2012 Finance Priorities SurveyBalancing core transactional responsibilities with agreater focus on strategic capabilities ...
INTRODUCTIONCorporate finance functions continue to tear down walls – those surrounding organizational silos as well as th...
Throughout the survey findings, it is clear that respondents have prioritized strategic capabilities – includingthose rela...
RESULTS AND ANALYSISProcess Capabilities (Financial Transactions)Key Findings – 2012	•	  trengthening financial risk manag...
Figure 1: Process Capabilities (Financial Transactions) – Perceptual Map HIGHER                                          3...
Respondents were asked to assess, on a scale of one to five, their competency in 38 areas of process capabilitiesfocusing ...
•	  ow can finance shared services move beyond a “lift and shift” process centralization approach and deliver   H   greate...
FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES2The priorities in this category for CFOs and other finance executives are large...
Table 4: Finance Executive Results, Process Capabilities (Financial Transactions) – Two-Year Comparison*                  ...
FOCUS ON LARGE COMPANIES (US$1 BILLION)Survey respondents from large companies identified similar priorities, with two not...
Table 6: Large Company Results, Process Capabilities (Financial Transactions) – Two-Year Comparison*                      ...
Process Capabilities (Financial Analysis)Key Findings – 2012	•	  inance functions want to strengthen competitive intellige...
Figure 2: Process Capabilities (Financial Analysis) – Perceptual Map HIGHER                                               ...
As senior management teams dedicate more attention to external market opportunities, threats andinformation, survey respon...
YEAR-OVER-YEAR RESULTS          Table 8: Overall Results, Process Capabilities (Financial Analysis) – Two-Year Comparison*...
FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES4CFOs and finance executives identified similar priorities compared to the overa...
Table 10: Finance Executive Results, Process Capabilities (Financial Analysis) – Two-Year Comparison*                     ...
FOCUS ON LARGE COMPANIES (US$1 BILLION)Among the notable findings:•	  s previously stated, finance functions are increasin...
Table 12: Large Company Results, Process Capabilities (Financial Analysis) – Two-Year Comparison*                         ...
Technical CapabilitiesKey Findings – 2012	•	  iven the furious pace of change regarding business regulations, accounting s...
Figure 3: Technical Capabilities – Perceptual Map HIGHER                       23                                         ...
Given the intensely complex nature of nearly all of the priorities survey respondents identified in this sectionof the sur...
True Partners Consulting observes, “It is not surprising to find that transfer pricing continues to be a highpriority for ...
YEAR-OVER-YEAR RESULTS                  Table 14: Overall Results, Technical Capabilities – Two-Year Comparison           ...
FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES6In this survey category, CFOs and other finance executives identified prioritie...
Table 16: Finance Executive Results, Technical Capabilities – Two-Year Comparison                           2012          ...
FOCUS ON LARGE COMPANIES (US$1 BILLION)The priorities cited by respondents from larger companies differ from those who wor...
Table 18: Large Company Results, Technical Capabilities – Two-Year Comparison                           2012              ...
Organizational CapabilitiesKey Findings – 2012	•	  inance executives and professionals are looking to improve those interp...
Figure 4: Organizational Capabilities – Perceptual Map                             23 HIGHER                              ...
The priorities survey respondents cited in this category (which primarily represent personal andinterpersonal skills) both...
YEAR-OVER-YEAR RESULTS               Table 20: Overall Results, Organizational Capabilities – Two-Year Comparison         ...
FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES7The priorities concerning Organizational Capabilities identified by finance exe...
Table 22: Finance Executive Results, Organizational Capabilities – Two-Year Comparison                          2012      ...
FOCUS ON LARGE COMPANIES (US$1 BILLION)Finance executives and professionals who work in larger companies appear to place g...
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results
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What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results

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Improving business and competitive intelligence capabilities and shared services governance rank among the top priorities for today's finance executives and staff, according to the results of the 2012 Finance Priorities Survey.

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What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results

  1. 1. 2012 Finance Priorities SurveyBalancing core transactional responsibilities with agreater focus on strategic capabilities to build value in thefinance function
  2. 2. INTRODUCTIONCorporate finance functions continue to tear down walls – those surrounding organizational silos as well as thecompany’s outer partitions. But make no mistake: These efforts are highly constructive. In response to ongoingmacroeconomic and marketplace volatility, leading finance functions identify, analyze and share informationwith their organizations about innovation, customers, competitors, government actions and other aspectsof the external environment to help maximize market opportunities while minimizing the risk that strategicassumptions will become invalid.In addition to building this “competitive intelligence” capability,1 more finance executives and professionalsappear eager to take on greater responsibility for analyzing and reporting key operational metrics toenterprises that grow increasingly hungry for more precise and actionable intelligence. Of course, theseexecutives and professionals also must continue to sharpen their financial performance management activitieswhile improving the efficiency and effectiveness of the broad range of financial processes, transactions andanalyses they traditionally have performed. Strengthening these long-established, predominantly transactionalactivities (while also contending with an ever-increasing risk and compliance management workload) stillqualifies as necessary work for finance functions, but the results of Protiviti’s latest finance survey indicatemore strategic work is necessary.Protiviti’s 2012 Finance Priorities Survey, through assessing the self-reported skill levels of finance executivesand professionals along with areas they cite for improvement, identifies top priorities and key areas of focusfor today’s finance functions. The finance executives and professionals who participated in our survey includechief financial officers, vice presidents and directors of finance, and controllers, and they represent virtuallyall industry sectors. The most-represented industries include financial services and manufacturing. In terms ofsize, they represent a diverse group of organizations, with more than 40 percent from companies with US$1billion or more in annual revenues. We take a closer look at the responses from this group throughout ourreport. (We may be able to provide additional insights by company size and industry – please contact us formore information.).Respondents answered more than 100 questions in three categories: Process Capabilities (which includea) Financial Transaction activities and b) Financial Analysis activities), Technical Capabilities (includingcompetencies related to regulatory compliance) and Organizational Capabilities (personal skills).The study’s most notable findings include the following insights:1. hile finance executives and professionals are focusing more and more on strategic activities, complex W transactional issues also rate as top priorities, placing increased pressure on finance functions to make traditional, transaction-heavy processes as efficient as possible, thus freeing up more time for high-value contributions such as financial analysis and business decision-support activities.2. ompetitive intelligence and financial risk management represent top priorities across all sizes of companies C and among all levels of the finance function (finance executives, managers and professionals).3. inance functions appear intent on moving their shared services organizations beyond a “lift and shift” F approach to mature proficiency, enhancing the scope of business services and increasing overall efficiency.4. urvey respondents are targeting improvement in personal and organizational skills such as negotiation, Six S Sigma and dealing with confrontation to help them successfully address functional priorities.1 T he concept of competitive intelligence is addressed more comprehensively in Protiviti’s white paper, “Maximizing the Value of Competitive Intelligence,” available at www.protiviti.com/earlymover. 2012 Finance Priorities Survey 1
