Here’s what companies want from their finance departments: More analysis. Better analysis. Faster analysis. And — don’t forget — lower cost.
Strategic business partnering and lower transaction costs have been the twin goals of finance executives for the past decade or so. But even today, we’re still struggling for an answer to the question raised by this month’s cover story (see “Striking a Balance“): Can finance departments be both efficient and smart?
Maybe it’s not a fair question. However much managers say they want more help making business decisions, historically, transaction processing has always come first. Long-identified “solutions” like shared-service centers, outsourcing, and ERP systems have often proven hellish to implement. And after they are implemented, they tend to reduce the cost of finance without freeing any more time for finance employees to advise businesses.
Their advice is especially needed now, as companies face a raft of new challenges. Some of those challenges are covered elsewhere in this issue. Hurricanes Katrina and Rita sent managers scurrying to revise their disaster recovery plans (see “Rethinking the Worst Case“). The ramping up of Chinese M&A activity in this country, most notably the failed bid for oil company Unocal and the successful acquisition of IBM’s PC unit, is raising new strategic questions for U.S. businesses (see “China’s Growing Appetite“).
Against the corporate pressure to focus first and foremost on the books, finance departments must learn to leverage other, nonquantitative capabilities. It’s not enough just to place finance analysts in business units. Those analysts must be brought to the big table not simply to recite numbers, but to translate them — and then to discuss, and listen, and persuade.