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CFOs’ Quest for the Golden Source of Data

Feature Article | August 26, 2014 by Andreas Schmitz

CFOs are now leading the charge for digital transformation and the quest for the golden source of data. SAP’s CFO expert Kai Finck, an advocate of forward-looking business management, confirms the survey findings of German consultancy BearingPoint.

Three out of four finance executives believe digital transformation will be setting the CFO agenda in the next few years. But digitalization is not the only megatrend being shaped by advances in IT. Regulatory compliance and sustainability are also set to benefit, according to BearingPoint’s 2013/2014 CFO Survey findings.

CFOs’ imperatives are better analytics and analytics for business departments.

“CFOs are frustrated with the situation right now,” says BearingPoint’s director Ingmar Röhrig, who led the survey of 65 finance officers at companies ranging from multinationals to midsize businesses. More often than not, it takes manual work to calculate how profitable a product is. Data is stored in multiple systems, so finding the answers you need at the press of a button is virtually impossible. Mergers and acquisitions add to the complexity.

CFOs as partners to the business

That is why finance chiefs are keen to help business departments get the IT they need. The survey found that four out of five CFOs believe that analytics must improve. Top of the list are drilldown functions to allow business departments to analyze their own profitability how and when they want. Kai Finck, senior vice president at SAP’s Office of CFO Solutions, agrees: “CFOs are corporate pilots, and are starting to partner more with the business.”

This is in response to growing pressure within companies to gain more insights from the business. Röhrig says: “CFOs now have to do much more but without hiring more people.” Nowadays, companies are seeking a different skillset in new hires. They are no longer looking for experts in transaction data. They need analytics specialists who can dig out precise operational insights from mountains of data.

Keeping up with regulatory change

The second major trend, new regulations, has the same IT implications. More companies are adopting integrated reporting. This approach takes a much broader view, covering a company’s strategy, governance, performance, and future prospects. It combines traditional financial reports, such as balance sheets and cash flow statements, with non-financial elements, such as a sustainability report, risk management report, and corporate governance aspects. The Integrated Reporting Committee (IIRC), formed in 2010, is driving this change.

Companies are not only being asked for broader information, but for ever more detailed numbers. “Regulators want far more granular data,” says BearingPoint’s Ingmar Röhrig. “Consolidated balance sheets and income statements are not enough.” Snapshots no longer suffice. Technology has to be able to provide the additional data the regulators are seeking.

Forecasting: picking up the pace

When asked about the third trend, sustainability, CFOs were less concerned about sustainability reporting on, say, the carbon footprint of their company’s production processes or its social engagement. They were more interested in the assumptions they base their budgets on. Respondents to BearingPoint’s survey said they were working to ever shorter budget and control cycles. The 12-month budget cycle has been replaced by more frequent forecasts. IT has to help them pick up the pace.

Almost half of the CFOs said they needed financial and operational planning to be better integrated. One in three wanted to be able to run through different scenarios. Just under a quarter of those surveyed wanted to be able to budget and forecast more frequently.

Without a golden source of data, none of these needs can be met. The ideal is no longer utopian. This is what CFOs are pushing for, and, according to Ingmar Röhrig, what they now expect.

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