Only a fifth (21%) of finance executives rate themselves as highly effective in supporting the CEOs efforts to grow the company, according to new study by consulting firm IBM Business Consulting Services Management, which surveyed 900 executives.
The study, developed in co-operation with The Economist Intelligence Unit, finds that at a huge cost to the future competitiveness of companies, almost 50% of executives report finance staff are tied up in transactional activities such as processing accounts and tax transactions, with only a quarter of staff focused on decision support performance and growth focused activities. Respondents state nearly 62% of finance organizations do not have robust processes and activities in place to support growth.
“Profitable growth is at the top of the CEO’s agenda and is what counts in the eyes of shareholders and financial analysts; however CFOs arestruggling to deliver predictive insight out of the colossal amount of data they collect,” said Nancy Thomas, leader of IBM Business ConsultingServices Financial Management practice. “At their fingertips financial executives have the power to unleash future growth by breaking down complex processes and systems and applying innovative methods to unlock information, provide new fact-based insight and create significant competitive advantages for their companies.”
The study also correlates a financial benefit may be linked to the effective analysis of financial information to drive growth activities.Analysis of publicly available financial data from nearly 300 of the study respondents reveals companies with highly effective delivery ofperformance, risk and growth information have increased revenue growth and are driving more value creation compared to their industry peers with less effective insight delivery.
Respondents excel at reporting historical financial results and meeting compliance requirements, but many are then unable to unlock, from theexploding volumes of data, the information that could uncover future business opportunities and foresee trends or costly problems ahead of time.
Finance executives stated the three most important aspects of their role included delivering performance insight 66%; providing insight to
grow the company 65%; and supplying insight to financial risks, 61%. Despite these aspirations, the survey finds only 13% of executives rate themselves as highly effective in two or more aspects of the role and alarmingly, over half do not rate themselves highly effective in any of these areas.
Transaction focused activities for finance executive’s teams reduced by only 3% since 2003 to 47% in 2005, while growth focused – decision support and performance management activities increased only 2% from 2003 to 26% in 2005.