IBM Study Shows Midmarket Chief Financial Officers Play Increased Role in Company Strategy but Face Challenges in Decision Making and Cost Reduction

Nearly 60% of Midmarket Chief Financial Officers are Looking to Improve Operational Planning and Analytical Capabilities

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Apr 08, 2010, 12:01 ET

ARMONK, N.Y., April 8 /PRNewswire-FirstCall/ -- A global study of Chief Financial Officers (CFOs) by IBM (NYSE: IBM) reports that nearly three quarters of Midmarket CFOs worldwide cite the need for faster decision making and pressure to reduce costs as their top challenges. The study explains that these CFOs believe that external pressures (economic, industry, regulatory) will increase over the next three years. As a result, more than half of these mid-size Finance organizations believe they have to make major changes to respond.

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More frequently, CFOs of mid-size businesses are being called into top level discussions around demand and price pressures, business model changes, information strategy and resource allocation. Additionally, over 75% say they have an advisory or decision making role on the entire company agenda, as opposed to having no role or being an informer. Despite their CFOs' elevated decision making role, the vast majority of those surveyed pointed to a significant gap between the importance of key CFO agenda items and their effectiveness in execution. The largest gaps were found in driving integration of information (32%), talent development (28%), advising on corporate strategy (27%), and managing and mitigating company risk (24%).

"Midmarket CFOs and their Finance organizations are taking a much more prominent role in corporate decision making," says Marc Dupaquier, General Manager - Midmarket, IBM. "This makes it all the more important for these CFOs to be able to provide insights into their companies' financial data and suggest strategies that will help advance their companies' agendas."

Challenges

While the findings indicate that CFOs are increasingly playing a significant role in strategic and operational matters to help the business make better decisions faster, Midmarket CFOs still cite challenges.

Over 40% of companies produce financial metrics manually
Finance spends over 50% of time on transactional activities
50% lack a common planning platform; 36% lack a common reporting platform
Nearly 60% not satisfied with their operational planning and forecasting analytical capability
47% are poor to average at anticipating external forces

Value Integrators

Through the analysis, one group of Finance organizations, dubbed "Value Integrators," were found to consistently outperform their peers in key financial metrics by driving two main qualities across their organization:

Finance efficiency – The degree of common process and data standards across the organization
Business insight – The maturity level of Finance talent, technology and analytical capabilities dedicated to providing business optimization, planning and strategic insights.

"Value" conveys Finance's contribution to helping manage the Enterprise, while "Integrator" conveys the importance these organizations place on standardizing and integrating information and processes. Value Integrators have found a way to excel and navigate a new economic climate. The study indicates that enforcing process and data standards, integrating information and applying business analytics are key capabilities that enable improved business insight and risk management. Midsize firms are well aware of the importance of these capabilities. For example, the 2009 Global CIO Study revealed that 86% of midmarket CIOs identified business intelligence and analytics – the ability to see patterns in vast amounts of data and extract actionable insights – as a top technology for enhancing competitiveness over the next five years.

About the Global CFO Study

The findings of this report are based upon a survey conducted in the spring and summer of 2009 by IBM Global Business Services' Financial Management practice and the IBM Institute for Business Value (IBV). Participants included more than 1,900 Chief Financial Officers and senior Finance executives from 81 countries and 35 industries. Of those, 445 participants were from midsize firms, defined as companies with less than $500M in annual revenue. These leaders participated in structured interviews conducted in person by IBM practitioners or online surveys designed to capture insights on how Finance professionals are affected by and deal with performance, risks, operational levers and governance.

For access to the full study findings and case studies, please visit: www.ibm.com/cfostudy.