A global study of chief financial officers by IBM reports that nearly three quarters of midmarket CFOs worldwide cite the need for faster decision-making and pressure to reduce costs as their top challenges. These CFOs believe that external pressures (economic, industry, regulatory) will increase over the next three years. As a result, more than half of these midsize finance organizations believe they have to make major changes to respond. The survey found nearly 60 percent of midmarket CFOs are looking to improve operational planning and analytical capabilities.
The findings of this report are based on a survey conducted in the spring and summer of 2009 by IBM Global Business Services' Financial Management practice and the IBM Institute for Business Value (IBV).
More frequently, CFOs of midsize businesses are being called into top-level discussions around demand and price pressures, business model changes, information strategy and resource allocation. Additionally, more than 75 percent said they have an advisory or decision-making role concerning the entire company agenda, as opposed to having no role or being an informer. Despite their elevated decision-making role, the vast majority of CFOs surveyed pointed to a significant gap between the importance of key CFO agenda items and their effectiveness in execution. The largest gaps were found in driving integration of information (32 percent), talent development (28 percent), advising on corporate strategy (27 percent), and managing and mitigating company risk (24 percent).
While the findings indicate that CFOs are increasingly playing a significant role in strategic and operational matters to help the business make better decisions faster, midmarket CFOs still cite challenges: More than 40 percent of companies produce financial metrics manually, with finance spending over 50 percent of the time on transactional activities. Half lack a common planning platform and 36 percent lack a common reporting platform. Nearly 60 percent were not satisfied with their operational planning and forecasting analytical capability, and 47 percent were poor to average at anticipating external forces. Through the analysis, one group of finance organizations, dubbed "Value Integrators," were found to consistently outperform their peers in key financial metrics by driving two main qualities across their organization: finance efficiency and business insight.
The study indicates that enforcing process and data standards, integrating information, and applying business analytics are key capabilities that enable improved business insight and risk management. Midsize firms are well aware of the importance of these capabilities. For example, the 2009 Global CIO Study revealed that 86 percent of midmarket CIOs identified business intelligence and analytics-the ability to see patterns in vast amounts of data and extract actionable insights-as a top technology for enhancing competitiveness over the next five years.
"Midmarket CFOs and their finance organizations are taking a much more prominent role in corporate decision-making," said Marc Dupaquier, general manager of Midmarket at IBM. "This makes it all the more important for these CFOs to be able to provide insights into their companies' financial data and suggest strategies that will help advance their companies' agendas."
Participants included more than 1,900 CFOs and senior finance executives from 81 countries and 35 industries. Of those, 44 participants were from midsize firms, defined as companies with less than $500 million in annual revenue. These leaders participated in structured interviews conducted in person by IBM practitioners or online surveys designed to capture insights on how finance professionals are affected by and deal with performance, risks, operational levers and governance.