From Efficiency and Cost-cutting, CFOs to Focus on Growth
The role of in-house finance teams is under scan again as CFOs are seeking expansion of their level of influence and encourage innovation and growth.
Although the CFO’s role has developed within the UK in recent years, most believe their focus over the next 2 years must revolve around day-to-day operations and greater engagement with external stakeholders, if businesses are to develop.
‘From Keeping Score to Adding Value’, published by KPMG, also reveals that the gap between the information companies have access to, and the data they actually need to make business decisions, lies behind the move to transform the finance function.
“Having focused unrelentingly on efficiency drives and cost cutting initiatives since the start of the current economic crisis, many finance executives are now looking to help their organisations grow again,” says Patrick Fenton, partner and UK head of financial management consulting at KPMG.
“Their willingness to continually evolve not only adds value to their business; it also fills the missing link in many organisations by improving relationships with other corporate support functions.”
However, respondents indicate that a number of challenges stand in the way of creating a more forward-looking and integrated finance department. More than half argue that the relationship between finance and other groups within their company poses a significant risk to the function’s effectiveness. CFOs do, at least, recognise that they need to address the issue, with one respondent commenting that the toughest chore finance faces is in communication.
Almost all of the participants in KPMG’s report cite some form of people challenges as blockages to their success. Many finance leaders admit they are struggling to assemble and retain finance staff with the right mix of capabilities and talents to reflect the new demands being placed on the finance function.
Respondents to KPMG’s survey also expressed continuing frustration with the limitations of technology. In many cases, out of date applications and legacy IT systems were cited as barriers to improving the finance function’s effectiveness. Given the fundamental emphasis on delivering accurate, consistent and timely financial data, many executives said that they would look to play a more pivotal role in bridging the gap between IT and finance.
Patrick Fenton continues: “It’s up to CFOs and their teams to convince other, sceptical, business areas that a function best known for evaluating past financial performance really can help them become more proactive, predictive and ultimately more successful.
“If finance teams can do this successfully, CFOs will be well on the way to demonstrating that they are about more than identifying reasons for past performance.”