  3. 3. Throughout the survey findings, it is clear that respondents have prioritized strategic capabilities – includingthose related to operational metrics, competitive intelligence, customer profitability analysis and reporting,among others – over more transactional activities. That said, highly complex transactional activities, such ascomplying with international/transfer pricing, also represent key concerns. Combined, these priorities placegrowing pressure on all finance functions to make transactional work, such as transaction processing andperformance of account reconciliations, as standardized, automated and well-governed as possible. Doing sofrees up finance resources to concentrate more on adding strategic value to the organization.Please note that this year’s Finance Priorities Survey includes the addition of a number of new competencies andskill areas. Last year’s survey was the first of this research series. We made adjustments based on feedback andsuggestions from the market. Additionally, we revised our 2012 survey instrument to reflect current marketconditions, specifically in the areas of financial transactions and analysis.We are confident the results from our Finance Priorities Survey will be of interest to chief financial officers andother finance executives as well as the finance community at large. In addition, we anticipate a high level ofinterest in the survey among board members and other C-level executives seeking to understand the strengthsof finance functions and areas of priority in terms of growth and development. We are very appreciative andgrateful for the time spent by the finance executives and professionals who participated in our survey.ProtivitiJuly 2012ACKNOWLEDGEMENTSWe would like to express our thanks to True Partners Consulting and WTAS for their insights andcontributions to this study. 2012 Finance Priorities Survey 2
  4. 4. RESULTS AND ANALYSISProcess Capabilities (Financial Transactions)Key Findings – 2012 • trengthening financial risk management capabilities is a top priority in 2012 amid ongoing S macroeconomic uncertainty (this also was a top concern in the 2011 survey).• Another clear priority is ensuring tax compliance while lessening the organization’s overall tax burden.• hargeback allocation methodology, overall shared services governance and performance management/ C operating metrics rank as top priorities, suggesting that finance functions are seeking to increase overall performance and generate as much value as possible from shared services centers while also increasing the support levels they provide to operational partners/internal customers.• lthough survey respondents generally rate their competency at performing highly transactional A activities, such as account reconciliations, higher than more strategic activities (such as mergers and divestitures), the findings suggest that increasing the efficiency of transactional activities remains critical, as doing so can free up finance resources to devote to higher-value and more strategic concerns. Table 1: Overall Results, Process Capabilities (Financial Transactions) “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) Financial risk management (hedging, credit risk, FX risk, interest rate risk, 1 2.9 etc.) 2 Chargeback allocation methodology 2.9 3 Overall shared services governance 2.9 4 Performance management/operating metrics 3.2 5 Foreign taxes 2.2 Tax processing (sales and use tax, 1099, TE tax coding, etc.) 3.3 6 (tie) Service-level agreements 3.0 Tax planning/forecasting 2.6 State or jurisdiction taxes 2.6 8 (tie) Mergers and divestitures 2.9 Customer management (internal and external) 3.1 2012 Finance Priorities Survey 3
  5. 5. Figure 1: Process Capabilities (Financial Transactions) – Perceptual Map HIGHER 30 25 29 24 37 28 36 35 20 26COMPETENCY 14 38 12 27 23 6 32 22 15 34 33 4 31 11 7 19 21 10 2 1 18 3 17 9 16 13 8 LOWER 5 LOWER NEED TO IMPROVE HIGHER Number Process Capabilities (Financial Transactions) Number Process Capabilities (Financial Transactions) Financial risk management (hedging, credit risk, FX 1 20 Fixed asset accounting risk, interest rate risk, etc.) 2 Chargeback allocation methodology 21 Activity-based costing 3 Overall shared services governance 22 Cost allocation 4 Performance management/operating metrics 23 Banking relationships 5 Foreign taxes 24 Month-end close Tax processing (sales use tax, 1099, TE tax 6 25 Quarterly close coding, etc.) 7 Service-level agreements 26 Project accounting 8 Tax planning/forecasting 27 Pricing 9 State or jurisdiction taxes 28 Travel and entertainment reimbursement 10 Mergers and divestitures 29 Annual close 11 Customer management (internal and external) 30 Account reconciliations 12 Cash forecasting 31 Standard costing 13 In-country taxes 32 Time capture and reporting 14 Working capital management 33 Payroll tax processing 15 Debt and other investments 34 Payroll processing 16 Non-conformance 35 Invoicing/billing 17 Issue escalation 36 Accounts receivable 18 Contract management 37 Accounts payable 19 Overall customer service 38 Variance analysis 2012 Finance Priorities Survey 4
  6. 6. Respondents were asked to assess, on a scale of one to five, their competency in 38 areas of process capabilitiesfocusing on financial transactions, with one being the lowest level of competency and five being the highest. Theywere then asked to indicate whether they believe they possess an adequate level of competency or if they need toimprove, taking into account the circumstances of their organization and industry. (For the Financial TransactionProcess Capabilities under consideration, see page 4.) Figure 1 depicts a comparison of “Need to Improve” versus“Competency” ratings in a Process Capabilities (Financial Transactions) landscape.Financial risk management (FRM) stands out as a top priority in this year’s survey, just as it was in the 2011 study.The sustained importance of FRM reflects ongoing macroeconomic volatility that frequently causes intenseuncertainty regarding credit risk, liquidity risk and market risk.FRM represents a highly strategic and complex activity. Throughout the survey, in fact, respondents consistentlyrated activities that are more strategic and complex in nature as higher priorities than transactional activitiessuch as accounts payable, accounts receivable and payroll processing. For example, survey respondents placea relatively high priority on improving their management of mergers and divestitures as well as the financefunction’s work in developing operating metrics to manage performance. However, the issue still remains thatseveral organizations have yet to fully adopt a strategy focused on automating pure transactional processes andthus driving manual activity around business processes like accounts payable, month-end activities and accountsreceivable. Organizations may reflect