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Accenture Outlook: Masters of Finance

Accenture Outlook: Masters of Finance

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Published by Accenture
Most CFOs are trying to drive value in today’s turbulent markets, but only a few are succeeding. Here are five advanced capabilities that sustain their achievement.
Most CFOs are trying to drive value in today’s turbulent markets, but only a few are succeeding. Here are five advanced capabilities that sustain their achievement.

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Published by: Accenture on Apr 23, 2012
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07/21/2012

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Finance & Enterprise Perormance
Masters of finance
 By Paul A. Boulanger, Christian Campagna, James M. Ellis and Chuck Wise
Most CFOs are trying to drive value in today’s turbulentmarkets, but only a ew are succeeding. Here are iveadvanced capabilities that sustain their achievement.
accenture.com/outlookThe journal o high-perormance businessThis article originally appearedin the 2012, No. 1, issue o 
 
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Outlook 2012
Number 1
Stop worrying so much about costcontrol within the nance unction andstart ocusing on growth instead.Beore you say, “Financial heresy!”consider this: When Accenture recentlysurveyed more than 500 senior nanceexecutives across 14 industries and morethan 20 countries to discover how wellthey are coping with virtually con-tinuous market volatility (see sidebar,page 4), we ound that organizationswith the leanest nancial unctions arealso perormance laggards.Indeed, our research indicates that intheir zeal to downsize as demand or their companies’ products or servicesdeclined, some nance organizationsmay have reduced costs too much—underinvesting in their unction to thepoint where its ability to create valueor the larger enterprise is being seriouslycompromised.Hal the nance executives wesurveyed told us that they remainocused on reining in costs. But our research also revealed a signicantshit in thinking as companies grapplewith the complexities o today’sglobal marketplace. Some 38 percento chie nancial ocers and 46 per-cent o the broader C-suite they servenow believe that the nance unctionshould start relaxing its obsessionwith cost control and concentratemore on collaborating closely withellow executives to nd protablegrowth opportunities or the enter-prise as a whole (see chart, page 3).Finance, in act, is well posiitioned to actin a more central and strategic manner within the company by assumingthree key roles: provide critical guidanceon how and where to allocate resourcesand invest to drive growth; identiyand minimize risk; and help shape astrategic response to market volatility.O course, excelling at such nancialbasics as core accounting is criticalto delivering such value. And our research conrms that nance orga-nizations generally have improvedcore capabilities substantially over the past three years—so much so thatnearly three-quarters o the nanceunction’s C-suite “customers” saythey are satised with its contribu-tion to the broader strategic goals o the enterprise.Still, since 53 percent o our surveyrespondents say that regulatory changehas a very high impact on the unction,accounting and compliance capabilitieswill continue to ace ongoing pressureto adapt. And neither nance executivesnor the broader C-suite are satisiedwith the inance organization’sperormance in the areas they saymatter most—its eectiveness or thebusiness, the quality o its workorceand its management o risk.Our research revealed, however, thatew nance organizations—less than15 percent o responding companies—are delivering higher value to theenterprise; we have designated them“masters” o nance. We identiedthem by analyzing perormance met-rics provided by participants acrossthree key areas—core accounting, costo nance and delivering value—tosee which organizations were outper-orming the overall group. And when we investigated urther we ound that the winners arenot only well integrated with theenterprise as a whole, they are alsomasters o ive speciic, advancedinancial capabilities.
1. Finance functionstrategy and governance
Having an ongoing nance unctionstrategy is considered a core capabilityor high-perormance nance organi-zations. And while all the organiza-tions we surveyed have improvedin this area, nance masters takea signicantly more sophisticatedapproach to the overall managemento their unction.
 
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Outlook 2012
Number 1
 Winning nance organizations ocuson the continual development andenhancement o their capabilities—and enterprise growth is high ontheir strategic agenda. For example,only 12 percent o nance masterstold us that they would still be ocusedprimarily on cost control a year romnow, while more than hal said that atthat time, growth would be o equalimportance.Leading nance organizations alsohave an exceptionally clear governancestructure, organized to maximize com-petencies in support o their strategicagenda. For example, nance mastersmake a clear distinction between nan-cial planning and analysis on the onehand and accounting operations on theother, and they organize accordingly.Moreover, each individual part o thenance unction clearly understandsits role—not only internally but also inrelation to the enterprise as a whole.Most critically, the nance organizationas an integrated entity holds a keyposition at the heart o the larger enterprise, and thus is able to contributedirectly to the strategic priorities o the company.Consider, or example, the case o a leading global steel group, whichtransormed its previously decentralizednance unction into a single, globalentity as the rst step in a processdesigned to enorce groupwide respon-sibilities. The transormation, whichresulted in a new operating model andstrategic vision or nance within theenterprise, also created new reportingcapabilities and capital expenditure—and helped drive a signicant improve-ment in return on invested capital.
2. A value-centered culture
Finance masters understand that thecreation o shareholder value is thegoal o all enterprise activities. What’smore, they play a central role in drivingthat value.Indeed, thanks to their role inplanning and analyzing business
Focus of finance: Different perspectives
At many companies, there is a clear difference of opinion within the C-suite about whatrole the finance function should play. For example, whereas only a little more than a thirdof CFOs believe the finance function should focus primarily on growth-oriented activities,nearly half of other C-level executives think growth is where the focus should be.
Which one of the following should be the finance function’s overall focus in 12 months’ time?
Source: Accenture analysis
Primarily on investment ingrowth-oriented activities38%46%About evenly split betweencost control and growth4136Primarily on cost control2117Other C-level executives, including CEOs, COOs and CIOsCFO

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