CFO to Chief Future Officer

Innovating to drive the future of SMEs

American Express CFO Future-Proofing Survey

contents

Foreword by American Express

Key Findings

The Changing Role of the CFO

Innovation is Key to Future-Proofing

Balancing Act Managing Risk and Opportunity

The Chief Future Officer

10

The Future-Proofer

11

The Innovator

13

The Influencer

14

The Visionary

15

Roadblocks to Future-Proofing

17

Opportunities and Challenges of

the Future-Proofing Debate

18

Conclusion

19

Definitions

20

Research Methodology

20

Participants

21

Foreword by
American Express
American Express is pleased to
present new research that details
future-proofing strategies that
Chief Financial Officers (CFOs)
are using to navigate increasingly
competitive times. American
Express has invested in the Small
to Mid-sized Enterprises (SME)
segment by commissioning detailed
research and publishing the findings
contained herein. This research is
part of a regional series that explores
your role as the Chief Future Officer
of your organisation.
An uncertain economic environment
and technological disruptions make
for increasingly competitive times.
As a result, the role of the CFOs
in Singapore SMEs has changed.
They now have many more duties
and responsibilities focused on
forward thinking, so it may be more
appropriate to think of them as
Chief Future Officers.
Companies that define themselves
as SMEs have specific needs,
differing significantly from start-up
companies and large corporates.
SMEs need to innovate to stay
competitive as the global economic
environment remains bound by
slow growth.

American Express recognises CFOs

as the drivers of that innovation, as
they push for more investments
in technology and people to help
future-proof their businesses.
This research reveals how CFOs
are approaching innovation and
demonstrating some caution
about the future. It captures candid
insights shared by the respondents
in their assessments of their own
performance, risk profiles and ability
to future-proof through nurturing
and promoting fresh thinking.
Our aim for this research is to help
SME CFOs better understand
the role they play at the heart of
their business and the importance
of future-proofing.

Nigel Fox
Vice President & General Manager
American Express
Global Corporate Payments
Singapore

Key Findings

The Changing Role

of the CFO
The SME market is lean so the need for
role diversification is essential

76%

of CFOs say their role

has changed over
the past 12 years.

CFOs play a significant role in driving

future-proofing activities

67%

play a significant role

in helping lead or implement
future-proofing strategies.

80%

are willing to
try new ideas
without fear of
repercussions
and failure.

Some CFOs are taking a bold view on risk

21%

have a high

personal
appetite for risk when

making business decisions.

In hindsight,

27%

would have taken more risks.

They work closely with other members

of the executive team

59%

believe they have

more influence at
board level.

The findings contained in this Report reflect the views of CFOs from across Singapore, with the quantitative survey data collected by
ACA Research between 9 June and 24 June 2015.

We are trying to understand how to identify, mitigate and reduce

black swan events. We are working on how to respond to any crisis
and are forming committees to address these issues.
MANUFACTURING AND PRIMARY COMPANY
$100M$200M turnover

Key Findings

Innovation is
Key to Future-Proofing
More CFOs are looking to the future

BARRIERS TO INNOVATION

46%

65%
are making
future-proofing
a bigger
focus than
12 months ago.

lack
personnel or
time dedicated

52%

believe they are

more focused on
the future than
their competitors.

30%
foresee

operational
barriers.

to innovation.

39%

28%

have

do not have their

available for
innovation.

toward innovation.

insufficient
budget

organisational
structure and
processes geared

A wide range of future-proofing initiatives are being implemented by SMEs

70%

66%

have or will change

strategic direction.

68%

have or will implement

new technology.

have or will diversify

products or services.

58%

have or will recruit staff

with new skills.

The findings contained in this Report reflect the views of CFOs from across Singapore, with the quantitative survey data collected by
ACA Research between 9 June and 24 June 2015.

Firstly, we are working on a marketing strategy. Secondly, we are looking

at how to keep the business competitive due to resourcing issues.
Construction Company
$100M$200M Turnover

Key Findings

Balancing Act
Managing Risk and Opportunity
Competitive edge

83%

CFOS concerns

of CFOs think their

organisation has a compelling
competitive edge and

89%

of those believe they

will hold this edge for
the next 35 years.

43%

say they will not have

the resources to improve
human resources
processes.

The risk of failure is real

67%

admit to a moderate or
significant risk of failure
in the next 35 years.

business threats are high

85%

are concerned
about labour
and other

93%

are concerned
about changing

government

economic

regulations.

conditions.

30%

24%

are worried about

not doing cost
management
justice.

think that sales

and marketing
will be an issue.

