Finance executives have long wanted to play a more strategic role in their companies, to serve as multifaceted business advisers instead of one-dimensional number-crunchers. Companies have invested in technology and offshore operations to handle many routine finance tasks. So why are finance departments still spending almost half their time processing transactions?
In a new study from APQC, a nonprofit provider of corporate benchmarking data, CFOs indicate that finance departments spend 46 percent of their time on transactions and another 18 percent on control. That leaves just about a third of their time for decision support and management activities — the very areas where most want to focus.
Finance executives acknowledge the problem in a separate study by CFO Research Services. A full 97 percent of them say finance must reduce the time spent on transaction processing. Two-thirds of them have made investments to improve efficiency in that area, and 71 percent are likely to spend more money on the effort. But they don’t seem to be getting anywhere.
“Businesses have become more complex, but the processes, measures, and technology tools are not standardized, so getting the information necessary to play the strategic role that CFOs want to play has become very time consuming,” says Lisa Higgins, chief operating officer at APQC. Many companies rush to implement planning systems without thinking through the kinds of analysis they are going to need. Others fail to standardize their systems. In either case, a tremendous amount of manual work is often required to produce any given piece of analysis. “If you’ve got an organization with 50 different sites involved in closing the books, and everybody makes journal entries a little bit differently, you’ve got all this work that needs to be done before you can even get to any kind of analysis,” says Higgins.
“In a worldwide business, there are complex transactions that are not suited to existing systems,” agrees Victoria Harker, CFO at AES, a global power company. “Integrating different types of transactions into an ERP system is not as streamlined or seamless as we would have thought 10 or 15 years ago.”