à Overhaul of the l’organisation Implementing des outils de pilotage relevance of informations des decision la décision data structures des structure “open” «ouvert» accessible information entrepôts support tools des données organisation management à l’ensemble des de données from data (référentiels) (databases) collaborateurs tools warehouses accessible to all employees 22
  • CFO BAROMETERHR ASPECTSPROFILES AND SKILLS IN gREATEST DEMAND WITHIN FINANCE DEPARTMENTSExpert profiles are increasingly in demand within finance departments (according to 45% of CFOs): this is the result ofa desire on the part of CFOs to concentrate on high value added roles. Expert profiles that are capable of responding tofast environmental changes contribute the most to value creation and performance improvement. At the same time, theimportance of so-called operational roles remains stable. Increased importance Importance accrue Importance stable Stable importance Importance réduite Reduced importance 67 % 54 % 48 % 45 % 21 % 22 % 20 % 11 % 4% Experts Experts (cash Productifs Operational staff Chargés de missions Project managers (trésoriers, analystes managers, financial (analystes quantitatifs, (quantitative analysts, (recruited to manage à (recrutés pour mener financiers, experts métiers…) comptables…) bien des projets et/ou analysts, expert roles, accountants, etc.) projects and/or fonctions) coordonner des etc.) coordinate functions) (quantitative analysts, accountants, etc.) 23
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  • 3A TIME OFOPPORTUNITIES? CFO BAROMETER 2011 TESTIMONIALS 25
  • "OUR CHALLENGES REMAINTHE SAME: GETTING ACCESSTO FINANCING AND MANAGINGTHE PRESSURE ON LIQUIDITY."26
  • TESTIMONIALSALEJANDRO ARANDAFINANCE MANAGERWEBER SHANDWICK SPAINWHAT CHALLENGES WILL THERE BE AND WHAT STRATEGIES WILL COMPANIES IMPLEMENT TO IMPROVE THEIRGROWTH AND STRENGTHEN THEIR MARKET POSITION? INTERVIEW WITH ALEJANDRO ARANDA, FINANCE MANAGERAT THE SPANISH SUBSIDIARY OF ONE OF THE WORLDS LARGEST PUBLIC RELATIONS COMPANIES.HOW DO YOU SAFEgUARD THE CONTINUITY OF find that they have excessive debt, which forces them to resort toYOUR ACTIVITIES OVER THE LONg TERM WHILE STILL divestment of assets in order to generate liquidity. It seems clear thatMANAgINg THE SHORT TERM? reform of the Spanish financial system is essential; it is not insignificant that savings banks in this country are restructuring to become privateConsidering the economic slowdown, which is not conducive to risk entities, allowing them to remain outside the sphere of influence of thetaking, I believe that we must remain attentive to short-term opportunities public authorities. We must draw lessons from this turbulent period sowhile still drawing lessons from the work carried out during these recent that we can know clearly where and how loans are granted.years of the crisis. At Weber Shandwick, we have tried to optimise andmaximise available resources so as to guarantee a healthy economic STAgNATION OF WESTERN MARKETS VERSUS STRONgand financial balance. We have also worked on minimising the impact gROWTH IN EMERgINg MARKETS: HOW SHOULDof this unstable economic situation on our business activities and COMPANIES REACT WHEN FACED WITH THIS NEWhave defined the company strategy for the long term. Today we find ECONOMIC SITUATION?ourselves confronted with a double strategic challenge: on the onehand, we have to review our approach to activities by creating new Over the last few decades, emerging markets have gradually increaseddepartments and product lines and by involving new professional their share of the global market to the detriment of developed countries.experts; on the other hand, we need to adapt to new consumption It is logical that the arrival of new, more competitive economies onhabits, a direct consequence of globalisation and new technologies, the market means that we are confronted with greater sector-basedso as to meet the new needs of our clients and requisitioners. While specialisation. Nevertheless, without this representing a threat, thewe do not intend to abandon our defensive strategies, we still need to rapid growth of emerging markets creates increased purchasingrecognise that the leaders of tomorrow will be those who have made power there, which improves per capita revenue and will also resulttheir balance sheets healthier and have defined coherent growth in increased internal demand for goods and services. This representsstrategies that allow them to face new market realities more nimbly a real opportunity for growth for many companies that wish to adoptand flexibly. An ability to adapt to change will thus be a key factor for a policy of international expansion. Weber Shandwicks presencesuccess in an economic environment marked by strong competition grows stronger from year to year in these markets, particularly inand major instability. the Asia-Pacific region and Latin America, and currently represents 10% of the total volume of our global activities.HOW CAN COMPANIES PROTECT THEMSELVES FROMFUTURE CRISES AND STILL gUARANTEE THEIRFINANCIAL INDEPENDENCE?Several articles support the theory that the main reasons for the economicrecession were a financial sector that has run out of steam plus a lackof responsiveness on the part of the financial regulators in takingappropriate corrective measures. At present, our challenges remainthe same: getting access to financing and managing the pressure onliquidity. Financial conditions continue to be restrictive and companies 27
