A forward-looking and analytical view — the ability to conduct what-if analyses, for example — goes to the heart of much of what finance and business unit managers need to manage their companies amid increasing competition, regulatory oversight, and higher investor and board expectations. Executives need to be able to report timely, accurate data on historical performance, to be sure.
Increasingly, however, finance and business unit managers seek to respond to threats and opportunities more quickly and to reallocate resources more authoritatively and dynamically.
In this study, we sought to explore finance executives’ views on
their ability to report and analyze financial information. What do their companies do well? Which stakeholders are well- or ill-served with information and analysis tools? And what barriers do companies face when trying to improve their financial reporting and analysis capabilities?
In addition, we wanted to understand how executives’ views on these and other matters vary according to their companies’ strategy for finance systems technology — that is, do companies that have invested aggressively have different views on their ability to gather, report, and analyze information?
To gauge finance executives’ opinions on these topics, CFO Research executed an electronic survey to readers of CFO magazine in November 2005. Our research program gathered a total of 164 responses from senior finance executives — more than half of whom work for companies with $1 billion or more in annual revenue. Our solicitation to participate in the survey was focused on senior finance executives and, as a result, respondents’ titles are typically chief financial officer (30 percent), vice president or director of finance (33 percent), and controller (16 percent). Respondents come from a broad cross-section of industries, with the manufacturing, financial services, consumer products, and wholesale/retail trade industries particularly well represented.
Queried on their satisfaction with the ability of their finance teams to execute a list of reporting and analysis activities, senior finance executives say they are broadly satisfied with their teams’ performance. Fully 86 percent of respondents are somewhat or very satisfied with their transaction-processing capabilities, and nearly 80 percent of respondents express this view of their external reporting and regulatory compliance capabilities. It seems clear from this data that companies’ investments over the last several years in basic financial management technology and process improvements have paid off.
But management reporting and the elements most closely tied to a company’s ability to plan and execute company strategy are rated less favorably by survey respondents. As shown in Figure 1, respondents express greatest dissatisfaction with their abilities to plan, budget, and forecast, to conduct ad hoc analyses, and to support business decisions such as M&A restructuring, product pricing, and so on.
These results are wholly in line with recent trends in finance and in business more generally, as companies have responded to the pressure of heightened regulatory scrutiny and higher investor expectations by investing heavily in transaction processing, basic consolidation and reporting, and compliance technology and systems.