CFOs dealing more than ever with internal complexity


By Neil Amato

Complexity is the most significant challenge facing CFOs, who also report growing strategic influence in a new survey by global management consulting firm Accenture.

Specifically, the top challenges for finance chiefs are related to companies’ internal growth. Those challenges are dealing with legacy systems and environments (55%), managing the complex needs of all stakeholders (48%), managing new and complex business risks (46%), and supporting increasingly complex operating models (28%).

The global survey, Accenture’s fifth in ten years, surveyed more than 600 senior finance executives for its most recent iteration, released on Monday.

The respondents are more concerned now with each of the above challenges. Dealing with legacy systems and environments, for example, was a top challenge for 38% in the 2011 survey.

The 2014 survey showed that executives are less concerned about regulation and talent, for instance. In 2011, 53% cited regulation as an outside force having a major impact on performance, compared with 39% who felt that way this year. Talent, a regular concern of companies, was viewed as having a major impact on 40% of respondents in 2011, compared with 21% in 2014.

Regulation has been cited as a top challenge for companies in recent AICPA Business & Industry Economic Outlook surveys, which polls mainly US finance executives.

In the Accenture research, 73% of respondents say the CFO’s influence in supporting strategic decision-making has increased in the past two years. Sixty-one per cent report that the CFO’s influence in business partnering has grown, and 60% say the CFO’s influence in providing insightful analytics has risen.

Companies today are more focused on growth and less focused on cost control, a reversal from 2011, according to the survey.

“Fifty per cent of senior finance executives were solely focused on cost control three years ago,” said David Axson, a managing director in Accenture’s Strategy, Finance & Enterprise Performance practice. “That number’s dropped down to 28%. Those that are focused on growth have moved in almost exactly the opposite direction. You can only cut your way to profitability for so long.”

Although CFOs are gaining influence, few are regularly consulted to help form the “vision, design, and implementation of key business initiatives” that don’t relate to cost reduction, the survey said. Eighteen per cent are involved in developing the company’s vision for workforce rationalisation and supply chain optimisation, and only 10% help develop the company’s vision for the digital revolution.

CFOs at organisations classified by Accenture as high-performing are more likely to have increased influence. For example, 78% of CFOs at high-performance organisations have initiated or completed operating model rationalisation in the past two years, compared with 67% of low performers, the survey said.

Other findings:

  • Senior finance executives today are more satisfied with the finance function’s performance in every category surveyed compared with 2011.
  • Companies plan big investments in digital technologies over the next two years. For instance, 39% report a greater-than-25% increase in investment in cloud and software as a service. Also, 28% expect the same level of investment in Big Data and analytics.
  • CFOs are driving broad enterprise transformation focused on profit and cost optimisation at just 5% of companies now, but 23% expect to drive such change in the next two years.

Related CGMA Magazine content:

Critical Skills Needed for Finance to Cut Through Complexity”: The expansion of finance professionals’ roles in an increasingly complex business environment has created the need for more skills development. Find out what new duties finance is taking on — and how accountants can prepare to succeed in those duties.

Why CFOs Must Avoid Being Overwhelmed by Details”: As the finance function expands its duties, it’s easy for CFOs to find their time drained by low-level discussions in areas outside the finance department. Learn how to avoid getting caught up in small details that are outside the normal course of duties.

Neil Amato (namato@aicpa.org) is a CGMA Magazine senior editor.

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