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Finance as Analytical Partner to the Business

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http://spr.ly/CFO_Finance_Leadership_Center - Read the research report that uncovers the current sentiment among finance executives on the types of information technology they believe can help improve …

http://spr.ly/CFO_Finance_Leadership_Center - Read the research report that uncovers the current sentiment among finance executives on the types of information technology they believe can help improve financial and operational performance. (Bloomberg Businessweek, 2013)

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  • 1. Finance as Analytical Partner to the Business When major economies are constrained, business leaders find their growth engines stuck in low gear. At times like these, financial leaders need to collaborate more closely with their operations counterparts and drive precision in performance management. An exclusive survey and research report from Bloomberg Businessweek Research ServicesBLOOMBERG BUSINESSWEEK RESEARCH SERVICES 1 FEBRUARY 2013
  • 2. Table of Contents Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Evolving Role of Finance in a Constrained Global Economy . . . . . . . . . . . . . . . . . . . . . . . 4 Setting Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Getting Granular . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Sidebar: Tighten Focus on True Costs and Increase Profitability . . . . . . . . . . . . . . . . . . . . . . . 7 Becoming an Effective Business Partner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Growing Interest in User Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Managing Enterprise-Level Risk—Another Dimension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Sponsor’s Statement: How CFOs and Their Teams Can Create Value . . . . . . . . . . . . . . . . . . 10 Copyright and Disclaimer Notices Bloomberg Businessweek does not make any guarantees or warranties as to the accuracy or completeness of this report. Bloomberg Businessweek shall not be liable to the user or anyone else for any inaccuracy, error or omission, regardless of cause, or for any damages resulting therefrom. In no event will Bloomberg Businessweek nor other companies or third-party licensors be liable for any indirect, special or consequential damages, including but not limited to lost time, lost money, lost profits or lost good will, whether in contract, tort, strict liability or otherwise, and whether or not such damages are foreseen or unforeseen with respect to any use of this document. This document, or any portion thereof, may not be reproduced, transmitted, introduced into a retrieval system or distributed without the written consent of Bloomberg L.P. © Copyright 2013 Bloomberg L.P. All rights reserved. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 2 FEBRUARY 2013
  • 3. MethodologyMethodology Respondents by RegionBloomberg Businessweek Research Services (BBRS) launched a Europe: 29% North America: 37%survey and research program in summer 2012 to discover andanalyze the views of C-level and line-of-business executives aroundthe world on the drivers of operational performance and ways thatdecision support can be strengthened. The survey also sought touncover what types of new information technology executives are Asia: 34%deploying or actively considering to improve their financial andoperational performance. Respondents by Company SizeThe goals of this program included: Small* ($100–$499 Enterprise million): 15% (>$5 billion): 21% etter understanding how midsize and large organizations view B n the state of their operational performance at the present time and their plans for the next few years. xamining the operational performance of five key corporate E n Large ($1–$5 functions: sales, customer service, finance, operations/ Medium billion): 35% ($500–$999 production and supply chain. million): 29% etter understanding the level of involvement of operational B n *1000 employees or more and C-level officials in various functions outside their primary function. Respondent by Industry Sector dentifying the role of technology in supporting efforts to I n Other: 23% Manufacturing/ improve operational excellence. Industrial: 34% BusinessThis research program included both quantitative and qualitative Services:components: 11% global survey of director-level or above executives at midsize A n Financial and large companies from around the world. A total of 318 Services: Retail/Wholesale: 16% 16% director-, vice president- and C-level executives responded to the July 2012 survey. For more information about the demographics Respondents by Title of the survey, refer to the “Methodology” charts, at right. *Total exceeds 100% due to rounding n-depth telephone interviews with C-level and other senior I n executives at the following organizations: Director: 13% C-Level: 33% Bigelow Tea n CBIZ n Manager: FM Global n 26% Vice President/ Rush University Medical Center n Senior VP/ The Dow Chemical Company n Executive VP/General Manager: 29% n elephone interviews were also conducted with: T n A former CFO who now teaches at Harvard Business School Respondents by Primary Function n The Founder of The CFO Alliance *Total exceeds 100% due to rounding n A CFO who is on the board of The CFO Alliance Sales: 15% Supply Chain: 26%BBRS and the author of this report, Mary Driscoll, a senior research Customerfellow at APQC, a non-profit business research firm, are grateful to all Service: 15%the executives who provided their time and insights for this project.This research project was funded by a grant from SAP but was Operations/written independently of this sponsor. The editorial department of Finance: 21% Production: 24%Bloomberg Businessweek magazine was not involved in this project. Source: Bloomberg Businessweek Research Services, 2012BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 3 FEBRUARY 2013
