Finance as the essential trusted business partner

More than ever, disruption, uncertainty, shifts in competition, and the impact of digital technologies are fundamentally changing business economics. Today’s different normal requires organizations to reshape their strategies and address rapidly evolving circumstances. They are challenged to craft strategies that address both new opportunities and future crises. And then they must find ways to successfully execute those strategies, which has become even more difficult with the emergence of ecosystem and platform partners and the need for more C-suite collaboration.

Finance has emerged as the key function to help lead decision making, develop resiliency, and capitalize on transformation in areas such as products or services, workforces and processes, enterprise or revenue models, and industry innovation. Yet, many finance executives tell us their enterprises are ineffective at developing and executing strategy.

To rapidly unlock new value from enterprise data, chief financial officers (CFOs) need to accelerate the digitization of their enterprise performance management (EPM) capabilities. With input from over 500 CFOs and senior finance executives worldwide, we distill how successful organizations do just that.

Next-generation triumvirate: Finance-business-data

In the era of data and AI everywhere, the finance function plays an essential role in helping enable enterprises in virtually every industry make better decisions. CFOs are instrumental in providing analytical insights that contribute to a strategic view of their organizations. These insights accelerate cost containment, guide capital investment in new opportunities, unlock new revenue streams, and iteratively steer the enterprise’s strategic direction.

But not all CFOs are equal. Responses from CFOs in our 20th Global C-suite Study reveal that a cadre of finance officers excel at providing their C-suite colleagues with vital financial intelligence and supporting strategy implementation. With this backdrop, the IBM Institute for Business Value (IBV) and Oxford Economics surveyed 500 CFOs and Vice Presidents/Directors of Financial Planning and Analysis in 21 countries who are involved in defining or executing their finance function’s EPM capabilities. Executives were asked about their progress and improvements in their financial planning and analysis (FP&A) processes and the use of data to enhance decision making and guide the enterprise.

Optimizing outcomes amid disruptive change requires speed and agility. Finance must support the rapid pace of technology advances, increased customer demands, and the formation of ecosystems and business platforms challenge enterprises to prepare for the future. This environment requires organizations to reshape strategies and transform how they compete and operate. Yet nearly 75 percent of finance executives say their organizations are ineffective at developing a strategy, and nearly half report they are ineffective at executing that strategy. These findings are consistent with an MIT Sloan survey of more than 400 CEOs who said the ability to execute strategy was their number one challenge—ahead of innovation, geopolitical instability, and top-line growth.

Elevating finance as a decision-support leader

How can finance lead the charge on changing business practices to address challenges such as the COVID-19 pandemic? We found a group of leading finance executives who might provide answers. These leaders serve as trusted decision-support leaders to their organizations. Their substantially better performance management capabilities drive innovation in revenue, cost containment, business models, and workforce. The end result is that these leaders are two times better than their peers at both developing and executing strategy.

We identified four key actions that contribute to these leading organizations’ success: Leaders have established an enterprise performance management foundation with a data-driven culture. They have implemented advanced financial planning and analysis processes. They have created trust in data to elevate decision making. And they are adept at partnering across the C-suite to guide strategy execution and develop resiliency. Read the full report to learn more.