  • "TOWARDS ANENTREPRENEURIALATTITUDE."28
  • TESTIMONIALSDANIEL BACQUEROETASSISTANT GENERAL MANAGER, FINANCE AND ADMINISTRATIONBRINKS FRANCEPRESIDENTASSOCIATION OF FINANCE MANAGERS ANDMANAGEMENT CONTROL (DFCG)AT BRINKS, THE FINANCE DEPARTMENT IS NOT SATISFIED WITH JUST SUPPORTING STRATEGY IN THE SHORT AND LONG TERM.IT MUST ALSO CULTIVATE AN ENTREPRENEURIAL SPIRIT IN ORDER TO CONTRIBUTE TO THE DEVELOPMENT OF THE BUSINESS.HOW IS YOUR BUSINESS EMERgINg FROM THE HOW ARE YOU RESPONDINg TO THE ACCELERATIONRECENT TURBULENT PERIOD? OF DECISION MAKINg CYCLES?We have the advantage of operating in a niche market: managing the In order to be very responsive in our action plans, we need to be able tomonetary chain for banks and large retailers. For our various lines of project trends on the basis of an analysis of the past. Our concern is tobusiness - cash transportation, counting, management of ATMs and improve performance measurement, by reinforcing cost monitoring andalso remote surveillance and airport security – the fundamentals have by implementing instant indicators. To achieve that, we have intensifiedremained good overall. We have however recorded a slight drop in information gathering in real time (volumes produced, hours worked,revenue as contract renegotiations have become tougher. etc.) in order to be able to generate projections even before this data is taken up as figures in the income statement.HOW HAVE YOU REACTED TO THESE NEWCONDITIONS? HAVE THE EXPECTATIONS OF TOP MANAgEMENT CHANgED?Faced with the pressure on volume and prices, we have adopted anew pricing approach and have developed new products. Our goal The major expectation concerns not only constant improvement ofis to ensure end-to-end management of customer needs rather than the performance measurement tools, but also a proven ability to be aone-off services. Its a matter of placing ourselves as far upstream as source of ideas to support the development of the company.possible in the value chain and getting closer to the customer, to the That is achieved first of all by even closer control of financial andpoint of processing currency on the customers premises. So we’ve operational flows, by the reinforcing of our internal control processes,put in place a true integration strategy. and by way of increasingly refined analysis. At the same time, we need to develop an entrepreneurial attitude which implies fighting againstAND HOW DO YOU SUPPORT THAT STRATEgY? our natural rigor and caution in order to develop other skills – such as boldness, creativity and vision.We model the scenarios for the launching of new activities. That enablesus to anticipate market reactions and to better assess the accountingand financial impact of new products on both us and our clients. Indoing so, we gain a better understanding of the activities themselvesand increase our proximity to operational staff. For example, we supplythem with operational indicators that enable them to evaluate theirperformance in respect to their goals (revenue, customer satisfaction,etc.) and to take corrective actions. 29
  • "UNDERSTANDINGCUSTOMER NEEDS."30
  • TESTIMONIALSMICHAEL BERAHAGENERAL MANAGERBNY MELLON FRANCECOMING OUT OF THE CRISIS, THE BANK OF NEW YORK MELLON IS SHOWING POSITIVE RESULTS. MICHAEL BERAHA,THE GENERAL MANAGER OF BNY MELLON FRANCE, EXPLAINS THE BANKS STRATEGY AND BREAKS DOWN THEROLE OF THE FINANCE MANAGER.HOW DO WE RETURN TO gROWTH? WHAT IS THE ROLE OF THE FINANCE MANAgER?The customer has to be at the centre of our strategy. We didnt suffer too Apart from their traditional remits (rigour, financial control, regulation,much from the crisis: with uSD 25 trillion of assets under management etc.), they direct cash into investments that are going to generate the bestor administration BNY Mellon is the world number one in this area, and positive operating leverage. BNY Mellons image is a highly reassuringis 8th or 9th in the world for assets under management with uSD 1.1 one: the market players who choose us know it’s safe to work withtrillion (as at December 31, 2010), and our revenues are split 3/4 - 1/4 us. Our balance sheet has grown during the crisis because they havebetween these two areas of operations. In the united States, we have invested their liquid assets with us. The CFOs role is central in selectinga triple A financial rating. Today, were concentrating on the location the investments that will be made. We’re not too adventurous, andof our business activities so as to be closer to our customers, and on it’s precisely that which makes us different and makes us successful.understanding their needs. Our regions for development are first of allin Europe, then in Asia and Latin