  • 4. Executive Summary Figure 1 n lthough a majority of financial executives surveyed A Economic Growth Globally—Just OK expect the global economy will grow at a modest 3 The world economy is expected to remain merely moderate. (Total does not equal 100% due to rounding.) percent per year or less, only 2 percent indicate a steep Q. What is your expectation regarding the global economic outlook over global economic decline is likely. the next 18 months? n imilarly, the majority of executives (54 percent) expect S Strong global economic growth (more than 3% per year) their own organizations will remain stuck in a low-growth 26% pattern for all of 2013. Moderate global economic growth (less than 3% per year) 52% No global economic growth n hile 57 percent indicate high unemployment to be the W 11% biggest factor hindering a significant pickup in global Moderate global economic decline (less than 3% per year) growth, 53 percent also cite the sovereign debt crisis as a 7% major concern. Steep global economic decline (3% or more per year) 2% n large majority of executives regard decision support A Uncertain as a strategic lever, with 72 percent citing increased 1% investment in IT to reduce costs, increase productivity Source: Bloomberg Businessweek Research Services, 2012 and uncover new revenue opportunities as important to them. established ones and the emerging ones. Drawing on the n ifty-two percent of respondents are using dedicated F findings of the BBRS survey, it is clear that executives do not analytical tools to enhance financial planning, expect to see a return of robust growth levels anytime soon. forecasting and reporting, thereby improving the odds of achieving business goals. Meanwhile, 46 percent are Key survey findings include: involved in big data projects to utilize surging volumes nM ost executives expect to be contending with low of information. economic growth (3 percent or less) for all of 2013. nT he majority also expects their own organizations to n ooking ahead two years, 40 percent of executives expect L remain stuck in a low-growth pattern for all of 2013. to speed decision-making by using real-time reporting rather than batch-processing data. And 37 percent expect Despite the lackluster economy, well over half the executives to be using predictive analytics. surveyed report they are turning to advanced financial forecasting approaches to help them sort through the mazeIntroduction of challenges posed by the current business climate. Nearly as many expressed interest in acquiring new tools, such asThe CFO’s role today has evolved well beyond traditional real-time reporting software, to strengthen their positions.accounting/compliance duties and tracking which unitsbotched or exceeded their revenue targets, according to an This research report provides insights, examples andexclusive summer 2012 survey by Bloomberg Businessweek recommendations on how finance professionals canResearch Services (BBRS). CFOs are now expected to collaborate effectively with operating managers to find theplay a central role in crafting strategy and creating value right strategic edge.for investors and other key stakeholders. CFOs, and theprofessionals under their supervision, do this by serving asstrategic business partners. And that involves collaborating The Evolving Role of Finance inwith operating leaders throughout the organization to a Constrained Global Economyidentify, quantify and compare opportunities and risks. The expanding role of finance as a strategic partner isIt is important to put this expanded role of finance in the particularly germane today with continued economiccontext of the world’s important economies, both the well- uncertainty in the United States and Europe—and slowingBLOOMBERG BUSINESSWEEK RESEARCH SERVICES 4 FEBRUARY 2013
