For years, the finance function became more and more involved in strategic decision-making, but then the global recession led many finance teams to refocus on cost management and cash flow concerns. Now that the economy is recovering, what are finance managers' top priorities? Longitude Research, commissioned by Accenture and Oracle, surveyed 930 CFOs across North America, Europe, Asia, and Latin America to answer that question.
The good news for finance executives is that 71 percent have seen an increase in their overall strategic influence over the past three years, while only 2 percent have seen a decrease. Many respondents are getting more involved in setting and determining strategy (65 percent), business transformation (47 percent), and executing strategic choices (36 percent). Thirty-one percent said their influence over HR has grown in the past three years, while 13 percent said it has shrunk. However, some companies are removing IT responsibilities from the purview of finance: Slightly more respondents have seen their influence over IT shrink (26 percent) than grow (25 percent).
Although they report that their overall strategic influence is growing, CFOs spend most of their time helping the business meet day-to-day needs in a tight economy. When asked to identify their top three priorities over the past three years, the largest proportions of respondents selected profitability and cost management (53 percent) and cash flow and working capital (50 percent), followed by risk management and compliance issues.
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Fewer respondents selected more strategic activities; however, most anticipate that their involvement in the strategic tasks will grow in the near future. Twenty percent said finance transformation has been a priority over the previous three years, but 22 percent said it will be a priority in the next three years. Likewise, 17 percent selected "business transformation and change management" as a key activity in the past, but 20 percent selected it as a priority for the future, and the proportion who selected "supporting the growth agenda" rose from 13 percent for the past three years to 18 percent for the next three.
The vast majority of CFOs surveyed are involved in an array of activities related to strategic planning and execution, although most play a supporting, rather than a leading, role. Forty-seven percent play a leading role in aligning strategy with finance processes, but only 34 percent play a leading role in strategy formulation and 24 percent play a leading role in strategy execution.
Why aren't more CFOs taking a leading role in setting strategy? The challenge most frequently cited by survey respondents as a barrier to their own effectiveness is the challenging economic environment. Thirty percent lay blame on the constantly evolving regulatory environment, and 31 percent cited a lack of integration between finance and other areas of the business.
More than a quarter also see gaps in skills and capabilities within the finance function as undermining their ability to do their job. What skills do finance staff need to bulk up? The top five selected by survey respondents are communication skills (33 percent), analytical skills (29 percent), industry knowledge (27 percent), and technology knowledge and leadership skills (each 24 percent).
The possible barriers to effectiveness that survey respondents cited least often are a lack of good-quality data (21 percent) and a poor technology infrastructure (17 percent). So the survey indicates that CFOs have the technology tools they need, but their staff may not be leveraging those tools to maximum benefit.
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