September 29, 2014
Source of Complexity for CFOs Shifts from External Forces to Internal Issues, Accenture Study Shows
CFOs to play greater role in guiding the growth of digital investments
NEW YORK; Sept. 29, 2014 – While finance functions of large companies have made notable progress in managing external forces over the past three years, CFOs say that internal complexity – particularly that caused by growth – is their most significant challenge today, new research from Accenture (NYSE: ACN) shows.
According to the Accenture study, “The CFO as Architect of Business Value: Delivering Growth and Managing Complexity,” CFOs have made significant strides in taming outside forces that previously had a major impact on performance, reporting falling levels of concern over regulation (53 percent in 2011 to 39 percent in 2014); permanent volatility (46 to 38 percent); and talent (40 to 21 percent). Four out of five of the top challenges facing CFOs are now due to internal complexity, however, including dealing with legacy systems and environments (55 percent); managing the complex needs of all stakeholders (48 percent); new and complex business risks (46 percent); and supporting increasingly complex operating models (28 percent).
The study is part of Accenture’s High Performance Finance Research that explores the evolution of CFOs and the finance function. The global research, now in its fifth iteration in ten years, surveyed more than 600 senior finance executives and conducted interviews with more than 30 CFOs and other senior finance professionals.
“Following the economic downtown, many CFOs were forced to take a defensive approach to managing the external challenges. Now we’re seeing finance executives proactively addressing new internal sources of complexity, which in many cases are the byproducts of growth and strong performance,” said Christian Campagna, global managing director – Accenture Strategy, Finance & Enterprise Performance. “While complexity will never be eliminated, the most proactive CFOs understand that they not only need to manage complexity in all of its forms, but also embrace it as an opportunity.”
The adoption of global business services or integrated business services models is seen as a key way to address complexity. The study shows that the use of global business services, which extend beyond the basic administrative tasks of the traditional shared services model, is expected to increase from just over half (51 percent) of surveyed companies to 56 percent over the next two years. Meanwhile, the use of the integrated business services model, which joins processes from across the enterprise into advanced end-to-end services to support overall business strategy, is set to increase five-fold from four percent of surveyed companies today to nearly 20 percent in two years.
CFOs Embrace Expanded Role as “Architect of Business Value”
The expanded role of CFOs has resulted in their growing influence, according to the study, especially as a result of their involvement in growth-related and business transformation activities. Almost three-quarters (73 percent) report that the CFO’s influence in supporting strategic decision making has increased in the past two years. Sixty percent say that the CFO’s influence in providing insightful analytics has grown and 61 percent report that the CFO’s influence in partnering with enterprise functions has also risen.
Despite their greater influence, only a minority of CFOs play a consistent role in the vision, design and implementation of key business initiatives beyond functional cost reduction. For example, relatively few CFOs are involved in developing the company’s vision as it relates to workforce rationalization (18 percent), supply chain optimization (18 percent) or the digital revolution (10 percent).
A notable exception relates to CFOs at high performance businesses, those with above average growth, profitability, longevity, consistency and positioning for the future, as measured by Accenture’s High Performance Business methodology. In these businesses, CFOs are more likely to have increased their influence in strategic planning processes and executing business transformation initiatives than their lower growth counterparts. For example, 78 percent of CFOs at high performance businesses have initiated or completed operating model rationalization in the past two years as compared to 67 percent of low performers.
“CFOs, particularly at high performance businesses, have expanded their role over the past decade from cost control, accounting practices and regulatory compliance to a broader, more comprehensive role as the ‘Architect of Business Value’ within the organization,” said Campagna. “Our research shows that CFOs are making steady progress in taking on this added responsibility of driving profitability and growth while managing constant volatility, complexity, globalization and emerging technology.”
CFOs play greater role in digital investments
Digital technology continues to have a profound impact on the finance function’s performance, but CFOs, given their prominence at the intersection of finance, technology and strategy, are increasingly leading the charge in driving digital initiatives, according to the study. Investments in digital technologies are expected to rise over the next two years, with more than one-third of survey participants reporting a greater than 25 percent increase in investment in cloud and software as a service. Over one-quarter report that they expect a greater than 25 percent increase in investment in big data and analytics and 23 percent also expect to boost investments in mobile by more than 25 percent over the next two years.
Nevertheless, most companies are at the early stage of harnessing big data. Just four percent say that they have fully deployed big data and enterprise analytics capabilities, while 20 percent aspire to be at this stage in two years’ time.
“CFOs have expanded their role in evaluating, prioritizing and executing technology investments,” said Scott Brennan, managing director – Accenture Strategy, Finance & Enterprise Performance. “Many CFOs understand that technology – especially big data and analytics – presents an opportunity to inform actionable insights, improve efficiency, and drive the growth and profitability of the organization.”
The Accenture research also showed that CFOs at high performance businesses are more engaged in digital technology investments. In fact, four in ten CFOs in high performance businesses were involved in guiding, prioritizing and managing technology decisions, as opposed to just 28 percent of CFOs at low performing companies.
About the Research
The Accenture 2014 High Performance Finance Study was based primarily on an online quantitative survey conducted by Accenture between January and April 2014 among 617 finance executives. The research focused on identifying the challenges and opportunities for the finance function and changes in the role of the CFO. Half of respondents were CFOs. The balance of respondents mainly comprised finance directors (24 percent), and senior vice presidents and vice presidents of finance (25 percent). Respondents were distributed fairly evenly across ten main industries and four regions (Europe, North America, Latin America and Asia-Pacific). Almost half (49 percent) of respondents were from companies with greater than US$10 billion in annual revenues, 30 percent came from firms with $1 to $10 billion in revenues, and the remaining 21 percent were from companies with $1 billion to $500 million in revenues.
The survey was supplemented by a series of more than 30 in-depth interviews conducted with finance executives representing large, global organizations across industries. These interviews were analyzed along with the quantitative data to provide additional insight and texture to the findings. This is the fifth time Accenture has conducted this research, with the most recent prior installment completed in 2011.
Learn more about the research at accenture.com/highperformancefinance
Accenture is a global management consulting, technology services and outsourcing company, with more than 305,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.
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