  • 5. growth in China—casting shadows over business forecasts Figure 3globally (see Figure 1, “Economic Growth Globally—JustOK,” on page 4). In this climate, the strong planning and Biggest Global Risks—Unemploymentanalytical skills typically found in the finance department and Sovereign Debtare needed to bolster decision-making more than ever. But People are still concerned about jobless rates around the world.so, too, is the need to equip business-unit managers with Q. Which of the following poses a major risk to future growth for the globalthe financial information and new technology they need to economy over the next 18 months? (Pick all that apply).pursue growth strategies. There is simply no room for errorwhen economic growth is not buoyant. High unemployment continues to stifle consumer spending 57% Sovereign debt crisisWhat types of business pressures will CFOs have to contendwith in the near term? Concern over how to manage 53% Uncertain political landscapecorporate budgets with minimal revenue growth is high on 49%most senior executive lists. The majority of these leaders Reduction in the growth rate of emerging marketsanticipate that their organizations will experience growth of 40%just 3 percent or less over the next 18 months (see Figure 2, Increased competition for business in emerging markets“Company Growth Stuck in Low Gear,” below). 40% Weak real estate marketSetting Strategy Increased scarcity of natural resources 35%The strategy of profit protection is the course many businesses 32% Lack of talent, aging societyhave been on for a while. But now, with the most obviousopportunities for cost savings already taken, finance 31%executives will have to hunt harder for profit boosters. They Source: Bloomberg Businessweek Research Services, 2012will have to work harder with operating managers and conductdetailed analyses of cost trends. In addition, they will needto look closely at which products or services are the most profitable and find ways to boost the return of those found wanting or possibly shut them down. Figure 2 Company Growth Stuck in Low Gear This is not to say that targets for revenue expansion will be The vast majority of respondents will not see revenues soar anytime ignored. Working together, finance and business managers soon. Only one in three expects to be generating growth above 3 will have to devise sound plans for developing new revenue percent. streams where opportunities exist and decide where best Q. What is your expectation of the economic outlook of your company over to invest in new technology. But this is where they will the next 18 months? face the strongest headwinds. The dominant financial risk Strong economic growth (more than 3% per year) for the businesses represented in the survey is continued 31% high unemployment in major world economies (“Biggest Moderate economic growth (less than 3% per year) Global Risks—Unemployment and Sovereign Debt,” above). 54% Insufficient income levels, or worries about getting laid off, No economic growth tend to depress consumer spending, which is a major driver 8% of industrial growth. Moderate economic decline (less than 3% per year) 5% To aid in the search for new revenue streams, senior finance Steep economic decline (3% or more per year) managers are reaching for new tools. Clearly, the message 1% is getting through that an effective finance team does more Uncertain than just hit the brakes on spending in times of uncertainty. 1% This team partners with business decision-makers to develop realistic forecasts of where the business is heading Source: Bloomberg Businessweek Research Services, 2012 relative to its goals.BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 5 FEBRUARY 2013
  • 6. Unsurprisingly, survey respondents show steady movement Figure 4toward technology innovation that aims to strengthenperformance management. The majority says they now use Half of Respondents Using Advanced Tech todedicated software applications to improve forecasting, Achieve Business Goalsanalysis and reporting. Almost half say they are turning to There is a growing fondness for moving from analysis to analytics.new data management technologies to cope with so-called Q. Which of the following technology functions or practices does yourbig data (see Figure 4, “Half of Respondents Using Advanced company currently use to achieve its business goals?Tech to Achieve Business Goals,” at right). Upgrade financial planning, forecasting and reporting applications to enable performance managementLooking ahead two years, the survey shows strong interest 52%in sophisticated performance analysis and driver-based New data management technologies to address the surging volume ofplanning—an approach that bases financial forecasts on information from multiple sources, or big dataoperational performance indicators that are non-financial. 46%However, many large, complex corporations will have Standardized financial platform across the enterpriseto overcome the obstacles presented by management 43% Adding analytics functions to existing financial systemsinformation systems that are not well integrated. For 42%example, when operations planning systems do not feed Consolidate decentralized financial systemsdata to financial forecasters in an automated fashion, it can 40%be difficult to move up the maturity curve of driver-based Predictive analytics to anticipate outcomes rather than just betterplanning. A lack of systems integration can also stymie understanding past performancepredictive analytics. Expect to find movement toward 40% Preconfigured and standardized reportsadditional investments in IT solutions that address the 39%perennial systems integration challenge. Access to financial information via employees’ mobile devices 39%Meanwhile, interest is growing in new IT tools that can Real-time reporting rather than waiting for batch reportsdeliver even more financial intelligence into the enterprise 