positively on the overall effectiveness of these processes, but the efficiencyand effort to make them effective dramatically increase the cost of these functions compared to implementingsome level of automation.While this weighting makes sense – finance functions contribute the greatest value to the organization throughtheir strategic capabilities – it should not diminish the importance of continuously improving transactionalprocesses. It is notable, for example, that account reconciliations as well as the closing process (month-end,quarter-end and annual) figure as priorities even though survey respondents indicated their finance functionsperform these processes with a relatively high level of competency. By further standardizing and automatingaccount reconciliation and other transactional processes, finance functions not only drive greater efficiency, butcan also devote more resources, time and attention to FRM and other strategic activities.Also, foreign taxes, tax processing and tax planning/forecasting rank as higher priorities given the complex andfluid nature of tax policy, as well as the growing global footprint of most companies.Lastly, finance executives and professionals identified several shared-services-related activities as key priorities,including chargeback allocation methodology, overall shared service governance and better management aroundservice-level agreements. These findings suggest finance organizations that have existing shared services in placeare now committed to improving these capabilities and implementing a stronger service management framework.Doing so means increased utilization of performance metrics, implementing simplified service-level agreementsthat ensure these metrics are better managed, and a transparent costing methodology driving consistent andfair economics. Likewise, as shared service capabilities mature, eliminating “shadow process activity” in thefield where duplicate processing typically occurs will be vital for continuous improvement and achieving fullmaturation within a shared services model.Key Questions to Consider:• ow knowledgeable of, and comfortable with, the organization’s FRM capability is the board of directors? H How can the company’s FRM capability become more forward-looking and responsive?• ow can internal tax policies and the procedures that translate those policies into practice be improved to H address frequent changes by relevant tax authorities as well as the company’s entrance into new markets?• ow can we continue to drive greater efficiency (via standardization, automation and additional process H improvements) among the finance function’s highly transactional processes? 2012 Finance Priorities Survey 5
  7. 7. • ow can finance shared services move beyond a “lift and shift” process centralization approach and deliver H greater value through a “true” shared services model managed by performance and governed via service- level agreements?YEAR-OVER-YEAR RESULTS Table 2: Overall Results, Process Capabilities (Financial Transactions) – Two-Year Comparison* 2012 2011 Financial risk management Financial risk management Chargeback allocation methodology Foreign taxes Overall shared services governance Tax planning Performance management/operating metrics Project accounting time tracking Foreign taxes Tax processing Tax processing In-country taxes Service-level agreements State or jurisdiction taxes Tax planning/forecasting Cash forecasting State or jurisdiction taxes Debt and other investments Mergers and divestitures Project budget to actual reporting Customer management* Certain competencies and skill areas in this category were not included in both years of the survey.NOTABLE TRENDS• Financial risk management continues to be a consistent priority within finance transactions.• hargeback allocation methodology and overall shared services governance – new additions to the survey – C were ranked high as priorities and areas for improvement.• Consistent with last year, tax-related competencies also rank as top areas of priority. 2012 Finance Priorities Survey 6
  8. 8. FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES2The priorities in this category for CFOs and other finance executives are largely similar to those identifiedby all survey respondents. However, it still remains clear that the most urgent priorities with senior financeleadership include:• anaging overall business risk from a financial and external market perspective, and hedging currency M fluctuations, interest rate and cash flow management.• ncreasing capacity and efficiency surrounding the back office, eliminating concern around non-core I business processing and increasing focus on financial analysis and business-planning capabilities.• nhancing focus around working capital management practices, better managing cash flow throughout an E organization and understanding the impact on the financial bottom line. Table 3: Finance Executive Results, Process Capabilities (Financial Transactions) “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) Financial risk management (hedging, credit risk, FX risk, interest rate risk, 1 3.2 etc.) 2 Overall shared services governance 3.2 Chargeback allocation methodology 3.2 3 (tie) State or jurisdiction taxes 2.9 5 Foreign taxes 2.5 Activity-based costing 3.4 6 Contract management 3.2 (tie) Non-conformance 3.0 Fixed asset accounting 3.9 9 (tie) Working capital management 4.02 Includes responses from CFOs and vice president-level executives. 2012 Finance Priorities Survey 7
  9. 9. Table 4: Finance Executive Results, Process Capabilities (Financial Transactions) – Two-Year Comparison* 2012 2011 Financial risk management Financial risk management Overall shared services governance Tax planning Chargeback allocation methodology Foreign taxes State or jurisdiction taxes Month-end close Foreign taxes Manual journal entries Activity-based costing Account reconciliations Contract management Pricing Non-conformance Financial consolidations and eliminations Fixed asset accounting Travel and entertainment reimbursement Working capital management Tax processing Leave, overtime and other employee time reporting* Certain competencies and skill areas in this category were not included in both years of the survey.NOTABLE TRENDS• imilar to the overall results, financial risk management continues to stand out as a top priority for CFOs S and finance executives.• ax-related areas, along with overall shared services governance and chargeback allocation methodology T (which were added to the 2012 survey) also rank as top areas of concern for this group. 2012 Finance Priorities Survey 8
  10. 10. FOCUS ON LARGE COMPANIES (US$1 BILLION)Survey respondents from large companies identified similar priorities, with two notable exceptions: Improvingcash-forecasting capabilities and mergers and divestitures rank as higher priorities compared to the overallsurvey response. Table 5: Large Company Results, Process Capabilities (Financial Transactions) “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) Financial risk management (hedging, credit risk, FX risk, interest rate risk, 1 2.7 etc.) Performance management/operating metrics 2.9 2 Chargeback allocation methodology 2.8 (tie) Overall shared services governance 2.7 Cash forecasting 3.0 5 (tie) Mergers and divestitures 2.8 Service-level agreements 2.8 7 Tax planning/forecasting 2.4 (tie) Customer management (internal and external) 2.9 10 Foreign taxes 2.1 2012 Finance Priorities Survey 9