17%
are concerned
that they will not
be able to implement
new technology or
equipment.

The findings contained in this Report reflect the views of CFOs from across Singapore, with the quantitative survey data collected by
ACA Research between 9 June and 24 June 2015.

We are putting the emphasis on processes to be more relevant, as efficiency

is one of the issues we are very concerned with.
Distribution COMPANY
$10m$49.99m TURNOVER

The Chief Future Officer

Influen
ce

ovator

1. T

e-Proo
tur
fe
Fu

he

2. T
h

n
In

e
Th

The CFO wears many hats in the evolving business

landscape. The Chief Future Officer has to anticipate
threats, nurture great ideas, have the ear of the
management team and have a clear view of the future.

h
.T

e Visionary

11

1.

The Future-Proofer
Future-proofing is becoming a higher priority for SMEs. Sixty-five
percent of CFOs surveyed say there is now a greater focus on
future-proofing than 12 months ago, and 70% of those who believe
the role of the CFO has changed say it is now significantly more
focused on future-proofing.
Most identified a wide range of future-proofing initiatives that
either have been implemented during the last 12 months or will be
implemented during the next 12 months to enable their companies to
remain competitive.

70%

of those who believe

the role of the CFO
has changed say
there is significantly
more focus on
future-proofing now.

The list was made up of 11 main strategies and shows that futureproofing comes in many guises and reflects the diversity of the
industries and organisations in the marketplace. Most common
future-proofing strategies were changing strategic direction (70%),
implementing new technologies (68%), and diversifying products
and services (66%).
While changing strategic direction scored highest in the Professional
and Business Services sector, at 80%, the Retail and Consumer
Services sectors were not far behind, at 77% and 73% respectively.
Implementing new technologies varied across the sectors, at between
59% and 74%, and Manufacturing industries were diversifying
products and services most actively.

We are speeding up the introduction

of technology such as upgrading
our computer systems for accounting
and billing to streamline our business.
Consumer Services Company
$100M$200M Turnover

12

The Chief Future Officer

We are looking for new business,

so it is good to diversify. We have
limited resources, so the focus
has been on the existing business.
If I had the resources, we could
have a parallel business.
Manufacturing and Primary Company
$100M$200M Turnover

Where failure of the business in the near future was considered less
likely in the next three to five years, more focus was being directed to
technology (78%) and new marketing approaches (58%). Those with
a higher risk of failure are restructuring (62%), changing strategic
direction (70%) and diversifying their products and services (70%).
But CFOs are not magicians. Forty-three percent say they wont have
the time or the budget to recruit and train staff, or improve human
resources processes or communication. A further 30% say they are
concerned about not doing justice to cost management, and sales
and marketing will be an issue for 24%.
A lack of resources is the biggest barrier to implementing new ideas,
led by a lack of personnel or time (46%), and followed by a lack of
money (39%). Organisational barriers (30%), a short-term mindset
(28%), and structures and processes not geared towards innovation
(28%) are also impediments.

For businesses that

considered themselves
at less risk of failure,

78%

more focus
was being directed
to technology and

58%

on new marketing
approaches.

13

2.

The Innovator
CFOs are confident that they can try new ideas without fear of failure.
Eighty percent feel they can take risks without fear of repercussions.
But 63% of the CFOs who do not enjoy such an environment believe
other factors besides a lack of tolerance towards failure are the main
obstacles to trying and investing in new ideas and approaches.
Even so, CFOs remain committed to traditional business models,
with 28% saying their main differentiator from their competitors
is pricing and just 3% saying technology is setting them apart.
Coming close behind pricing was the skills and knowledge of
the companys workers, at 25%.
Breaking it down by industry, Professional and Business Services
(63%) and Manufacturing (64%) businesses are more likely to use
technology to differentiate themselves from the pack.
As the business environment changes, its necessary for companies
to innovate and transform just to keep pace, which means taking
risks. Ninety percent of CFOs have a high to medium personal
appetite for risk when making business decisions, and only 10%
admitted they have a low or very low appetite for risk.
However, they say their management colleagues are generally
braver, with 31% seeing a high or very high appetite for risk and 58%
recognising a medium risk appetite among management personnel.

80%
feel they can take
risks without fear
of repercussions.

Mistakes are common, with many CFOs recognising they have often
failed in gauging how much risk to take. In hindsight, 40% of those
with a low risk appetite say they would have taken more chances. Only
23% of all CFOs say that looking back, they would have taken fewer
risks, while 50% would not have done anything differently.

Our biggest challenge is working out

how to stand out from the existing
competitors in the local market.
Consumer Services Company
$50M$99.99M Turnover

14

The Chief Future Officer

3.