38%management ranks (see Figure 5, “Which Techs Are They Ad hoc reporting capabilities delivered via self-service without needingBetting on Next?” on page 7). Topping the list of new tools IT intervention 33%that finance executives expect to deploy over the next two None of the aboveyears are real-time reporting and expanding the analytical 3%capabilities of existing finance systems. Giving employeesaccess to financial information over mobile devices is also Source: Bloomberg Businessweek Research Services, 2012favored by 25 percent of respondents.Getting Granular part of our culture,” says Janezic, adding that Bigelow is well practiced in the use of business analytics. “We use analyticsThe ability to detect and analyze emerging trends in extensively, and we [in finance] have ongoing dialogue withconsumer demand is particularly essential to retail operating managers about what incoming data means inbusinesses. Take the food and beverage industry, which terms of business performance.”must please customers who are highly sensitive to bothprice and quality. In the tea sector, for example, Bigelow At Bigelow, the finance team speaks regularly with operatingTea CFO Don Janezic explains that tea drinkers are generally managers about productivity trends (such as the level ofloyal to their favorite flavors and brands. But when labor cost incurred to meet customer satisfaction goals) thatconsumers pare their grocery lists in times of economic may actually undermine financial performance targets. “Weworry, the pressure mounts for suppliers to manage have to be very cost-conscious if we’re going to competeopportunities and risks with maximum precision. This calls on price, so we look at productivity on a lot of levels,”for tight alignment between operating managers and the Janezic says. Among other things, the tea maker looks atfinance team worldwide. productivity by flavor or product and may decide to alter distribution plans to keep productivity trends in line. Putting“We are fortunate in the sense that all function managers a fine point on this, “profit sharing at this company is tied toat Bigelow are very good at collaboration. It’s very much a productivity,” he notes. continued on page 8BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 6 FEBRUARY 2013
  • 7. SIDEBAR Tighten Focus on True Costs and Increase Profitability “The ability to identify and manage your true costs of operations is a requirement for the 21st Century finance team,” says Blythe McGarvie, a former CFO who is now a senior lecturer at Harvard Business School. “Doing this properly means working with business leaders to understand what accountants call TDABC, which stands for time-driven activity-based costings.” TDABC is generally used to understand the entire range of costs associated with a given product or service. TDABC requires a project team to map out every administrative and operational process over a complete product or service cycle. Indirect costs, such as overhead, are not allowed to slide under the radar. In this way, TDABC can help to support strategic decisions such as pricing, outsourcing, and identification and measurement of process improvement initiatives. “A lot of people may have forgotten how powerful a tool TDABC can be,” McGarvie says. It was introduced in the manufacturing sector over 40 years ago but lost favor in the 1990s, when other approaches to cost management came along. “With the global economy growing weaker, it’s crucial to get a detailed and highly reliable picture of what you’re spending your time and money on and what can be trimmed,” McGarvie adds. Profitability Planning TDABC and related analytical approaches are crucial when the time comes to make decisions about the deployment of capital—financial, human and technological. The point is to develop reliable views of how various factors correlate in various ways to generate net operating profit after tax (NOPAT), a financial metric that lets business leaders and equity analysts make judgments about one company’s operating efficiency compared to its industry peers. On a tactical level, here are a few examples of how business decision-makers use profitability modeling to get the highest possible return on each dollar of revenue generated: n M arketing managers want to compare the profitability of product lines or various distribution channels so they can focus marketing budgets on the campaigns with the best yield. n S ales executives want to know which customer segments deliver the highest margins so they can fine- tune their customer retention drives. n S upply chain managers who source from multiple regions like to analyze more than just what raw materials or components cost. They need to factor in transportation, labor and warehousing costs. n L ine-of-business managers will want a view of how variations in seasonal demand impact their plans for hiring contract labor and the associated costs. n H ospital leaders who want to improve patient outcomes while reducing costs and providing better service. Armed with granular details about the drivers of cost, “a manager can think like the entrepreneur who doesn’t have extra cash or easy access to capital and has to have all his or her assets work harder and deliver more,” McGarvie says. Surely, in the current economic climate, that mindset can make all the difference. •BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 7 FEBRUARY 2013
