What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results

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Improving business and competitive intelligence capabilities and shared services governance rank among the top priorities for today's finance executives and staff, according to the results of the 2012 Finance Priorities Survey.

Transcript of What is top of mind for the CFO? Read Protiviti's 2012 Finance Priority Survey Results

  • 2012 Finance Priorities SurveyBalancing core transactional responsibilities with a greater focus on strategic capabilities to build value in the finance function

  • 1 2012 Finance Priorities Survey

    INTRODUCTION

    Corporate finance functions continue to tear down walls those surrounding organizational silos as well as the companys outer partitions. But make no mistake: These efforts are highly constructive. In response to ongoing macroeconomic and marketplace volatility, leading finance functions identify, analyze and share information with their organizations about innovation, customers, competitors, government actions and other aspects of the external environment to help maximize market opportunities while minimizing the risk that strategic assumptions will become invalid.

    In addition to building this competitive intelligence capability,1 more finance executives and professionals appear eager to take on greater responsibility for analyzing and reporting key operational metrics to enterprises that grow increasingly hungry for more precise and actionable intelligence. Of course, these executives and professionals also must continue to sharpen their financial performance management activities while improving the efficiency and effectiveness of the broad range of financial processes, transactions and analyses they traditionally have performed. Strengthening these long-established, predominantly transactional activities (while also contending with an ever-increasing risk and compliance management workload) still qualifies as necessary work for finance functions, but the results of Protivitis latest finance survey indicate more strategic work is necessary.

    Protivitis 2012 Finance Priorities Survey, through assessing the self-reported skill levels of finance executives and professionals along with areas they cite for improvement, identifies top priorities and key areas of focus for todays finance functions. The finance executives and professionals who participated in our survey include chief financial officers, vice presidents and directors of finance, and controllers, and they represent virtually all industry sectors. The most-represented industries include financial services and manufacturing. In terms of size, they represent a diverse group of organizations, with more than 40 percent from companies with US$1 billion or more in annual revenues. We take a closer look at the responses from this group throughout our report. (We may be able to provide additional insights by company size and industry please contact us for more information.).

    Respondents answered more than 100 questions in three categories: Process Capabilities (which include a) Financial Transaction activities and b) Financial Analysis activities), Technical Capabilities (including competencies related to regulatory compliance) and Organizational Capabilities (personal skills).

    The studys most notable findings include the following insights:

    1. While finance executives and professionals are focusing more and more on strategic activities, complex transactional issues also rate as top priorities, placing increased pressure on finance functions to make traditional, transaction-heavy processes as efficient as possible, thus freeing up more time for high-value contributions such as financial analysis and business decision-support activities.

    2. Competitive intelligence and financial risk management represent top priorities across all sizes of companies and among all levels of the finance function (finance executives, managers and professionals).

    3. Finance functions appear intent on moving their shared services organizations beyond a lift and shift approach to mature proficiency, enhancing the scope of business services and increasing overall efficiency.

    4. Survey respondents are targeting improvement in personal and organizational skills such as negotiation, Six Sigma and dealing with confrontation to help them successfully address functional priorities.

    1 The concept of competitive intelligence is addressed more comprehensively in Protivitis white paper, Maximizing the Value of Competitive Intelligence, available at www.protiviti.com/earlymover.

  • 2 2012 Finance Priorities Survey

    Throughout the survey findings, it is clear that respondents have prioritized strategic capabilities including those related to operational metrics, competitive intelligence, customer profitability analysis and reporting, among others over more transactional activities. That said, highly complex transactional activities, such as complying with international/transfer pricing, also represent key concerns. Combined, these priorities place growing pressure on all finance functions to make transactional work, such as transaction processing and performance of account reconciliations, as standardized, automated and well-governed as possible. Doing so frees up finance resources to concentrate more on adding strategic value to the organization.