  11. 11. Table 6: Large Company Results, Process Capabilities (Financial Transactions) – Two-Year Comparison* 2012 2011 Financial risk management Financial risk management Performance management/operating metrics Foreign taxes Chargeback allocation methodology Project budget to actual reporting Overall shared services governance Tax processing Cash forecasting Project accounting time tracking Mergers and divestitures Cash forecasting Service-level agreements Debt and other investments Tax planning/forecasting Tax planning Customer management State or jurisdiction taxes Foreign taxes Project accounting expense tracking* Certain competencies and skill areas in this category were not included in both years of the survey.NOTABLE TRENDS• Foreign taxes fell as a priority from second in 2011 to tenth this year.• imilar to other groups in the survey, financial risk management ranks as a top priority for finance functions S in large companies. However, unlike other groups in the survey, respondents from large companies did not rank many tax-related areas to be among their top priorities and areas for improvement. 2012 Finance Priorities Survey 10
  12. 12. Process Capabilities (Financial Analysis)Key Findings – 2012 • inance functions want to strengthen competitive intelligence capabilities to equip executive teams with a F more holistic, and actionable, blend of internal and external strategic insights.• erformance management and business intelligence remain top priorities, suggesting that finance P functions are being asked to provide better information to the enterprise in a more proactive manner.• rofitability analysis and reporting efforts are maturing beyond channel profitability to focus in a more P detailed fashion on product and customer profitability. Table 7: Overall Results, Process Capabilities (Financial Analysis) “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Competitive intelligence (competitor, customer, geopolitical, etc.) 2.9 Business intelligence (operations reporting) 3.2 2 (tie) Executive dashboards/scorecards 3.2 4 Profitability analysis (product, customer, channel, etc.) 3.3 5 Profitability reporting – customer 2.9 6 Strategic planning 3.2 Performance management 3.4 7 (tie) Profitability reporting – product 3.0 Profitability reporting – channel 2.9 9 Periodic forecasting 3.5 (tie) Ad hoc reporting 3.2Respondents were asked to assess, on a scale of one to five, their competency in 22 areas of process capabilitiesfocusing on financial analysis, with one being the lowest level of competency and five being the highest. For eacharea, they were then asked to indicate whether they believe they possess an adequate level of competency or ifthey need to improve, taking into account the circumstances of their organization and industry. (For the FinancialAnalysis Process Capabilities under consideration, see page 12.) Figure 2 depicts a comparison of “Need toImprove” versus “Competency” ratings in a Process Capabilities (Financial Analysis) landscape. 2012 Finance Priorities Survey 11
  13. 13. Figure 2: Process Capabilities (Financial Analysis) – Perceptual Map HIGHER 14 21 10 7 12 4 3 22 6 11 2COMPETENCY 15 18 19 16 13 8 5 1 9 17 20 LOWER LOWER NEED TO IMPROVE HIGHER Number Process Capabilities (Financial Analysis) Number Process Capabilities (Financial Analysis) Competitive intelligence (competitor, customer, 1 12 Multiyear budget geopolitical, etc.) 2 Business intelligence (operations reporting) 13 Margin management 3 Executive dashboards/scorecards 14 Annual budget 4 Profitability analysis (product, customer, channel, etc.) 15 Ad hoc nonfinancial reporting 5 Profitability reporting – customer 16 Controls reporting 6 Strategic planning 17 Other statistical reporting 7 Performance management 18 Profitability reporting – segment 8 Profitability reporting – product 19 Project management 9 Profitability reporting – channel 20 COSO ERM framework 10 Periodic forecasting 21 Board of directors financial reporting External reporting (10-Q, 10-K, 8-K, proxy and 11 Ad hoc reporting 22 other shareholder) 2012 Finance Priorities Survey 12
  14. 14. As senior management teams dedicate more attention to external market opportunities, threats andinformation, survey respondents indicated that their finance functions fulfill a valuable partnership role inthese efforts. Specifically, finance executives and professionals cited competitive intelligence more than anyother capability as an area they intend to strengthen. (Competitive intelligence is a new competency in theFinance Priorities Survey – it has been added based on feedback received on last year’s study as well as emergingmarket trends denoting the increasing importance of a strong competitive intelligence function.)A robust competitive intelligence capability enables companies to scrutinize the external landscape continuallyfor information that can equip decision-makers with the grist they need to identify new growth opportunitiesand minimize and/or avoid strategic risks. This priority also explains why a related capability, strategicplanning, figures as a top 10 issue among survey respondents. By strengthening their company’s competitiveintelligence proficiency, finance functions can expect to deepen their involvement in strategic planningactivities.The fact that business intelligence (operations reporting), executive dashboards/scorecards and performancemanagement figure as key priorities suggests that CFOs and their finance teams are taking on greaterresponsibility for financial and operational reporting. Indeed, top-performing companies – or “EarlyMovers” 3 – frequently rely on their finance functions to produce, monitor and share integrated analytics.These include a blend of leading indicators (e.g., competitive intelligence) and lagging indicators (e.g.,performance management insights) culled from a broad portfolio of internal and external data sources.This data, once it is transformed into actionable insights, must be shared in a highly efficient manner. Thefinance function’s executive and operational colleagues, who are awash in data, want to know the handful of keyindicators that have the greatest impact on the organization’s performance.Survey respondents also identified profitability reporting and analysis activities as priority areas, which reflectsa pervasive desire to combat margin pressure amid ongoing economic uncertainty and volatility. While manyorganizations can monitor and manage channel profitability, survey respondents indicated a desire to advancethis capability to evaluate and manage profitability at the individual product level and at the customer level.This visibility, driven by the finance function’s data management and analytical skills, can help companiesunderstand, for example, when high-volume customers also figure as the lowest-margin customers.Key Questions to Consider:• o what extent can your finance function track external factors and translate them into actionable T information that strategic decision-makers need to exploit new opportunities and/or address new threats?• re your organization’s business intelligence and performance management processes producing a A sufficiently integrated collection of analytics (e.g., financial and operational analytics; internal and external analytics)?• re the finance function’s financial and operational performance reports easy to understand, and do A executive and operational colleagues consider the reports required reading?• re your organization’s profitability analysis and reporting activities maturing to include actionable insights A at the product and customer levels?3 For more information, visit www.protiviti.com/earlymover. 2012 Finance Priorities Survey 13
  15. 15. YEAR-OVER-YEAR RESULTS Table 8: Overall Results, Process Capabilities (Financial Analysis) – Two-Year Comparison* 2012 2011 Competitive intelligence KPI development Business intelligence Operational/productivity reporting Executive dashboards/scorecards Controls reporting Profitability analysis Project management Profitability reporting – customer Other statistical reporting Strategic planning COSO ERM framework Performance management Ad hoc nonfinancial reporting Profitability reporting – product Board of directors financial reporting Profitability reporting – channel Disclosure committee financial reporting Periodic forecasting Multiyear budget Ad hoc reporting* Certain competencies and skill areas in this category were not included in both years of the survey.NOTABLE TRENDS• everal new additions to this category – competitive intelligence, business intelligence, executive S dashboards/scorecards and profitability analysis, among other areas – rose to the top of the list in this year’s survey.• number of high-ranking areas from last year’s survey, including controls reporting, project management A and the COSO ERM framework, among others, fell from the top 10 priority areas. 2012 Finance Priorities Survey 14