The Influencer
CFOs are taking a lead role in driving change in Singaporean SMEs,
with 76% claiming their job has changed over the past one to two years.
They now feel they have more responsibility (70%), are under
increased pressure to deliver results (68%) and have a bigger
boardroom influence (59%). This includes playing a significant role
in future-proofing strategies, by either helping to lead or implement
future-proofing strategies or initiatives (44%), or being responsible for
developing and executing the strategies or initiatives (23%).
Perhaps because of the greater weight of responsibility placed on them,
83% of the CFOs are confident their businesses have a compelling
competitive edge and 89% expect this can be maintained over the next
three to five years.
By industry, those most confident of their current competitive edge are
the CFOs in Distribution (92%), while 100% of those in Retail expect to
maintain their position over the next three to five years.

76%

claim their job

has changed
over the past
12 years.

While CFOs are confident of their companys competitive edge, they are
not complacent about their place in the market. Sixty-seven percent of
CFOs identified their businesses as at risk of failure during the next
three to five years.
While competition both locally and internationally is seen as a significant
threat, labour issues (20%) and rising business costs (19%) are seen
as greater risks. The threat of increased labour and government
regulations worried 85% of CFOs, while changing economic conditions
(93%) remained the biggest macro concern.

Our biggest concern is manpower

essentially, the shortage of good
talent. You have to pay for this and
because of budget constraints
that is not possible.
Consumer Services Company
$50M$99.99M Turnover

15

4.

The Visionary
The CFOs in our survey were asked to look into the future to identify
the areas that would provide the greatest growth in the next
three to five years.
The top response was developing new products and services (25%),
followed by expanding into a new industry or sector (17%), and
grasping opportunities in emerging markets (17%).

When asked what areas

would provide the greatest
growth in the next 35
years, the top response by
CFOs was developing new
products and services,

25%
followed by
expanding into
a new industry
or sector, and

grasping
opportunities
in emerging
markets.

The aim of future-proofing is to anticipate the needs and future

structure of a company to be able to respond effectively to challenges
and opportunities. That means keeping ahead of the competition.
Fifty-two percent of CFOs in Singaporean SMEs believe they are doing
more on future-proofing than their competitors, while 43% say
they are keeping pace. The most confident CFOs are diversifying
their products and services (74%), implementing new technologies
(71%), recruiting staff with new skill sets (63%) and expanding
into new areas (62%).
In contrast, CFOs that say they are falling behind their competitors
are changing strategic direction (71%) and appointing new leaders
(47%), showing they are anxious to make up lost ground.

17%

17%

Our aim is to work on a strategy

to enable various teams to achieve
economies of scale and lower
costs for the company.
Construction Company
$100M$200M Turnover

Id like to concentrate on new technology such as a structural monitoring system to

monitor construction work. Also to get more instruments for real-time systems.
PROFESSIONAL AND BUSINESS SERVICES COMPANY
$50M$99.99M Turnover

17

ROADBLOCKS TO FUTURE-PROOFING

In their own words

Labour issues the government regulations are tightening so

its difficult for us to convince the government to change the labour policies.
Construction Company
$50m$200m turnover

Dealing with the labour regulations there are reduced quotas on manpower
and a higher labour cost. Also, we have an issue with a lack of technology.
Construction Company
$50m$200m turnover

Cost-cutting I wish I could have more time to look into how things
are done in terms of productivity.
Manufacturing Company
$10m$49.99m turnover

We have spent time looking at internal controls, systems and

risk management, but we have to spend more time on it to give
us a more thorough study of the company.
Professional and business services Company
$100m$200m turnover

We need more focus on HR and recruitment policies to transform

the culture, strengthen our staff retention and recruit better talent.
Retail Company
$2m$9.99m turnover

Internal processes and workflows we have been modifying

as and when, but its good to have a well-structured plan.
Retail Company
$10m$49.99m turnover

18

Opportunities and Challenges

of the Future-Proofing Debate
Although SME CFOs are actively future-proofing, a lack of resources
may affect the sustainability of their efforts and expose them to
competitors developing and using disruptive business models.
Whats more, SMEs may not be nimble enough to compete with
start-ups or larger players with more resources.

How CFOs
are working:

Most CFOs balance

tried and tested
business practices
with risk taking.

83% of CFOs claim

their organisation
has a compelling
competitive edge.

Innovation plays an
important role in
future-proofing.

CFOs have
an underlying
confidence
about the future.

Future-proofing is an
important part of
day-to-day work.

