CFO Study cites integration as key to sustained growth and global competitiveness
Sydney, Australia, 8 February 2008: IBM today announced the A/NZ results of its Global Chief Financial Officer Study. The study of over 1,200 Chief Financial Officers (CFOs) and senior finance executives from 79 countries worldwide included 76 respondents from Australia and New Zealand.
Only seven percent of A/NZ respondents are globally integrated, compared to 24 percent worldwide. In addition, only 17 percent in A/NZ aim to globally integrate their finance function in the future. IBM believes this highlights both the complexities involved in becoming a globally integrated enterprise and the low global penetration of A/NZ businesses, with many yet to substantially expand internationally.
Other key findings were:
• 61 per cent of A/NZ participants regard people development as critical, compared with only 37 per cent globally
• More than half of A/NZ respondents that had encountered a major risk event in the past three years felt that they were unprepared compared with 42 percent globally
• Just one in four A/NZ participants see finance-related compliance programs and strengthening internal controls as critical, compared with one in three globally
David Fincher, Financial Management Leader, IBM Global Business Services, A/NZ, has been speaking to many of the A/NZ participants in the study. “Globalisation currently presents one of the largest challenges yet greatest opportunities for A/NZ enterprises,” he said. “The inconsistency between the external reality of globalisation and an internal ability to address it should be a major concern for many CFOs."
The emergence of Integrated Finance Organisations (IFOs) is a key component of the study. IFOs are defined as entities that, at minimum, mandate standards enterprise wide including a standard chart of accounts, common data definitions and standard common processes. These are basic components of good governance and fewer than one in seven enterprises govern and manage the integration of their Finance organisation by the combination of these four criteria.
The study finds that IFOs provide greater resiliency, better decision support and help to drive outperforming enterprises. Additionally, the study shows that enterprises with IFOs are more likely to perform better financially than non-integrated finance organisations and are more likely to proactively manage risk.
Another significant difference between A/NZ respondents and their global counterparts was the focus on developing people. Sixty one percent of A/NZ respondents regarded this as critical, compared to only 37 percent globally. This reflects the high employment levels in A/NZ, with a talent shortage amongst finance and risk professionals increasing the need to develop and retain people.
A/NZ CFO Study respondents also placed a lower importance on finance-related compliance programs and strengthening internal controls than their international counterparts. “Globally, there are tougher and more established legislative requirements such as SOX and the Combined Code, with higher penalties for non-compliance. We expect the focus on compliance to increase in A/NZ over the coming years, especially if organisations start to become more global in their outlook,” said Fincher.
Risk was also a key focus of the study, and more than half of A/NZ respondents that had encountered a major risk event in the past three years felt that they were unprepared to manage the risk. This compared with 42 percent globally. Risk management remains immature both in A/NZ and globally, although A/NZ organisations outperformed other regions on formalised risk identification, routine management monitoring, specific risk thresholds, and embedded access/process controls.
“It’s reassuring to see that A/NZ finance functions are better than their global counterparts at fully contributing to enterprise risk management, but more can be done. For example, A/NZ respondents saw ‘enabling technology’ as a greater obstacle to risk management than did global respondents. We see this correlating to the slower adoption of performance management and analytical tools in this market,” continued Fincher.
About the Global CFO Study
The findings of this report are based upon a survey conducted by IBM Global Business Services’ Financial Management practice and the IBM Institute for Business Value (IBV) in the spring and summer of 2007. Over 1,200 Chief Financial Officers and senior Finance executives from 79 countries participated in structured interviews or online surveys designed to capture insights on how Finance professionals deal with performance, risks, operational levers and governance. The interviews were conducted in person by IBM practitioners, with the remainder surveyed online through a partnership with The Economist Intelligence Unit (EIU). Participants represent organisations across a variety of industries, geographic locations and size.
Note for editors
Finance executives interested in learning more about the study are invited to attend one the special CFO Study events being held in Melbourne (February 26th), Canberra (February 27th) and Sydney (February 28th). To RSVP visit www.ibm.com/do/au/cfostudy
Further information
Angela Eggleton
Text 100
(02) 99565733
Matt Mollett
IBM Communications
(03) 9626 6074