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|  | | Business consulting > | | | Global CFO Survey 2004 |
|  In September 2003, IBM Business Consulting Services completed interviews with 450 CFOs from 35 countries. These CFOs represented global enterprises with average annual revenues of US$8.4 billion. Over 77 percent of the interviewees were enterprise-level CFOs, while the balance represented business unit, regional and country perspectives. This major research project was undertaken to gain perspective on where finance is today and the direction in which CFOs say they are headed in the next three years. This report places the research findings into an overall context and provides perspective on the continuing transformation of finance. | The recent past: The right direction but more to be accomplished | |
Finance organizations across the world have made significant progress in redefining the function over the last five to seven years. The vast majority of organizations included in this study have made a "shift" from the past to a new, more efficient and effective model. Key "shifts" that finance organizations have made include: - Transformation of role from "policeman" to strategic business partner
- Transformation of cost base from approximately three percent to one percent of revenue
- Transformation of activity focus from transaction processing to decision support and control
While the progress finance organizations have made is positive, the complexity of the overall business environment has increased substantially, rendering the advances that have been made as competitive necessities versus competitive advantages. In addition, the pace of change and the degree of complexity seems to be accelerating without limit. Issues such as increased globalization, operating in a networked business model and heightened concerns with regard to corporate governance have placed additional pressures on CFOs. The good news is that much of what has been put into place (e.g., automated processes, shared services, etc.) can be leveraged going forward. The tougher news is that the next level of transformation needs to be even more dramatic than that which has preceded it. | The model of the future: Finance in an on demand world | |
In order to deal with continuing and increasing complexity enterprises must develop on demand business models. Built on the attributes of focus, responsiveness, variability and resiliency, an on demand business "senses and responds" to continuously changing and unpredictable market dynamics -- enabled through the integration of process, technology and people. Finance must follow suit and move aggressively to an on demand model that allows it to operate at a new level of sophistication and competence. The transformation to on demand is not simply a shift, but rather a "rift" that impacts finance as follows: - Decision support and controls are fully embedded in the business, enabling better decisions.
- Central finance activities such as capital structure management are lean and consolidated into a small, focused central finance team.
- Transaction processing and specialty services, such as tax and internal audit are handled using the most efficient and effective provider allowing for a substantially lower and more variable cost structure.
| The path to finance on demand | |
The survey and ongoing discussions with CFOs have reinforced IBM views on the continuing transformation of finance. As the nexus of business strategy, process and information, CFOs and finance organizations are uniquely positioned to integrate key components of the on demand business model. We suggest five key directions for finance. CFOs will: - Emerge as Chief Focus Officers. Proactively driving decisions regarding overall business model design and portfolio configuration will be paramount to success.
- Drive responsive business performance management architectures. Development of a holistic, integrated framework is required for success in an on demand world.
- Implement resilient governance structures. Transition to dynamic controls and risk management processes will be rewarded by the market.
- Recognize that cost variability will be required to achieve step function changes in the cost of finance. Designing a competitive cost structure across the entire finance network is a base-level requirement.
- Be key integrators of process, technology and people across the business as they realize this fusion is essential for the required transformation.
What follows is a discussion of each of these key directions in terms of future vision, survey findings and actions we believe the CFO should drive. The insights presented in this report provide a framework for CFOs and their finance organizations to use to drive a truly differentiated finance competency within their enterprise. Finance has done it before, and, with the right vision and plan, they can do it again. To read the full report, download the pdf file at the top of this page. | |
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Copyright (c) 2004 by IBM Corporation
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