America. Seventy-five percent of our HOW ARE COMPANIES REACTINg TO THE STAgNATIONrevenue comes from the united States: we are aiming for a balance OF WESTERN ECONOMIES AND STRONg EMERgINgbetween this and the rest of the world. MARKET gROWTH?HOW CAN THE COMPANY BETTER PREPARE FOR For us, Europe is a growth region: it is a market that remains highlyMARKET FLUCTUATIONS? fragmented, but is flourishing thanks to structural and regulatory changes. We want to continue setting up activities there, knowingThe market situation is an intrinsic part of our strategy. The more that I already have roughly 10,000 colleagues in Europe, and thatmarkets fluctuate, the more we profit: we like volatility and volume. Their together we have managed European customers for over a century!increase is integrated into our business model. If the global financial Asia interests us in the longer term: its a gamble, whilst Europe is amarket does not take off again this year, then we will be able to take strategy which is at the centre of our hopes and desires, and is whereadvantage of the situation. We have liquidity we can invest wherever we see new opportunities in the short term.seems relevant to us: in Europe in 2010, we acquired Insight Investment,BhF Asset Servicing GmbH and PNC GIS. Each of these transactionsallowed us to expand our expertise and get closer to customer needs.These are our guide and knowing where we want to go allows us tobenefit from the crisis.WHAT ARE THE PRIORITIES FOR FINANCEDEPARTMENTS IN THIS UNUSUAL PERIOD?Its all about showing that there will be a return on investment, andensuring that financing secured will be used wisely. An importantindicator is positive operating leverage: revenue growth must behigher than any growth in costs, even though our operations requiremuch investment; each year a large part of our revenues are spent onIT investment. In addition, the rising cost of capital is something wemonitor very closely. 31
  • "NOWADAYS, THE CFO MUST PLAY THEROLE OF A PEER IN MAKING STRATEGICDECISIONS, WITH AN ABILITY NOT ONLYTO INTERPRET THE WEAK SIGNALSCOMING FROM THE MARKET BUT ALSOTO REACT PROMPTLY TO EXTERNALAND INTERNAL FACTORS."32
  • TESTIMONIALSGIULIO DELLAMICOPARTNERMcKINSEY & COMPANYTHE ROLE OF THE CFO IS UNDERGOING RADICAL CHANGE TO BECOME A FIGURE THAT CAN COMBINE PLANNING AND ANALYSIS,BUT ALSO ONE THAT IS INCREASINGLY INVOLVED IN STRATEGIC DECISIONS AND ABLE TO CONTRIBUTE DECISIVELY TO THE VALUECREATION PROCESS OF THE COMPANY.WHAT CAN THE CFO DO NOWADAYS TO ENSURE WHAT CAN THE CFO DO TO PROTECT THE BUSINESSBOTH BUSINESS CONTINUITY AND gROWTH? WHAT FROM POSSIBLE FUTURE CRISES AND, AT THEMEASURES HAVE BEEN TAKEN BY YOUR COMPANY TO SAME TIME, ENSURE THE COMPANY’S FINANCIALgET THROUgH THIS DIFFICULT PERIOD? INDEPENDENCE?What is fundamental is the progressive evolution of the role of the CFO. In addition to the actions already mentioned, nowadays it is fundamental toFrom being a process manager who carefully controls the business, have a proactive approach to risk management, through the identificationhe is turning into a business partner who focuses on planning and and the prioritisation of key business risks, the measurement thereof,analysis, is deeply involved in business decision making and who takes and the adoption of appropriate measures for mitigating or coveringa forward-looking approach in order to become a value partner who critical events. One must not neglect the importance of strategic planningbrings distinctive competencies to company. Nowadays, the CFO must that takes into account alternative scenarios derived from the trendsplay the role of a peer in making strategic decisions, with an ability associated with various macroeconomic variables that are relevantto interpret the weak signals coming from the market and to react for the business, and identifying for each scenario the various actionspromptly to external and internal factors. to take. Last but not least, it is important to think of and implementIn addition to the normal functions of the CFO, he/she plays a key role stress tests that take into account not only possible changes in theas a value partner regarding: key drivers of the business, but also the occurrence of critical events.• Active management of the companys asset portfolio: decisions related to the managing the company’s presence, in terms of HOW ARE YOU REACTINg TO THE NEW ECONOMIC geographic location, product range and distribution channels SITUATION, CHARACTERISED BY THE STAgNATION OF - the determining factors for growing the business. In the last WESTERN MARKETS AND STRONg EMERgINg MARKET 10 years, the expansion of market presence together with gROWTH? M&A activity represented 95% of the growth generated by a sample of 720 large companies; It is important to seek and to achieve growth by leveraging one’s own• Investor relations and communication, which requires a good distinct competences and identifying at a granular level (in terms of understanding of the nature of the companys investors and geography, product or channel) the opportunities for growth that exist the management of adequate communication with them; in Western markets. It is also necessary to invest in those high growth• Measurement and performance management at a high markets that prove to be more compatible with the presence and the level of granularity (every single element of performance), characteristics of the company, and into which it can more easily export which links the metrics of the profit and loss account and its own distinct competences. cash flow to the allocation of capital employed and thus the creation of value. 33