    Please note that this years Finance Priorities Survey includes the addition of a number of new competencies and skill areas. Last years survey was the first of this research series. We made adjustments based on feedback and suggestions from the market. Additionally, we revised our 2012 survey instrument to reflect current market conditions, specifically in the areas of financial transactions and analysis.

    We are confident the results from our Finance Priorities Survey will be of interest to chief financial officers and other finance executives as well as the finance community at large. In addition, we anticipate a high level of interest in the survey among board members and other C-level executives seeking to understand the strengths of finance functions and areas of priority in terms of growth and development. We are very appreciative and grateful for the time spent by the finance executives and professionals who participated in our survey.

    Protiviti July 2012

    ACKNOWLEDGEMENTSWe would like to express our thanks to True Partners Consulting and WTAS for their insights and contributions to this study.

  • 3 2012 Finance Priorities Survey

    RESULTS AND ANALYSIS

    Process Capabilities (Financial Transactions)

    Key Findings 2012 Strengthening financial risk management capabilities is a top priority in 2012 amid ongoing

    macroeconomic uncertainty (this also was a top concern in the 2011 survey).

    Another clear priority is ensuring tax compliance while lessening the organizations overall tax burden.

    Chargeback allocation methodology, overall shared services governance and performance management/operating metrics rank as top priorities, suggesting that finance functions are seeking to increase overall performance and generate as much value as possible from shared services centers while also increasing the support levels they provide to operational partners/internal customers.

    Although survey respondents generally rate their competency at performing highly transactional activities, such as account reconciliations, higher than more strategic activities (such as mergers and divestitures), the findings suggest that increasing the efficiency of transactional activities remains critical, as doing so can free up finance resources to devote to higher-value and more strategic concerns.

    Table 1: Overall Results, Process Capabilities (Financial Transactions)

    Need to ImproveRank Areas Evaluated by Respondents

    Competency(5-pt scale)

    1Financial risk management (hedging, credit risk, FX risk, interest rate risk,

    etc.) 2.9

    2 Chargeback allocation methodology 2.9

    3 Overall shared services governance 2.9

    4 Performance management/operating metrics 3.2

    5 Foreign taxes 2.2

    6(tie)

    Tax processing (sales and use tax, 1099, T&E tax coding, etc.) 3.3

    Service-level agreements 3.0

    8(tie)

    Tax planning/forecasting 2.6

    State or jurisdiction taxes 2.6

    Mergers and divestitures 2.9

    Customer management (internal and external) 3.1

  • 4 2012 Finance Priorities Survey

    NEED TO IMPROVELOWER HIGHER

    COM

    PETE

    NCY

    LOW

    ERHI

    GHER

    4

    32 1

    5

    6

    710

    11

    12

    13

    1415

    1718

    19

    20

    21

    22

    24

    2326

    27

    282930

    31

    323334

    3536

    37

    38

    25

    89

    16

    Number Process Capabilities (Financial Transactions) Number Process Capabilities (Financial Transactions)

    1

    2

    3

    4

    5

    6

    7

    8

    9

    10

    11

    12

    13

    14

    15

    16

    17

    18

    19

    Financial risk management (hedging, credit risk, FX risk, interest rate risk, etc.)

    Chargeback allocation methodology

    Overall shared services governance

    Performance management/operating metrics

    Foreign taxes

    Tax processing (sales & use tax, 1099, T&E tax coding, etc.)

    Service-level agreements

    Tax planning/forecasting

    State or jurisdiction taxes

    Mergers and divestitures

    Customer management (internal and external)

    Cash forecasting

    In-country taxes

    Working capital management

    Debt and other investments

    Non-conformance

    Issue escalation

    Contract management

    Overall customer service

    Fixed asset accounting

    Activity-based costing

    Cost allocation

    Banking relationships

    Month-end close

    Quarterly close

    Project accounting

    Pricing

    Travel and entertainment reimbursement

    Annual close

    Account reconciliations

    Standard costing

    Time capture and reporting

    Payroll tax processing

    Payr