  16. 16. FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES4CFOs and finance executives identified similar priorities compared to the overall survey response. Of note:• usiness intelligence and performance management dominate the priorities of CFOs as organizations B increasingly rely on finance functions for financial and operational reporting.• he need to monitor external events and markets is making competitive intelligence a top area of concern. T• he focus on protecting and enhancing margins continues in today’s challenging market, with profitability T analysis and reporting being high on the CFO’s priority list. Table 9: Finance Executive Results, Process Capabilities (Financial Analysis) “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Business intelligence (operations reporting) 3.5 2 Competitive intelligence (competitor, customer, geopolitical, etc.) 3.2 3 Executive dashboards/scorecards 3.5 4 Profitability reporting – customer 3.3 5 Performance management 3.6 6 Profitability reporting – channel 3.2 7 Profitability analysis (product, customer, channel, etc.) 3.5 COSO ERM framework 3.0 8 Controls reporting 3.4 (tie) Ad hoc nonfinancial reporting 3.44 Includes responses from CFOs and vice president-level executives. 2012 Finance Priorities Survey 15
  17. 17. Table 10: Finance Executive Results, Process Capabilities (Financial Analysis) – Two-Year Comparison* 2012 2011 Business intelligence Operational/productivity reporting Competitive intelligence KPI development Executive dashboards/scorecards Ad hoc nonfinancial reporting Profitability reporting – customer Other statistical reporting Performance management Project management Profitability reporting – channel Controls reporting Profitability analysis Multiyear budget COSO ERM framework COSO ERM framework Controls reporting Customer reporting Ad hoc nonfinancial reporting Variance analysis* Certain competencies and skill areas in this category were not included in both years of the survey.NOTABLE TRENDS• or CFOs and finance executives, the COSO ERM framework continues to rank among their top priority F areas.• he results suggest that ad hoc financial reporting is not as great of a concern for finance executives T compared to last year. 2012 Finance Priorities Survey 16
  18. 18. FOCUS ON LARGE COMPANIES (US$1 BILLION)Among the notable findings:• s previously stated, finance functions are increasingly taking a lead role in monitoring external events and A markets, with large companies placing the need for better competitive intelligence capabilities at the top of their priority lists.• he finance function is being looked upon as an increasingly influential partner in the strategic planning T process within large companies, as evidenced by this capability’s high ranking for improvement. Table 11: Large Company Results, Process Capabilities (Financial Analysis) “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Competitive intelligence (competitor, customer, geopolitical, etc.) 2.8 2 Strategic planning 3.0 3 Profitability reporting – product 2.9 Profitability analysis (product, customer, channel, etc.) 3.2 4 (tie) Business intelligence (operations reporting) 3.1 Executive dashboards/scorecards 3.2 6 (tie) Profitability reporting – customer 2.8 8 Periodic forecasting 3.3 Performance management 3.4 9 (tie) Ad hoc reporting 3.0 2012 Finance Priorities Survey 17
  19. 19. Table 12: Large Company Results, Process Capabilities (Financial Analysis) – Two-Year Comparison* 2012 2011 Competitive intelligence KPI development Strategic planning Operational/productivity reporting Profitability reporting – product Board of directors financial reporting Profitability analysis Project management Business intelligence Period forecast Executive dashboards/scorecards Other statistical reporting Profitability reporting – customer COSO ERM framework Periodic forecasting Controls reporting Performance management Ad hoc nonfinancial reporting Ad hoc reporting Multiyear budget* Certain competencies and skill areas in this category were not included in both years of the survey.NOTABLE TRENDS• imilar to the overall results, new competencies in this category – including competitive intelligence, S strategic planning, and profitability reporting and analysis – stand out as top priorities and areas for improvement.• oard of directors financial reporting and project management are among areas that dropped significantly B as priorities in this year’s survey compared to the 2011 study. 2012 Finance Priorities Survey 18
  20. 20. Technical CapabilitiesKey Findings – 2012 • iven the furious pace of change regarding business regulations, accounting standards and tax rules – as well as G the ongoing convergence of International Financial Reporting Standards (IFRS) and U.S. generally accepted accounting principles (GAAP) – finance functions have a growing “readiness” need.• eporting uncertainties to the Internal Revenue Service (IRS), fair value accounting, international/transfer R pricing regulations and IFRS/GAAP convergence projects are among the top areas of priority for finance functions. Table 13: Overall Results, Technical Capabilities “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Reporting uncertainties to the IRS (new regulations) 2.2 Fair Value Accounting (ASC 825 – formerly FAS 159, Fair Value Option for 3.0 Financial Assets and Liabilities) 2 International/transfer pricing regulations 2.2 (tie) International Financial Reporting Standards/GAAP convergence projects 2.7 Readiness for adopting new and impending accounting pronouncements 3.1 5 (tie) FASB Accounting Standards Codification – impact on both research 2.9 capabilities and disclosures U.S. tax laws 2.6 7 (tie) Domestic regulations 2.5 9 Reporting uncertainties – external reporting 2.5 International cash/earnings repatriation – compliance and accounting 10 2.2 implicationsRespondents were asked to assess, on a scale of one to five, their competency in 24 areas of technical capabilitiesin finance, with one being the lowest level of competency and five being the highest. For each area, they werethen asked to indicate whether they believe they possess an adequate level of knowledge or if they need toimprove, taking into account the circumstances of their organization and industry. (For the Technical Capabilitiesunder consideration, see page 20.) Figure 3 depicts a comparison of “Need to Improve” versus “Competency”ratings in a Technical Capabilities landscape. 2012 Finance Priorities Survey 19
  21. 21. Figure 3: Technical Capabilities – Perceptual Map HIGHER 23 18 24 13COMPETENCY 20 5 21 19 16 2 17 15 6 22 4 12 7 14 9 8 11 LOWER 3 10 1 LOWER NEED TO IMPROVE HIGHER Number Technical Capabilities Number Technical Capabilities 1 Reporting uncertainties to the IRS (new regulations) 13 Business combinations Fair Value Accounting (ASC 825 – formerly FAS 159, Fair Proxy rules, including risk and compensation 2 14 Value Option for Financial Assets and Liabilities) disclosures SECs 2007 Interpretive Guidance regarding Section 3 International/transfer pricing regulations 15 404 of the Sarbanes-Oxley Act International Financial Reporting Standards/GAAP 4 16 PCAOB Auditing Standard No. 5 convergence projects Readiness for adopting new and impending accounting SEC Staff Accounting Bulletin (SAB) No. 104: Revenue 5 17 pronouncements Recognition Criteria for SEC Registrants FASB Accounting Standards Codification – impact on Sarbanes-Oxley Section 404 (Internal control over 6 18 both research capabilities and disclosures financial reporting) * Sarbanes-Oxley Section 301 (Complaints regarding 7 U.S. tax laws 19 accounting, internal controls or auditing matters) * Sarbanes-Oxley Section 302 (Disclosure controls and 8 Domestic regulations 20 procedures) * 9 Reporting uncertainties – external reporting 21 Revenue recognition – multiple element deliverables International cash/earnings repatriation – compliance 10 22 Regulation S-K S-X requirements and accounting implications 11 Extensible business reporting language (XBRL) 23 Revenue recognition – general Stock-based compensation (ASC 718 or ASC 505-50 – 12 24 Segment reporting formerly FAS 123R share-based payments)* Or local country equivalent. 2012 Finance Priorities Survey 20