  • 8. continued from page 6 Figure 5Becoming an Effective Which Techs Are They Betting on Next?Business Partner Serious interest in real-time reporting, greater use of analytics in existing systems and predictive tools that anticipate outcomes areAkin to developments at Bigelow, business partnering coming on strong. Q. Which of the following technology functions or practices does yourwith line managers is in full swing at CBIZ, a professional company plan to use in the next two years to achieve its business goals?services firm that provides traditional accounting, auditand tax services to midsize organizations. From 2003 to Real-time reporting rather than waiting for batch reports2008, CBIZ—which trades its shares on the New York Stock 40%Exchange—experienced strong top-line growth. But by 2009, Adding analytics functions to existing financial systemswhen the recession was hitting CBIZ clients hard, the firm 39%started to experience a modest decline in revenue that latest Predictive analytics to anticipate outcomes rather than just betterthrough 2010. understanding past performance 37% Standardized financial platform across the enterpriseWare Grove, the CFO at CBIZ, now reports: “Economicactivity is now stable, but growth is slow, in the 1-to-2 36% Consolidate decentralized financial systemspercent range for organic revenue growth. It’s very clear 36%to us that our clients have learned how to cope with a flat New data management techniques to address the surging volumes ofeconomy. Small and midsize businesses are not hiring information from multiple sources, or big dataand not expanding. As a result, we have had to play some 36%defense with respect to protecting margins.” Ad hoc reporting capabilities delivered via self-service without needing IT interventionIt is hard to grow margins in a low-growth economy, so cost 35%management is key for many companies. As CBIZ’s Grove Upgrade financial planning, forecasting and reporting applications toputs it: “One of finance’s most crucial roles today is being enable performance managementthat good business partner. It means encouraging operating 32%managers to use our operating key performance indicators to Preconfigured and standardized reportsplan resources and control costs so they can, in turn, serve 31% Access to financial information via employees’ mobile devicesour clients well.” 25%Advanced business partnering, planning and performance Source: Bloomberg Businessweek Research Services, 2012analysis is not confined to the realm of for-profit entities.Chicago’s Rush University Medical Center has a financegroup with strong views about the need to collaborate suggestions for solving it.’ Critical thinking and problemwith other function heads to plan and manage the financial solving are involved. It’s not just presenting numbers.”vitality of the organization. He stresses the importance of building analytical and communication skills within the finance group. “The morePatricia O’Neil, vice president and treasurer, explains: we, as finance, can nurture and evolve these skills, the“We have a regular inter-disciplinary review to discuss better business partners we will be.”any emerging financial risks. For instance, if we are in abig capital spending cycle, we’ll work with other functionsto analyze at a pretty detailed level when we can expect Growing Interest in User Toolspayments from all sources, including philanthropy. If you Tools such as financial dashboards are crucial in this effort,are not attuned to the analytical needs of your internal according to the finance pros at Rush. “You want to create abusiness partners and their goals, then you are not doing performance dashboard that’s easy for operating people toyour job.” use,” O’Neil offers. “You want them to easily ask and answer: ‘Are we on target or not when it comes to net income orJohn Mordach, the CFO at Rush, puts it this way: “To be liquidity?’ We have a dashboard like this. And our goal isan effective business partner, a finance person has to be to have operating people use it and understand it, even if aable to tell a clear story. ‘Here’s the problem, and here are finance person is not standing over their shoulders.”BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 8 FEBRUARY 2013
  • 9. That message is apparently not lost on survey participants,the majority of whom indicate their organizations have Figure 6invested in technologies that enable line managers toexercise strong discipline in both revenue generation and Information Quality Is Crucial Sound decision support is seen as a strategic lever.cost control (see Figure 6, “Information Quality Is Crucial,” Q. How important is each of the following tactics to help your companyat right). achieve its top business goals and manage risk? (Percent who indicate it is important.)One company with a deep commitment to using IT wisely Increasing investment in IT to reduce costs, increase productivity, findin the pursuit of business objectives is The Dow Chemical new revenue opportunities, improve employees’ access to information,Company. According