  • "THE CFO PLAYS A KEY ROLEIN SPREADING A MINDSET OFPERFORMANCE MEASUREMENT,WHILE AT THE SAME TIMEMAINTAINING RIGOROUS COSTCONTROL THROUGHOUT THEBUSINESS."34
  • TESTIMONIALSVINCENZO MARAGLIANOCHIEF FINANCIAL OFFICERELICAIN ORDER TO CONTINUE TO GROW IN A MATURE MARKET, ELICA LEVERAGES ITS CAPABILITIES IN PRODUCT ANDPROCESS INNOVATION TO SUPPORT A STRATEGY OF INTERNATIONAL EXPANSION AND HIGHLY SELECTIVE M&A,FURTHER REINFORCING ITS TOP OF THE RANGE POSITIONING.WHAT CAN A CFO DO TO ENSURE BOTH BUSINESS HOW ARE YOU REACTINg TO THE NEW ECONOMICCONTINUITY AND gROWTH? SITUATION, CHARACTERISED BY THE STAgNATION OF WESTERN MARKETS AND STRONg EMERgINg MARKETPersonally, I believe that there can be no sustainable business growth gROWTH?without increased attention to asset strength and financial flexibility.In this regard, the CFO plays a key role in spreading a mindset of Since 2006, Elica has pursued a path of internationalisation by opening aperformance measurement and rigorous cost control. Moreover, the business unit in Mexico, aimed at serving American markets (both NorthCFO has to steer investments in the core business, while safeguarding and South) and by opening a factory in Poland near the productionfinancial flexibility and selecting the best opportunities in the M&A market. plants of our main OEM clients and Eastern European markets. ThisTo overcome the crisis, Elica took numerous governance measures trend accelerated over the last two years, during which Elica completedin terms of both the business and finance. In particular, Elica pursued an acquisition in the very high-end segment of kitchen hoods inprocess and product innovations, thus increasing market share in every Germany in 2008, and one in China in September 2010. In May 2010,market segment in which we operate. In addition to this, we achieved Elica also signed a joint venture agreement in India. In Germany, thevery good results in terms of cost management, capex rationalisation, acquisition had as primary goal the development of the sales of Elicaworking capital optimisation and financial risk management. brands in the German-speaking markets. The operations carried out in Asia will promote our expansion in markets with the fastest growth rates in the world.WHAT CAN THE CFO DO TO PROTECT HIS BUSINESSFROM POSSIBLE FUTURE CRISES?In a mature sector like ours, either the business has the strength andcapabilities necessary to grow in a sustainable manner, or it is inexorablydestined to fold. 35
  • "EVOLVING TO AN OPTIMALCAPITAL STRUCTURE, SO WECAN TAKE ADVANTAGE OFSTRUCTURAL MEGATRENDS."36
  • TESTIMONIALSJEAN-PIERRE MELLENCHIEF FINANCIAL OFFICERRECTICELIN RECENT YEARS RECTICEL, WHICH MANUFACTURES VARIOUS POLYURETHANE BASED PRODUCTS, HAS FOCUSED PRIMARILY ONTHE AUTOMOTIVE SECTOR. IN THE WAKE OF THE ECONOMIC CRISIS AND LOWER MARGINS IN THE SECTOR, THE COMPANY IS NOWCHANGING COURSE. AS OF NOW THE EMPHASIS WILL BE ON NON-CYCLICAL SECTORS WITH STRUCTURAL GROWTH TRENDS,AND NEW NICHE PRODUCTS TAILORED TO CUSTOMER REqUIREMENTS. THE TASK OF CFO JEAN-PIERRE MELLEN IS TO ENSURETHAT THE CAPITAL STRUCTURE AND INTERNAL ALLOCATION OF FINANCIAL RESOURCES SUPPORTS THIS NEW STRATEGY. CASHFLOW OPTIMISATION AND SYNERGIES WILL PLAY A KEY ROLE IN THIS.HOW IS RECTICEL PLANNINg TO gROW FURTHER IN SO YOUR FUNCTION IS PRIMARILY ONE OF CONTROL?THE CURRENT ECONOMIC CONTEXT? Absolutely not! I see myself in the first place as a challenger, aIn 2010 Recticel changed its strategic direction, moving away from catalyst. As CFO I have the considerable advantage of being aboveour overdependence on the automotive sector. In future we will focus the divisions. And it’s from that perspective that I can stimulate theon four growth areas in which we can take advantage of structural business managers – for example, to seek synergies – which is alsomegatrends, thanks to our knowhow and technological capabilities. one of the pillars of performance management. When an investmentThe first is energy saving. Recticel’s insulation products are an ideal is being considered, it’s also the role of the CFO to ask the rightresponse to the growing awareness of the need to reduce energy critical questions.consumption. Our bedding activity capitalises upon the trend towardwellness and comfort during sleep. The market for water conservation WHAT ARE THE MAIN CHALLENgES FOR RECTICEL INis also very promising. Water absorbent polyurethane foam is ideally THE NEARBY FUTURE?suited for agricultural applications in countries where water is scarce.And lastly, even the automotive sector is a growth area, although one First of