  22. 22. Given the intensely complex nature of nearly all of the priorities survey respondents identified in this sectionof the survey, the underlying takeaway from these results is surprisingly straightforward and practical: Toaddress in an effective manner the never-ending procession of global regulatory and tax-policy changes,finance functions want to strengthen their readiness. This readiness capability requires increasing the supply ofexpertise – internally and/or externally – available to:• Monitor and understand pending accounting pronouncements.• Create new policies concerning relevant regulatory and accounting rules changes.• nsure that these new policies are transformed into procedures that the rest of the enterprise understands E and follows.WTAS (www.wtas.com), an independent U.S. tax firm, notes, “The results of the survey, in particular the taxitems shown as priorities as well as the related technical capabilities, reflect the increased level of focus onaccounting for income taxes that has evolved in recent years. Jurisdictional concerns and the complexity ofdoing business domestically and internationally demand that companies provide more detailed reporting anddisclosures. The result is more comprehensive and complex tax reporting within the quarterly and annualfinancial statements, including additional risk analysis and transparency. Recent case law, audit activity bytaxing authorities, SEC comments and IRS guidance have heightened the focus on these key areas. Thetechnical application of detailed rules in our self-reporting environment is demanding a higher level of skillfrom existing personnel within the accounting/tax function. Management recognizes these responsibilities andtrends as well as the need to monitor the quality of its reporting in our ever-changing environment.”Accessing and deploying the necessary expertise to address these areas can be a challenge for companies of allsizes. Smaller organizations may have difficulty justifying the expense of keeping that expertise on staff, whilelarger companies must strike the right balance between devoting too many full-time resources to this typeof readiness while remaining prepared to respond with sufficient expertise when the level of new accountingpronouncements and related regulatory changes increases. Regardless of company size, the survey results showthat readiness represents a crucial requirement.Other priorities identified in this section of the survey reflect current regulatory and policy changes andrequirements that companies must address. For example, reporting uncertainties to the IRS (a top priority,according to the results) requires corporate finance, accounting and tax functions to balance how to addressthe required financial reporting of uncertain tax positions with the resulting impact it has on the disclosuresthat are part of the federal tax return for that year. The standard, originally intended to eliminate inconsistencyin accounting for uncertain tax positions in financial statements, continues instead to generate significantuncertainty within corporate finance and accounting functions.According to True Partners Consulting LLC (www.tpctax.com), a tax and business advisory firm, “Therequired tax return reporting of uncertain tax positions to the IRS has been evolving for over two years as theIRS has responded to the tax community’s comments on the original proposals. While the IRS has reducedthe amount of reporting originally outlined, the required concise descriptions of the uncertain tax positionsstill contain sufficient detail to allow identification of the items that the taxpayer has recorded for financialstatement purposes.”In addition, top priorities for finance executives and professionals this year include fair value accounting,international/transfer pricing regulations and IFRS/GAAP convergence projects. International/transfer pricingrequirements often call for external expertise from tax consulting firms (and, in many cases, from economists).The demand for this expertise is growing, according to the study: In last year’s survey, international/transferpricing requirements ranked eighth among the areas in need of improvement. In 2012, this area has beenelevated to a top-three concern. 2012 Finance Priorities Survey 21
  23. 23. True Partners Consulting observes, “It is not surprising to find that transfer pricing continues to be a highpriority for finance and tax executives. As the business world becomes more global, transfer pricing becomesa more important component of a company’s finances. At the same time, the existing regulatory regimesare enacting more complex regulations and stepping up enforcement in an effort to increase tax revenues.Developing countries have also enacted or are enacting regulations that are not always in step with those ofthe industrialized countries, further complicating the regulatory landscape. Because transfer pricing, now morethan ever, requires specialized skills, it continues to be an area where companies do not have the necessary levelof competency and require the use of external consultants.”On the IFRS front, IFRS/GAAP convergence continues to move ahead and may even beat the SEC’seventual IFRS compliance timeline in certain key areas such as revenue recognition and lease accounting.The convergence calendar, because it changes GAAP, will continue to affect private and public companies asit unfolds. Again, since convergence of U.S. GAAP and IFRS already is underway in significant areas such asrevenue recognition, now is the time for companies to begin formulating the steps they must take to ensurethat the transition to IFRS is as seamless, effective and cost-efficient as possible.5Key Questions to Consider:• hat is the overall state of the finance function’s readiness to respond (with internal policy and procedure W guidance) to new accounting pronouncements as well as tax and regulatory changes that affect accounting and financial reporting processes?• oes your organization have a clear plan of action for the convergence of IFRS and U.S. GAAP (as well as D for adopting IFRS)?• oes your function possess the expertise to address international/transfer pricing regulations as well as D other new business regulations and tax rules (both foreign and domestic)?• re CFOs and other finance executives and their managers and professional staff on the same page A regarding financial reporting areas of priority identified in the survey results, and revenue recognition issues, in particular?5 F or more information on IFRS, read Protiviti’s Guide to International Financial Reporting Standards: Frequently Asked Questions (Second Edition), available at www.protiviti.com. 2012 Finance Priorities Survey 22
