Quality of management information produced is the key business challenge for CFOs as finance function becomes more strategically focused

Just over a third rate quality of management information very good or excellent
84% said that their finance function contributed to decreasing costs
85% say that finance is no more easily available now compared to 6 months ago

Organisations are planning for the future with growth strategies firmly on the agenda. Restructuring activities are ongoing and significant change is taking place around business models. Companies are increasingly looking to the CFO for strategic direction but CFOs recognise that keeping management information relevant and accurate is a challenge. This is according to PwC’s Chief Financial Officers Pulse survey launched today.

The finance function plays a greater strategic role, but room for further improvement
Over half (51%) of Ireland’s finance leaders indicate that being a strategic business partner best describes the role of their finance function. This is an increase from 27% three years ago. However, there is room for further improvement, as half of respondents reported spending over 50% of their time on data gathering and reconciliations rather than value added processes such as forecasting and business analysis. Only a quarter (23%) reported spending more than half of their time on providing business insight - a key indicator.

An overwhelming majority (84%) of survey respondents said that their finance function contributed to decreasing costs while over a third (39%) indicated that they helped increase revenues.

Quality of the people is single key success factor
Over half (54%) said that the single key factor contributing to the success of the finance function is the quality of the people. An overwhelming majority (81%) said that they have the appropriate skills to support business demands. However, the survey suggests that both systems and talent challenges exist as only 38% rate the quality of their management information as either ‘very good’ or ‘excellent’. The top three challenges for the finance function, according to the survey, are accurate budgeting (58%), supporting organisational restructuring (50%) and management information (43%).

Over a third (39%) outsource finance activities to a third party, with a quarter (25%) using a Shared Services Centre (SSC). According to the survey, over a third (37%) of these SSCs are located in Ireland and a further 28% in Western Europe. The most popular activity being outsourced is payroll (31%), followed by tax (15%).

Speaking at the survey launch, Paul Tuite, PwC’s Advisory Leader, said:

“Businesses will have undergone significant transformation when an upturn emerges. With better business models and a more competitive cost structure, progressive organisations are better placed now than ever before to take advantage of growth opportunities and finance functions have a critical role to play in supporting these changes. However, they need to be sure that the information used for decision making is complete and accurate and they recognise that there is room for improvement in this regard.”

Challenges are being tackled
The survey reveals that that an overwhelming majority (85%) feel that finance is no more easily available now compared to six months ago. Other key business challenges currently facing Ireland’s finance leaders, according to the survey, are maintaining margins (78%); controlling the cost base (64%) and lack of demand (45%). Businesses continue to tackle these challenges evidenced by ongoing restructuring activities. According to the finance leaders, reviewing key contracts (68%); simplifying processes (53%) and reviewing the supply chain for efficiencies (48%) are the top restructuring initiatives.

Volatile economic growth tops the risk agenda

The single key risk being tackled is volatile economic conditions (90%). Other risks on the agenda are exchange rates (45%), competition from emerging markets (40%), inflation (31%) and lack of available finance (31%)
Launching new products/services (64%), entering new markets (41%) and introducing new marketing incentives are the most popular growth strategies
Significant activity is taking place concerning business models. Over half (56%) of the finance leaders said that they are planning to change the manner in which they make their investment decisions in the coming year; a similar proportion (55%) are planning to review talent management strategies. Half (51%) are planning to change their organisational structure and 41% are planning to change their approach to risk management in the coming months

Garrett Cronin, Consulting Partner, PwC added:

“The survey highlights that the finance function plays a key role in strategic business operations. However, with over half of the time being spent on data gathering, there is capacity to become more efficient. Our current environment demands high quality business insight and timely information in order to make the right decisions at the right time. It is not surprising that the key challenges for the finance function, as reported, are accurate forecasting, supporting organisational restructuring and management information. We also see finance functions continuing to explore the wider role of Shared Services Centres in order to optimise processes and costs. ”

ENDS

Notes to editor:

The survey was carried out in Q4 of 2011 with 207 participants covering a range of sectors and ownership types.

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