Kolkata, Oct 31 IBNS | 9 months ago

Globally, finance functions have spent much of the past decade dealing with rapidly changing financial reporting standards, new corporate governance requirements and/or cost-cutting initiatives, according to a latest survey.


KPMG International's survey of over 440 CFOs and other senior finance executives in 15 countries shows that the majority are poised to make the necessary investments and embrace intelligent finance function models.

In India, the survey results show the finance function lagging behind in centralisation of its key finance activities.

Compared to global responses, respondents in India reported 14pc less centralisation across the various core finance activities on average (one-quarter in relative terms).

A majority (61pc ) of Indian respondents say they are 'very willing' to devote resources and funds to improve their finance functions, and over half plan to increase their finance function's budgets or investments.

India also has seen a dramatic surge in the number of finance executives who think that their finance function will play a 'larger role' in their company's development and execution of business strategy in five years from now - 87pc now agree with this statement, compared to 52pc five years ago.

Talent management - playing for keeps

For senior finance executives in India, talent management is the single most important success factor of the finance function, and also one of their biggest challenges.

'Talent management and technical knowledge of staff' is tied with 'processes for risk management' as the areas named as most difficult to improve.

And, while a relatively high percentage (48pc ) say they already have strong talent management capabilities, Indian finance executives are split on the question. A sizeable minority of them (30pc ) says they are either 'very weak' or 'somewhat unskilled' in this area.

Says Rajiv Gupta, Partner - Financial Management Advisory Services, KPMG India, "With a tight market for skilled finance professionals and increasing demands on finance functions, companies need to sharpen their focus on talent management if they want to build and retain a competitive and intelligent finance team.

"It is promising, however, to see that the majority of respondents in India expect to make major investments in talent management in the next two years."

The global momentum to transform the role of the finance function continues to grow

Compared to 2011, 25pc more respondents in this year's global CFO study say their organizations are 'very willing' to spend money on finance function improvements.

Over two-thirds say their organization is 'very' or 'somewhat willing' to spend money to improve the effectiveness and efficiency of their finance function.

KPMG's global CFO survey compares the results of all respondents against those of high performing organizations, defined as companies with more than 10pc growth in revenue and EBITDA in the past three years.

Key findings from this year's research show that an increasing number of organizations have had success making this finance transition a reality.

49pc of senior finance executives rate their ability to communicate effectively with their board of directors as a strength, up from 40pc four years ago.

44pc say they are already able to contribute well to the organization's long-term business strategy development, up from 33pc four years ago.

56pc expect their finance teams to have an even larger role in developing and executing business strategy in the next five years.

Over half of respondents believe that providing greater support to the business offers the greatest opportunity for the finance function to add more value.

Says Martyn van Wensveen, KPMG's Global Head of Financial Management, "The finance organization of the future, and indeed of today, must go beyond its business-as-usual bookkeeping and financial reporting role to become a provider of real intelligence that business units can depend on when making tactical and strategic business decisions.

"Intelligent finance functions empower their finance teams to help the business make better and faster decisions based on the right information delivered at the right time."

The report also notes that the most forward-thinking finance functions embed intelligent finance concepts by strengthening their business strategy alignment, planning and control, management reporting and analytical capabilities.

They also employ the latest business intelligence tools and innovative (big) data and analytics techniques as well as invest in resources for transforming this data into insightful reports that enable actionable decisions across all business functions.

Shifting focus to activities that contribute to business decisions that improve the bottom line

The report reveals that some of the biggest finance function improvement gains come from leveraging new information technologies to seize evolving market opportunities, for example, through more integrated, cloud-enabled Enterprise Resource Planning (ERP) and Enterprise Performance Management (EPM) solutions combined with user-friendly mobile technologies.

"The latest EPM solutions provide a company-wide business cockpit with real-time display of all key business value drivers and KPIs that can be shared across all business units" says van Wensveen.

"Through the use of EPM tools, companies gain better alignment between business units, better understanding of movements in their markets and better synchronization of business decisions to support the company's strategic goals," he adds.

In summary, the CFO survey shows that intelligent finance functions are built on a strong foundation of Lean Finance principles and Finance Shared Services and have adopted reliable forecasting techniques and aligned their finance and risk functions and last but not least, implemented pro-active talent management for their finance staff.

(Posted on 31-10-2013)