to Finance Manager Sandy Hartman- speed analysis and/or provide more transparent decision-makingHolbrook: “We’ve been giving our operating leaders 72%performance dashboards to enhance their ability to make Investing in developing new products or services to take advantage ofeffective decisions quickly.” market opportunities 67%The allure of information mobility is also a theme at Dow. Changing corporate revenue or net income targets“We’re looking now at ways our executives can use iPads 64%and attractive graphics in meetings to communicate more Additional financial hedging to offset global riskseffectively with peers,” Hartman-Holbrook says. Moreover, 62%Dow recently invested heavily in financial managementprocess automation, which boosts the reliability of financial Diversification, of either products or geographic marketsdata because manual data entry is completely avoided. 61% Divesting underperforming unit(s)Managing Enterprise-Level 61% Changing business model—more outsourcing, downsizing, sharedRisk—Another Dimension services, divesting of poorly performing businesses, products or servicesJeff Burchill is CFO at FM Global, one of the world’s largest 60%providers of commercial and industrial property insurance. Source: Bloomberg Businessweek Research Services, 2012With headquarters in the United States and 65 officesaround the globe, FM Global earns approximately one-thirdof its annual premium income (about $1.5 billion) outsideNorth America. The sovereign debt crisis in Europe, whichcould result in property damage by demonstrators, is one Summaryof many risk factors for FM Global and its customers acrossthe continent. Several powerful forces are converging in a way that elevates the role of the CFO and the finance organization. There isTo identify, quantify and manage major risks such as this, intense pressure on business leaders to make calculated betsBurchill’s finance team provides what he calls “‘a whole host’ on new products, services and markets. But this is playingof predictive analytics to senior management. We do complex out at a time when growth does not come easily. It is clearmodeling of possible correlations. For example, we ask: that operating managers need finance professionals to help‘What if several risk events materialized at once?’” them analyze, quantify and compare opportunities and risks.FM Global is, by nature, a risk-assuming business. “So, we’ve At the same time, information management tools andalways had some quantification of risk on the insurance side techniques are maturing at a fast pace. So, it is not surprisingand on the investment side,” Burchill says. “But during the that the BBRS survey finds the majority of executives keenlast few years, we’ve institutionalized this knowledge and to upgrade their enterprise performance managementcapability.” Now, he adds, “our focus is identifying major capabilities. In this environment, finance has a perfectrisks and getting people comfortable with the idea that if we opportunity to serve as a true business partner—one thathad a significant, one-in-a-thousand-year event that we’d still uses advanced tools and techniques to anticipate potentialbe financially vibrant. “ outcomes, clarify the economic value of each and recommend the course of action that offers the best shot at success.BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 9 FEBRUARY 2013
  • 10. SPONSOR’S STATEMENTHow CFOs and Their Teams CanCreate ValueFor many people in Finance, the economic crash of 2008 was counted in days rather than weeks or months and havingthe first time in their careers that they had experienced a management reports that give insight into the operationalserious recession. It was simply no longer business as usual, variances underpinning the numbers and possibly leading toand facing up to it needed special resilience. The anxiety and better decision-making—and having all of this information asstress involved in realigning their businesses with the new fast as possible, while there is time to act on it.reality and having to let staff go left deep scars that no onewants to suffer again soon—and let’s hope that is the case. Somewhat fortuitously, the advent of better performance management solutions, new technologies such as in-memoryIn the months immediately after the crisis, what needed processing that are fundamental to real-time reporting andto be done was obvious. Many companies took the knife to the ability to proactively provide information to managers onexpenses and discretionary spending. The result is many their mobile devices, no matter where they happen to be, areof those firms sitting on cash reserves that collectively run all available today within the SAP portfolio. So much so thatto trillions of dollars. However, four years later, consumer when people come to write the history of the informationdemand remains weak, with many Western economies technology industry in the first quarter of the 21st Century, itstill struggling to deliver sustainable economic growth. may well be referred to as a ‘golden age.’ What’s more, theySo, burdened with burgeoning cash reserves needing to may write that it came at a very opportune moment.be invested on one hand but faced with low growth andpersistent economic uncertainty on the other, it is no Retrospectively, it may also be the golden age of the CFO andsurprise that CFOs are concerned about the future, as this the Finance department, too, when—after years of promises—report clearly shows. The only thing obvious today is that they finally occupy a more central role in the business. Theytimes were easier a decade ago. can work alongside their operational colleagues to help them analyze, quantify and compare growth opportunities andChallenged But Confident risks, in addition to ensuring that sufficient resources areBut if there is any good to come out of the last four years it made available to them so they can execute effectively andhas to be that the crisis has accelerated the transition of the efficiently to deliver optimum profitability.role of Finance from custodian and bean counter to businesspartner. It has been written about in the journals of the But we shouldn’t fool ourselves into thinking that it’s alwaysaccounting profession for decades but only realized in recent going to be a harmonious partnership. Finance will alwaysyears, so that today CFOs and their teams are expected to be a custodian of cost controls, both in driving down the costtake a leading role in developing and delivering strategy to of its own department and in critically reviewing the costscreate value for investors and other key stakeholders. and profitability of the resources, products and customers in individual business units, as is discussed in this research.It is clearly a challenging time to be thrust into such aprominent position, but CFOs are confident—nearly 80 Central Role for Financepercent of the respondents interviewed for this report expect Likewise, Finance will have a central role in allocatinggrowth to recover over the next 18 months. The more recent resources and even rejecting or curtailing someone’squarterly figures coming from some countries give support cherished business opportunity in favor of another that isto their optimism. But to identify and capitalize on emerging able to demonstrate a greater return. Sometimes, Financegrowth opportunities—and to steer their companies through will have to simply say, ‘No.’ But, ultimately, supported bythe challenges endemic in the current business climate—many performance management solutions that provide betterCFOs have come to realize they need to invest in performance insight and timely decision support, their operationalmanagement solutions that are ‘up to the job.’ That means peers will recognize the undeniable value Finance bringsimplementing planning and budgeting cycles that can be to the business.BLOOMBERG BUSINESSWEEK RESEARCH SERVICES 10 NOVEMBER 2012
  • 11. SAP Solutions for FinanceSAP’s portfolio of applications to support financial processes is deliverable via any or all of four channels—on-premise, on-demand, on a mobile device or in-memory.Finally, don’t forget that we are all partly responsible for 3. o deliver superior service at reduced cost, Tthe lack of consumer confidence and the depressed demand companies can streamline all financial functions—fromwe see today. It is too easy to point the finger at bankers, transaction processing all the way through to financialoverzealous real estate salespeople and derivatives traders, reporting—and leverage self-service analytics and built-when all the time we were only too happy to reap the in content.benefits of escalating property values that fuelled much ofthe consumer spending during the boom years. The good SAP offers a comprehensive portfolio of applications andnews, contained in the pages of this fascinating piece of end-to-end processes that support these pillars, includingresearch, is that CFOs are intent on restoring our economies SAP solutions for enterprise performance managementto growth that will benefit a great many people beyond their (EPM); SAP solutions for governance, risk and compliancecompanies’ stockholders. And with the help of solutions from (GRC); and the SAP ERP Financials solution. SAP can helpSAP, they can. you achieve financial excellence with strong cash flow and liquidity, compliant and accurate financial reporting, andThree functional pillars describe the tasks and tools Finance maximized profitability while reducing the cost of finance,should adopt to support their colleagues: thereby freeing up time to partner with the organization to 1. o ensure regulatory compliance and effective risk T drive value creation. management, companies can embed risk management and access and process controls all the way through from transactional processing to financial reporting and For More Information disclosure. Learn how to achieve a 360-degree view of the 2. o outperform financial objectives and create T enterprise and drive financial excellence at the CFO and sustainable value, organizations design a 360-degree Finance Leadership Center, featuring thought leadership, view of both financial and operational performance solution details, case studies and customer events. across their organizations so managers can take better Visit the site at www.sapcfo.com. decisions more quickly by breaking down traditionally siloed functions.

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