  24. 24. YEAR-OVER-YEAR RESULTS Table 14: Overall Results, Technical Capabilities – Two-Year Comparison 2012 2011 Reporting uncertainties to the IRS International Financial Reporting Standards Fair value accounting Extensible business reporting language (XBRL) Readiness for adopting new and impending accounting International/transfer pricing regulations pronouncements International Financial Reporting Standards/GAAP Fair value accounting convergence projects Readiness for adopting new and impending accounting Reporting uncertainties to the IRS pronouncements FASB Accounting Standards Codification FASB Accounting Standards Codification U.S. tax laws U.S. tax laws Domestic regulations International/transfer pricing regulations New proxy rules, including risk and compensation Reporting uncertainties – external reporting disclosures International cash/earnings repatriation – compliance SECs 2007 Interpretive Guidance Regarding Section 404 and accounting implications of the Sarbanes-Oxley ActNOTABLE TRENDS• he results show that reporting uncertainties to the IRS and international/transfer pricing regulations have T increased as priorities for finance executives and professionals.• hile still important, IFRS showed a year-over-year drop as an area of priority – this is understandable W given the delays in IFRS adoption and discussions around convergence, all of which have caused the level of urgency to subside somewhat. 2012 Finance Priorities Survey 23
  25. 25. FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES6In this survey category, CFOs and other finance executives identified priorities similar to those identified byall respondents, with two exceptions. Senior finance executives appear more concerned about one of the mostcommon and important regulatory risks in the United States: revenue recognition (as addressed in financialreporting and presented on financial statements). CFOs and other finance executives identified the SEC’sInterpretive Guidance regarding Section 404 of the Sarbanes-Oxley Act and SEC Staff Accounting Bulletin(SAB) No. 104: Revenue Recognition Criteria for SEC Registrants as top priorities. Given these differences, itwould behoove finance executives as well as their staffs to ensure both levels of the finance function stay on thesame page in terms of addressing these priorities. Table 15: Finance Executive Results, Technical Capabilities “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) SEC Staff Accounting Bulletin (SAB) No. 104: Revenue Recognition Criteria 1 3.4 for SEC Registrants 2 International Financial Reporting Standards/GAAP convergence projects 2.9 FASB Accounting Standards Codification – impact on both research 3.2 3 capabilities and disclosures (tie) Reporting uncertainties to the IRS (new regulations) 2.4 SECs 2007 Interpretive Guidance regarding Section 404 of the Sarbanes- 5 3.1 Oxley Act Stock-Based Compensation (ASC 718 or ASC 505-50 – formerly FAS 123R 6 3.1 Share-Based Payments) Readiness for adopting new and impending accounting pronouncements 3.3 7 (tie) International/transfer pricing regulations 2.6 9 Reporting uncertainties – external reporting 3.0 Proxy rules, including risk and compensation disclosures 3.0 Sarbanes-Oxley Section 301 (Complaints regarding accounting, internal 3.1 10 controls or auditing matters) (tie) Sarbanes-Oxley Section 302 (Disclosure controls and procedures) 3.3 PCAOB Auditing Standard No. 5 (An Audit of Internal Control Over Financial 3.0 Reporting That Is Integrated With An Audit of Financial Statements)6 Includes responses from CFOs and vice president-level executives. 2012 Finance Priorities Survey 24
  26. 26. Table 16: Finance Executive Results, Technical Capabilities – Two-Year Comparison 2012 2011 SEC Staff Accounting Bulletin (SAB) No. 104: Revenue Readiness for adopting new and impending accounting Recognition Criteria for SEC Registrants pronouncements International Financial Reporting Standards/GAAP International Financial Reporting Standards convergence projects FASB Accounting Standards Codification Business combinations Reporting uncertainties to the IRS FASB Accounting Standards Codification SECs 2007 Interpretive Guidance regarding Section 404 Reporting uncertainties to the IRS of the Sarbanes-Oxley Act Stock-Based Compensation (ASC 718 or ASC 505-50 – PCAOB Auditing Standard No. 5 formerly FAS 123R Share-Based Payments) Readiness for adopting new and impending accounting Fair value accounting pronouncements International/transfer pricing regulations Extensible Business Reporting Language (XBRL) Reporting uncertainties – external reporting Reporting uncertainties – external reporting SECs 2007 Interpretive Guidance Regarding Section 404 Proxy rules, including risk and compensation disclosures of the Sarbanes-Oxley Act Sarbanes-Oxley Section 301 Sarbanes-Oxley Section 302 PCAOB Auditing Standard No. 5NOTABLE TRENDS• AB No. 104, a new addition to the 2012 survey, rose to the top of the list of priorities for finance S executives.• nterestingly, IFRS remains an area in need of improvement for this group, as does the SEC’s Interpretive I Guidance for Sarbanes-Oxley Section 404. 2012 Finance Priorities Survey 25
  27. 27. FOCUS ON LARGE COMPANIES (US$1 BILLION)The priorities cited by respondents from larger companies differ from those who work for small to midsizecompanies in one regard: The latter organizations appear more concerned about IFRS/GAAP convergence,identifying this competency as a higher priority than their counterparts at larger companies (which typicallyhave more resources to assign to convergence issues). Table 17: Large Company Results, Technical Capabilities “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Reporting uncertainties to the IRS (new regulations) 2.0 2 International/transfer pricing regulations 2.1 3 Business combinations 3.1 4 Reporting uncertainties – external reporting 2.3 Readiness for adopting new and impending accounting pronouncements 2.9 U.S. tax laws 2.5 5 (tie) Domestic regulations 2.4 Stock-based compensation (ASC 718 or ASC 505-50 – formerly FAS 123R 2.6 Share-Based Payments) Fair Value Accounting (ASC 825 – formerly FAS 159, Fair Value Option for 2.9 9 Financial Assets and Liabilities) (tie) FASB Accounting Standards Codification – impact on both research 2.8 capabilities and disclosures 2012 Finance Priorities Survey 26
  28. 28. Table 18: Large Company Results, Technical Capabilities – Two-Year Comparison 2012 2011 Reporting uncertainties to the IRS (new regulations) International Financial Reporting Standards International/transfer pricing regulations Fair value accounting Business combinations Reporting uncertainties to the IRS Reporting uncertainties – external reporting Domestic regulations Readiness for adopting new and impending accounting Readiness for adopting new and impending accounting pronouncements pronouncements SECs 2007 Interpretive Guidance Regarding Section 404 U.S. tax laws of the Sarbanes-Oxley Act Domestic regulations Extensible business reporting language (XBRL) Stock-based compensation (ASC 718 or ASC 505-50 – Sarbanes-Oxley Section 301 formerly FAS 123R Share-Based Payments) Fair Value Accounting (ASC 825 – formerly FAS 159, Fair FASB Accounting Standards Codification Value Option for Financial Assets and Liabilities) FASB Accounting Standards Codification U.S. tax lawsNOTABLE TRENDS• nternational/transfer pricing regulations is a top priority area for finance departments in large companies I after not ranking as such in the 2011 study.• onversely, after ranking among the top areas for improvement in 2011, IFRS and the SEC’s Interpretive C Guidance for Sarbanes-Oxley Section 404 failed to crack the top 10 areas for improvement this year. 2012 Finance Priorities Survey 27
  29. 29. Organizational CapabilitiesKey Findings – 2012 • inance executives and professionals are looking to improve those interpersonal skills that align with the F functional priorities identified throughout the survey.• egotiation, Six Sigma, dealing with confrontation and leadership (in outside organizations, groups, etc.) N are among the top priorities in this category. Table 19: Overall Results, Organizational Capabilities “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Negotiation 3.2 2 Six Sigma 2.2 3 Dealing with confrontation 3.4 Leadership (in outside organizations, groups, etc.) 3.3 4 (tie) Coaching/mentoring 3.6 Presenting (large groups) 3.6 6 (tie) Leadership (within your organization) 3.7 8 Developing outside contacts/networking 3.4 Change management 3.3 9 (tie) High-pressure meetings 3.5Respondents were asked to assess, on a scale of one to five, their competency in 23 areas of organizationalcapabilities, with one being the lowest level of competency and five being the highest. They were thenasked to indicate whether they believe they possess an adequate level of competency or if they need toimprove, taking into account the circumstances of their organization and industry. (For the OrganizationalCapabilities under consideration, see page 29.) Figure 4 depicts a comparison of “Need to Improve” versus“Competency” ratings in an Organizational Capabilities landscape. 2012 Finance Priorities Survey 28