all, to cope with continuously increasing raw materials prices,which doesn’t require investment in additional capacity. Our polyurethane among others by way of synergies, so that we can make the mostfilms for among others dashboard coatings fit perfectly in the context of economies of scale. In addition, we need to roll out our projects inof continuously reducing the weight of cars – and thus also their fuel the area of product development as quickly as possible. The waterconsumption. We intend to geographically diversify the insulation absorbent foam is a nice example of this. In future we intend to offerand bedding activities, also by way of acquisitions. In addition, we’ll even more tailored niche solutions to our industrial customers, but thatfocus on China, which represents significant growth potential for all will only be feasible if we can generate enough volume in the moreour activities, and where Recticel has already been present for many traditional sectors.years, albeit on a limited scale. AND MORE SPECIFICALLY, IN FINANCIAL TERMS?WHAT ROLE DOES THE CFO PLAY IN THESE PLANS? My most important objective is the further optimisation of our capitalFrom the beginning, as CFO I was deeply involved in the development of structure, partially thanks to a less volatile and stronger cash flow.this strategy. Its success depends on rigorous performance management. Recticel’s new strategy is focused on growth. Now that we have clearlyThe strong emphasis on cash performance was a necessary evolution defined our areas of activity, we need to have the necessary financialfor Recticel, given our traditionally high debt ratio in the past. Today room to manoeuvre so we can seize growth opportunities!we examine every investment to determine if it fits with the strategyand offers sufficient financial return. Risk management is also essential.Recticel is driven by a very strong entrepreneurial culture, but the urgeto take on new challenges should be accompanied by a thoroughunderstanding and management of risk. As CFO I rely on a well-developed internal control system to manage these things. 37
  • "A CFO CAN AND MUSTBE THE CEOS BUSINESSPARTNER, HELPING HIMIN THE DEVELOPMENTOF STRATEGIES."38
  • TESTIMONIALSTATIANA SIMONELLIFINANCE DIRECTORBRISTOL-MYERS SQUIBB ITALYBRINGING TOGETHER PHARMA AND BIOTECH BUSINESS SINCE 2007, BRISTOL-MYERS SqUIBB HAS FOCUSED ON A STRONG M&ASTRATEGY AND ON A THOROUGH RATIONALISATION OF ITS PRODUCTION NETWORK, BECOMING THE PHARMACEUTICAL COMPANYWITH THE MOST INNOVATIVE PIPELINE, AS RECOGNISED IN THE R&D DIRECTIONS REPORT.WHAT CAN THE CFO DO NOWADAYS TO ENSURE WHAT CAN CFOS DO TO PROTECT THEIR BUSINESSESBOTH BUSINESS CONTINUITY AND gROWTH? WHAT FROM POSSIBLE FUTURE CRISES AND, AT THE SAMEMEASURES HAVE BEEN TAKEN BY YOUR COMPANY TO TIME, SAFEgUARD THE COMPANYS FINANCIALgET THROUgH THIS DIFFICULT PERIOD? INDEPENDENCE?In my opinion, business continuity and growth are not in conflict with There is no panacea, but one can, and indeed must, prepare for theeach other, but rather must be part of a single holistic strategy. future in the best possible way, making the most of not only productsAnalysis of the pharmaceutical sector, and specifically the Italian one, and services, but also of the business and management models.Theshows that it is currently characterised by a fall in growth rates and lower analysis of success stories illustrates the importance of thinking andmargins, for reasons that are not entirely attributable to the global crisis. In acting on a medium-term basis, striking a balance between immediateorder to meet external market requirements and create a foundation for and future investments, forecasting developments in reference markets.future success, at the end of 2007, Bristol Myers Squibb (BMS) decided Of course, we don’t have a crystal ball, but there are various types ofto transform itself into a biopharmaceutical company, by combining what-if analyses that can be used to identify possible future scenarios.the best of the traditional pharma model (strong competence in clinical Occasionally some outcomes may seem absurd and disastrous, but ittrials and the approval process, financial solidity, geographic scope and is necessary to make an effort to understand the underlying rationale.penetration) with the best of the biotech model (innovative research, Of course, failure is possible; for this reason, it is fundamental to measureagile and entrepreneurial culture). Since then, BMS has always operated and monitor risk, to have alternative plans, and to have the couragein a coherent manner, focusing on prescription drugs (leaving aside all to stop new projects whenever they prove to be inadequate.Throughthe other secondary businesses that it was previously engaged in) and long-term financial forecasts, risk adjusted models, choice managementconcentrating on the development of innovative molecules for curing and the development of alternative plans, the CFO can and must be theserious diseases with a strong social impact. The pipeline has continued CEOs business partner, helping him in developing strategies. Addedto