Accenture Report Identifies What Sets Finance “Masters” Apart from Lower-Performing Corporate Finance Departments
Finance masters focus on corporate strategy, alignment with business objectives and analytic capabilities
NEW YORK; May 2008 – A new report from Accenture (NYSE: ACN) has identified characteristics that set leading corporate finance organizations, or finance “masters,” apart from average or lower-performing corporate finance organizations.
These finance masters, as Accenture refers to them, deliver value to corporations with a laser focus on strategy, aligning their organization, capability development and selection of departmental initiatives with overall corporate business objectives. Masters earned their designation by reporting that they possessed advanced capabilities in a combination of five specific areas: finance function management, enterprise performance management, finance and accounting operations, enterprise risk management and corporate finance.
The report, Accenture’s “High Performance Finance Study 2008: The Changing Role of the Finance Organization in a Multi-Polar World,” is based on a survey of more than 350 senior executives of finance departments in large companies across a broad range of industries. It is the third in a series of global studies from Accenture that examine the state of the profession and the factors that set the top-performing finance departments apart from lesser-performing ones.
The research found that finance masters take a markedly different approach than non-masters to the way they perform their function. For instance, finance masters were more than 50 percent more likely than non masters to report that they accurately measure the annual cost of finance and its related cost drivers (63 percent versus 37 percent).
Furthermore, masters were more than twice as likely as non-masters to have implemented advanced, integrated risk management processes and technologies (42 percent versus 20 percent). They also were nearly twice as likely as non-masters to have implemented advanced enterprise performance management capabilities, such as predictive or advanced analytic tools or executive dashboards that help them monitor corporate performance against management metrics (31 percent versus 17 percent).
“The challenges underscore the need for finance professionals to examine the performance of finance masters to get new ideas about how they might improve their teams’ performance,” said Dan London, managing director of Accenture’s Finance & Performance Management practice. “Finance masters recognize that they do not have to excel in everything, but they organize themselves and develop superior capabilities in areas that are of the greatest strategic importance to the company to drive value for their shareholders and the enterprise itself.”
Masters also reported spending more time on strategic matters and less time on operational details than non-masters did. For example, masters said they spent 20 percent of their time planning and developing enterprise strategy, while non-masters said they spent 15 percent of their time on strategy. Conversely, non-masters said they spent about 47 percent of their time managing finance and accounting operations, on average, while masters said they allocated an about 25 percent of their time to those activities.
The report also notes that globalization is adding to the complexities and challenges facing finance executives. More than half (58 percent) of respondents said the greatest challenge they will encounter as their companies enter emerging markets will involve building and sustaining the governance levels and internal controls that will enable them to comply with additional regulatory, tax and compliance demands and to account for revenues in different currencies. Nearly half (48 percent) of respondents said that to meet such challenges and position their finance organizations for success, they will need a standardized operating environment across geographies and business units.
“Globalization is clearly increasing the pace of change and the level of risk finance executives confront as they strive to help their companies grow and deliver value to shareholders,” said Steve Culp, managing director of Corporate Finance within Accenture’s Finance & Performance practice. “Shared services, enterprise resource planning software systems and outsourcing will become even more critical tools for helping finance organizations and their enterprises address the complexities and manage the cost-control challenges of globalization.”
The report, the third in a series of studies conducted by Accenture since 2004, was based on online responses collected from more than 350 senior corporate finance executives at companies reporting, on average, a minimum of US$1 billion in revenues, across 20 industry sectors and 30 countries in the Americas, Europe, the Asia Pacific region, Africa and the Middle East. The survey was fielded between October 2007 and January 2008, and the results were supplemented by discussions with executives from several leading companies.
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