  30. 30. Figure 4: Organizational Capabilities – Perceptual Map 23 HIGHER 19 22 20 18 13 7 17 12 5 6 14 10COMPETENCY 21 11 8 3 9 4 1 15 16 LOWER 2 LOWER NEED TO IMPROVE HIGHER Number Organizational Capabilities Number Organizational Capabilities 1 Negotiation 13 Developing rapport with senior executives 2 Six Sigma 14 Personnel performance evaluation 3 Dealing with confrontation 15 Management of outsourcing arrangements 4 Leadership (in outside organizations, groups, etc.) 16 Management of shared services 5 Coaching/mentoring 17 Time management 6 Presenting (large groups) 18 Developing rapport with business-unit executives 7 Leadership (within your organization) 19 Written communication 8 Developing outside contacts/networking 20 Presenting (small groups) 9 Change management 21 Working effectively with regulators 10 High-pressure meetings 22 Working effectively with outside parties 11 Leveraging outside expertise 23 Working effectively with external auditors 12 Networking with peers 2012 Finance Priorities Survey 29
  31. 31. The priorities survey respondents cited in this category (which primarily represent personal andinterpersonal skills) both reflect and confirm all of the other priorities described in previous sections ofthis report. For example, respondents indicated that they intend to improve the performance metrics theydevelop for their operational colleagues (through business intelligence and related analytical processes).This work requires frequent and, at times, contentious interaction with operational and executive colleagues.Performance metrics must be selected, debated and agreed upon. Finance executives and professionalsidentified priorities – including negotiation, dealing with confrontation, presenting, leadership (within theorganization) and change management – that should help them succeed in their efforts to develop more andbetter operational performance metrics.Similarly, survey participants identified leadership (in outside organizations, groups, etc.) as a priority.This type of activity can help finance executives and professionals broaden their knowledge of competitiveintelligence practices (another top priority discussed earlier in the report) in addition to stimulating otherpractices-sharing and benchmarking activities.Continuous improvement, in the form of Six Sigma, is another area identified by survey respondents as atop priority. Once again, this intention aligns with other functionwide improvement priorities – in this case,those related to shared services performance improvements.Key Questions to Consider:• s your finance team acquiring, developing and maturing the interpersonal skills required to help build I functional capabilities such as competitive intelligence, business intelligence and financial risk management?• o you feel you have a strong network of outside experts you can consult with regularly for counsel and D guidance?• as your company considered adopting a Six Sigma strategy in the finance function (including finance and H accounting shared services centers)? 2012 Finance Priorities Survey 30
  32. 32. YEAR-OVER-YEAR RESULTS Table 20: Overall Results, Organizational Capabilities – Two-Year Comparison 2012 2011 Negotiation Developing outside contacts/networking Six Sigma Negotiation Dealing with confrontation Dealing with confrontation Leadership (in outside organizations, groups, etc.) Presenting (large groups) Coaching/mentoring Time management Presenting (large groups) High-pressure meetings Leadership (within your organization) Leadership (in outside organizations, groups, etc.) Developing outside contacts/networking Six Sigma Change management Leadership (within your organization) High-pressure meetings Networking with peersNOTABLE TRENDS• hough the year-over-year results are relatively consistent in this category, developing outside contacts and T networking slid from the top of the 2011 list to eighth this year.• ix Sigma, while a top-10 priority in last year’s survey, ranks second on the priority areas for improvement S list in 2012.• oaching/mentoring and change management are among the top areas for improvement in this year’s C survey after ranking below the top 10 in 2011. 2012 Finance Priorities Survey 31
  33. 33. FOCUS ON CFOs AND OTHER FINANCE EXECUTIVES7The priorities concerning Organizational Capabilities identified by finance executives track relatively closelyto the priorities identified by all respondents. Table 21: Finance Executive Results, Organizational Capabilities “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Presenting (large groups) 3.6 2 Negotiation 3.5 3 Six Sigma 2.4 4 Dealing with confrontation 3.5 Change management 3.5 5 (tie) Leadership (in outside organizations, groups, etc.) 3.4 Developing outside contacts/networking 3.8 Leadership (within your organization) 3.9 7 (tie) Personnel performance evaluation 3.7 Presenting (small groups) 3.87 Includes responses from CFOs and vice president-level executives. 2012 Finance Priorities Survey 32
  34. 34. Table 22: Finance Executive Results, Organizational Capabilities – Two-Year Comparison 2012 2011 Presenting (large groups) Networking with peers Negotiation Developing outside contacts/networking Six Sigma Time management Dealing with confrontation Presenting (large groups) Change management Six Sigma Leadership (in outside organizations, groups, etc.) Coaching/mentoring Developing outside contacts/networking Leveraging outside expertise Leadership (within your organization) Negotiation Personnel performance evaluation Written communication Presenting (small groups) Developing rapport with senior executives Developing rapport with business unit executives Presenting (small groups)NOTABLE TRENDS• ealing with confrontation ranks among the top priorities for finance executives in this year’s survey results, D as do leadership (both within the company and in outside organizations) and change management.• etworking with peers, the top area for improvement in 2011, failed to crack the top 10 in this year’s N results – nor did time management, coaching/mentoring or leveraging outside expertise. 2012 Finance Priorities Survey 33
  35. 35. FOCUS ON LARGE COMPANIES (US$1 BILLION)Finance executives and professionals who work in larger companies appear to place greater emphasis on threecompetencies compared to their counterparts in other organizations: networking with peers, management ofoutsourcing arrangements and time management.The emphasis on improving outsourcing reflects the maturation of finance and accounting outsourcingactivities, which have become more closely integrated with internal shared services activities (and, in somecases, produce hybrid models that blend elements of shared services and traditional outsourcing arrangements).The priority placed on time management and networking is a result of increasingly competing demandsfinance functions face internally for their guidance and support, as well as the growing need to seek outsidecounsel and expertise for insights and best practices that can help finance functions thrive. Table 23: Large Company Results, Organizational Capabilities “Need to Improve” Competency Areas Evaluated by Respondents Rank (5-pt scale) 1 Negotiation 3.2 2 Six Sigma 2.3 Coaching/mentoring 3.7 3 Dealing with confrontation 3.5 (tie) Networking with peers 3.6 Management of outsourcing arrangements 3.2 Time management 3.7 6 Developing outside contacts/networking 3.4 (tie) Personnel performance evaluation 3.7 Written communication 3.9 2012 Finance Priorities Survey 34

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