evolve and, as financial analysts have confirmed, it has become one value is created by a thorough knowledge of the business, the companysof the most promising in the sector, in the five therapeutic areas in which operational business context and its business partners. Regardingit competes. In addition, we have pursued a very innovative approach financial independence, there is definitely no guarantee of avoidingby integrating internal research with a selective acquisition strategy possible acquisition by another company. It is also true that companiescalled “String of Pearls”, which has led to ten important acquisitions in that are capable of planning their own future and of fully exploitingless than three years. In addition, the decision to enter into partnerships their potential enjoy good ratings not only from financial analysts, buthas allowed the company to reduce the risk of clinical trials and, at the also from investors. ultimately, I don’t think one should be scared ofsame time, to share the cost of development and marketing, leveraging acquisitions, as they are often nothing more than the recognition ofthe competencies acquired from each partner. In short, it’s a win-win the company’s value, and invariably whoever is buying will integrateapproach that optimises return for partners by avoiding extraordinary the best parts of the acquired company: products, business models,financial operations (mergers and/or acquisitions), which do not generate and staff. Excellence is a winning card even in this case!immediate value for shareholders, as has been widely demonstratedin various cross-sector analyses. HOW IS YOUR COMPANY REACTINg TO THE NEW ECONOMIC SITUATION, CHARACTERISED BY THEBMS has also reported excellent financial results thanks to the STAgNATION OF WESTERN MARKETS AND STRONgimplementation of initiatives aimed at increasing productivity, by EMERgINg MARKET gROWTH?rationalising the production network, focusing on core competencesand outsourcing those activities which specialised players can do Innovation and excellence are always rewarded. One should not givebetter than in-house organisations. up when confronted by an unfavourable macroeconomic context. At a global level, even BMS is looking carefully at markets with high growth rates (we operate in China, India and Brazil), developing strategies and deploying adequate resources. In addition, I must insist on the fact that notwithstanding the stagnation of our domestic market, Italy still offers many opportunities! 39
  • "CFOs HAVE A LARGE RANGE OFPRIORITIES. CERTAINLY, THEY MUSTBE ABLE TO MAINTAIN A CONSTANTFOCUS ON THE GROWTH DRIVERSOF THE BUSINESS."40
  • TESTIMONIALSFABIO TOMASSINICHIEF FINANCIAL OFFICERNUOVO TRASPORTO VIAggIATORINTV IS THE LEADING ITALIAN PRIVATE OPERATOR ON THE ITALIAN HIGH-SPEED RAIL NETWORK. IT IS ALSO THEFIRST PLAYER TO OPERATE IN A SECTOR OPEN TO COMPETITION. NTV IS A COMPANY BORN OUT OF THE DRIVE TOINNOVATE, IN WHICH STRATEGIC PLANNING IS CONSIDERED TO BE A FUNDAMENTAL COMPANY ASSET.WHAT CAN THE CFO DO NOWADAYS TO ENSURE BOTH WHAT CAN THE CFO DO TO PROTECT HIS BUSINESSBUSINESS CONTINUITY AND gROWTH? FROM POSSIBLE FUTURE CRISES?A great deal of uncertainty surrounds the traditional markets, which Financial resources are increasingly considered to be a real productionare characterised by increased competition and the evolution of factor and the corresponding suppliers demand – in addition to anmajor macroeconomic factors, in turn increasingly influenced by new adequate compensation for the risk associated with the project orinternational political balances and the steady rise of emerging markets. company – a certain stability and continuity of the business. To ensureIn this context, CFOs have to juggle numerous priorities. Certainly, they business continuity and proper remuneration for risk, it is crucialmust be able to maintain a constant focus on the growth drivers that for the company to focus on pursuing long-term objectives whileenable the business to generate profit and thus ensure its existence in the maintaining sufficient flexibility to enable it to seize opportunitiesmarketplace. At the same time, the CFO must participate in formulating for growth and to withstand volatility and turbulence in the short tocorporate strategy, by helping identify business opportunities. Lastly, medium term. The CFO can help top management define a methodthe CFO must safeguard the long-term continuity of the business by to measure value creation in order to reconcile two requirements:monitoring the conditions in which it operates, and making sure neither firstly, to guarantee the implementation of the right strategic plan ininternal nor external factors change those conditions in a manner order to achieve long-term goals; and secondly, to be able to reactthat threatens the company’s existence. The current crisis has had a to unexpected events.significant impact on the number of players in the market, and hasrewarded the leading companies able to ensure their continuity. These HOW ARE YOU REACTINg TO THE NEW ECONOMICbusinesses have also been able