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“More the 45 percent of CFOs indicate that their Finance organizations are not effective in the areas of strategy, information integration, and risk and opportunity management…With expectations rising faster than effectiveness, Finance faces a widening execution gap.” - Source: 2010 IBM Global CFO Study.
How can this be? Today, technology can all but eliminate that data hoarding and silos. Portals, SAAS, Business Intelligence, etc. are designed to democratize data, to make it available to the masses in a consumable format. With all of these technological and software advances, why are almost half of CFOs behind the curve in terms of delivering the results expected?
Who knew Arthur Andersen and Enron (and on and on) would still be impacting CFOs around the world? The reality is that the increased compliance and required transparency is still trickling down across both borders and industries. Sarbanes Oxley, LM2, 990, EITF 08-1, etc., etc.
These increased requirements to produce information specifically and in standard formats in addition to the routine of any finance department (month-end, 10-k, etc.), require additional overhead to manage. And it does not typically come in the form of additional resources – rather, resources are shifted from other areas, like financial analysis and strategy. Tactical and day-to-day tasks win out. Hence, the Execution Gap.
The IBM study highlights the 45% who feel they are falling behind, but there are the other 55% of Finance teams who are excelling operationally and strategically. IBM dubs these organizations ‘Value Integrators.’ And if you take these words literally, they quite accurately describe what these organizations have focused on to achieve results. As the study points out, an Integrator is not just about data and processes; it is about efficiency and insight. This does not happen by accident.
Organizations must make a conscious decision to optimize Finance personnel to not only keep up with reporting on the past, but also provide insight into the future. Through automated integration of data from across the organization, energy can be spent digging into the meaning data instead of manually consolidating reports. That insight can uncover market opportunities, mitigate risks, validate tough decisions and drive value – making the Finance Department the decision ‘hub’.
Fortunately, technology and software advances provide a toolset that allows organizations of virtually any size to normalize and integrate data, turning that data into real asset. Unfortunately, too many organizations view the technology as the entire solution. Becoming a ‘Value Integrator’ is not an IT or technology or software issue. It is a business issue.
The transition from Finance as a reporting department to an insight department requires a complete change of focus. Once data from across the organization is consolidated, analytical and communication skills become the most important assets of the team. Finance teams that embrace this change will add immense value to their organizations with fact-based insight and clear, objective communication.
Posted by Steve Kane on Mon - Jun 07, 2010 at 11:19 am EDT
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