A wide range of futureproofing initiatives is

being implemented.

Failure is accepted as
part of the process of
investing in new ideas.

The Opportunities

Their
Biggest
fears:
The level of
competition
is high.

Differentiation
is based on
traditional business
model pricing.

Tight resourcing
makes innovation
difficult.

The risk of failure

is real.
Government labour
regulations and the
cost of doing business
are challenging.
SMEs are too small for
dedicated functions and
too lean to use external
experts.
Growth opportunities
are likely to be in more
risky expansions into
new markets and
company acquisitions.

The Challenges

19

Conclusion

The CFOs of Singaporean SMEs

were asked some detailed questions,
which they answered with impressive
candour. Many questions involved
a degree of self-assessment and
required CFOs to provide an honest
appraisal of their own performance.
The safety of anonymity also allowed
them to voice their views of the future
and reveal their misgivings.
Their responses have allowed
American Express to glean the real
state of play for this often overlooked
but vital segment.
CFOs were challenged to articulate
how they were future-proofing their
businesses. More than half of the
CFOs said they had taken more steps
to future-proof in the past year than
the previous year and would do more
in the next 12 months.
They identified a wide range of
future-proofing initiatives they would
implement to enable their companies
to remain competitive.
The changes CFOs are making show
that future-proofing comes in many
guises and reflects the diversity of
the industries and organisations
in the marketplace. The most
common strategies were futureproofing by innovating, changing
strategic direction, implementing
new technologies, and diversifying
products and services.
Standing still or looking the other
way wont make the future go
away but sharing what we can see
will help us all.

This survey
gleaned
insights
including:

Innovation is the main means

of future-proofing, suggesting
business leaders should
encourage fresh thinking to
give their organisations an edge.
Staying on the same path can
mean making the same mistakes
so you should be prepared to
change your strategic direction.
The digital era is bringing so
much new technology, it is
essential to keep pace with
the changes.
Making more products
and services available to your
customers may bring in more
business so it is wise to diversify
your products and services.
Hiring workers with the
right skills and experience to
enhance your business is critical.

20

Definitions

RESEARCH
METHODOLOGY

Future-proofing

The specific research objectives of this study were to:

Understand the role of the CFO in the SME market,
including their appetite for risk
Determine the CFOs role in future-proofing
and innovation
Determine strategies for maintaining a competitive
advantage
Understand the extent of future-proofing and
innovation activities.

This is defined as the process organisations use to

anticipate and respond to changes so they remain
successful. This can include having financial agility,
developing new ways of working or structuring the
company, or investing in new products and services.
Future-proofing is not confined to financing and
can include action taken by all C-suite executives or
innovation departments within the business.
Risk and innovation
The terms risk and innovation were not explicitly
defined in the research highlighted in this report.
American Express accepts risk and innovation have
different meanings to different people and remain key
areas of focus for CFOs.

TIMEFRAME
The findings contained in this Report reflect the
views of CFOs from across Singapore, with the
quantitative survey data collected by ACA Research
between 9 June and 24 June 2015.
Industry Types
A sample of 151 surveys were completed over the
phone. All respondents were CFOs or CEOs responsible
for the financial management of their organisations.
Organisations ranged in size and industry, including:
Professional and Business Services business
services, professional services and property
management
Consumer Services hospitality, education, health,
personal services and membership organisations
Distribution transport, logistics, utilities and
wholesale
Manufacturing and Primary Industry
manufacturing, agriculture and mining
Construction construction and engineering
Retail.

21

Participants

By industry*
Professional and Business Services
Construction
Manufacturing and Primary
Distribution
Consumer Services
Retail

23%
19%
19%
16%
15%
9%

Revenue*
S$2m$9.99m
S$10m$49.99m
S$50m$99.99m
S$100m$200m

17%
17%
31%
36%

Location of head office

Local
Overseas/regional/global
Both

74%
9%
17%

Job title
CFO
CEO

95%
5%

*Percentages add to more than 100% due to rounding.

For more trends and insights

for smarter business, please visit
https://business.
americanexpress.com/sg/
business-trends-insights

About American Express

Global Corporate Payments
Through its Global Corporate Payments group,
American Express provides Corporate Card,
Business Travel Account and other expense
management services to mid-sized companies
and large corporations worldwide. In the U.S,
it is a leading issuer of corporate cards, serving
more than 70% of the Fortune 500, as well as
tens of thousands of mid-sized companies.
American Express issues local-currency
commercial cards in more than 40 countries,
and International Dollar Corporate Cards in an
additional 100+ countries.
For more information, visit
https://business.americanexpress.com/sg.

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