to capitalise on the opportunities for SITUATION, CHARACTERISED BY THE STAgNATION OFgrowth linked to market consolidation. Another significant effect of WESTERN MARKETS AND STRONg EMERgINg MARKETthe crisis was to heighten awareness of the need to closely monitor the gROWTH?evolution of risk factors. This implies being able to develop alternativescenarios that enable the rapid implementation of measures required NTV is currently operating in a national market and, given the specificto safeguard the company’s resources. nature of its business, its supply markets are not located in the emerging markets such as those collectively called the BRIC countries. I believeWHAT ABOUT NTV? that the stagnation of European markets can only be overcome through structural measures at the Eu level.Nuovo Trasporto Viaggiatori (NTV) is the leading private Italianhigh-speed rail network. It has several distinctive features, as it is thefirst player to operate in a sector that is open to competition, in whichthe liberalisation process is still underway, and it is there thanks to thestrong commitment of its shareholders and banks who have providedsignificant amounts of capital and credit. In this context, the priority ofthe finance department was to define an efficient financial planningprocess to ensure the availability of the resources needed to develop thebusiness, and to put in place a management control model that wouldenable quick corrective action to be taken.The choice of focusing onplanning activities implies two major elements: a widespread awarenesswithin the company of the key operational drivers of the business, andthe support of top management to ensure the implementation of astructured and objective financial planning process. 41
  • "SECURING THE MEANSTO SUPPORT OURDEVELOPMENT."42
  • TESTIMONIALSHERVÉ VARILLONFINANCE, IT AND ORGANISATIONAL MANAGERCRÉDIT AgRICOLE LEASINg AND FACTORINgCRÉDIT AGRICOLE LEASING AND FACTORING IS STRENGTHENING ITS RISK MANAGEMENT AND MANAGEMENT CONTROL PROCESSESTO SUPPORT BUSINESS GROWTHIS A RETURN TO gROWTH AN ADEQUATE INDICATOR WHAT IS YOUR STRATEgY FOR ACHIEVINg THIS?OF THE COMPANYS DURABILITY? We are prioritising dynamic management and greater selectivity of ourIn our two lines of business, leasing and factoring, the recent period has assets and of our resources, capital and liquidity. We do this by way ofnot resulted in a slowdown in activities despite the difficult economic more detailed analysis of the profitability and financial performanceclimate and the increased cost of finance. In fact, periods of economic of our lines of business, by territory and by activity – so through everstress are favourable for specialised financing. To manage their short- more efficient management control. We are also strengthening ourterm cash flow, companies use techniques such as assigning accounts forecasting and controlling capabilities to ensure our ability to securereceivable, like factoring, and turn to leasing to finance their investments. refinancing over shorter or longer time horizons. This will enable us toFor banks, these two products provide greater security in periods of improve our risk management and better prepare ourselves to meetincreased risk (credit secured by factoring and ownership of leased the requirements of Basel III.goods). As the French leader in these two lines of business we havetaken advantage of this economic context and recorded 10% growth WHAT WILL THE RESULT OF THIS BE IN PRACTICE?in our exposure in 2009. So for us, the question does not apply inquite the same way. In order to be more vigilant and responsive, we have further developed our processes and tools, and will continue to do so with the aim ofWHAT IS YOUR MAIN CONCERN? increasing productivity but above all of improving the quality of our service. In terms of IT systems, this occurs mainly through managementGiven the above, our number one problem is not recovery after the in real time, interfaces with external data (databases, web clients, etc.)crisis, but rather continuing to grow, and thus supporting companies and enhancements to our data warehouses in order to improve thein a time of economic recovery. Our main challenge is thus obtaining depth of the databases and the quality of our forecasting. In addition,the liquidity required to fulfil our role as a financier of the real economy we have also reinforced our financial communication toward ourand of investment and working capital requirements of businesses customers, in cooperation with similar efforts at group level.at a reasonable cost. Naturally, we benefit from the strength of theCrédit Agricole group in this area, but the constraints are becomingincreasingly severe, particularly in the context of Basel III, both in termsof the availability and cost of this liquidity (which has tripled betweenthe end of 2007 and the end of 2010). Our objective is thus to use ourresources as best we can. In other words, to optimise the profitabilityof our investments and of our products. 43
  • 44
  • 4A TIME OFOPPORTUNITIES? CFO BAROMETER 2011 ANALYSIS 45
  • "BUSINESSES AREFACED WITH THEACCELERATION OFTIMELINES."46
  • ANALYSISMARC BENSOUSSANCHIEF OPERATING OFFICER, SOuTH AND WEST EuROPECSCThe new world that we see unfolding each day was not caused by the MANAgEMENT MODES ADAPTED TO DIFFERENTcrisis. The crisis only served to reveal and accelerate it. Businesses CYCLESare in the vanguard of the changes which characterise this newworld. The first shock sustained concerns the emergence of digital In order to steer their businesses, managers use a dual reference astechnologies and life sciences, which herald profound disruptions in regards the time horizon. Two management modes must coexist,our ways of working, producing and interacting. The second shock is adapted to the different cycles of the business. For the short term, arelated to the shift of the engine for global growth from the Atlantic reactive management mode intended to monitor risk and ensure resultsarea towards the Pacific and the emergence of China as an economic are achieved. For the medium and long term, a predictive managementsuperpower. In almost all business sectors, the crisis has been used by mode to identity new opportunities and steer the business while takingbusinesses in a very relevant manner to accelerate transformations, operational and financial elements into account. From now on, the goallower production costs and to re-examine a certain number of old of CFOs is to project themselves beyond the crisis and to be involveddogmas from every angle. in the changes underway. Businesses must respond to the acceleration of cycles with more effective short-term management and deeper involvement in long-term strategy. They must improve the quality ofCONTROLLINg THE TIME HORIZON their steering and their ability to anticipate. Firstly, visibility is greatly reduced. In certain sectors, order books are only filled for two to threeIn 2009, after the brutal downturn in the global economy, businesses months compared with six to twelve months in the past. Managersmade drastic reductions in their costs, working capital requirements and thus need tools that enable them to make strategic decisions in ainvestments. Larger companies benefited from favourable borrowing very short time period. Secondly, the nature of risk and the regulatoryconditions with low interest rates. Their priority was to manage their framework are constantly changing. Planning and forecasting are thuscash flow and to survive. In 2010, the performance of large European even more difficult. Yet, an approach based on management forecastinggroups improved overall. Their profits are close to historical levels and is indispensable in order to give the business a direction for the future.demonstrate an ability to rapidly adapt to a deteriorated environment.For the most part, their cash reserves have not been reinvested because True growth cannot be achieved by way of excessive public debt butof lack of visibility as regards the economic upturn. However, in the rather by way of innovation, investment, trade and profit, which remainbackground behind the performance of large businesses, many SMEs the only means of safeguarding our further development. The globalhave not yet rebuilt their profits and continue to experience difficulties. economy has outstanding growth drivers at its disposal. The entry into the modern world of the middle classes in emerging markets; anWe know that short term considerations drive the decision making increase of 3 billion in global population in a few decades; and a waveof our companies, be they political, economic or financial. For a long of exceptional innovation that has only just started to unfurl. All marktime already, the operations of businesses have been impacted by the beginnings of a cycle of strong growth for a long period. Onea cult of the immediate, which never ceases to reduce our thought of the challenges linked to the upturn is the ability of businesses tohorizon. The last CFO Barometer survey conducted by CSC among redefine their development plans. In order to maintain their position inEuropean finance managers shows that the crisis has contributed to the new competitive landscape, they will need to implement an activethe acceleration of timelines in every business sector. Business cycles, investment policy, especially where there is growth. Their expansionsuch as those in R&D, production, marketing, sales, etc., have again and success are vital for our society.been shortened. This shifting timeline is also changing the way inwhich managers make decisions. Businesses must be able to reactat any time, to immediately revise the allocation of their resources,to constantly re-evaluate risks and opportunities over a three-monthhorizon as well as those over a three-year time span. 72% of Europeanfinance managers consider mastering the time horizon to be a priority.The question all managers ask themselves is: how best to manage theshort term while seizing opportunities in the medium and long term? 47
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  • CFO Barometer 2011A TIME OFOPPORTUNITIES? 49
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