Financial officers want to be more than bean counters
As the economic outlook worsens, outsourcing work is likely to become increasingly popular.
Chief Financial Officers (CFOs) are fed up with their roles as bean-counters and instead want to play a greater part in setting corporate strategy, according to a new survey by Deloitte.
The survey, which was carried out among 118 Irish-based CFOs from a variety of industries, reveals that 75 per cent seek a greater role in management strategy and are looking to redefine their traditional role.
CFOs are traditionally seen as next in line to the CEO. It is clear from the survey that before making the leap, CFOs are keen to play a greater role in deciding corporate strategy.Instead of simply keeping a firm's finances in order, CFOs now see their role as evolving from the traditional role of steward to one that also assumes the additional responsibilities of the dynamic business leader, supporting and stimulating business performance.
According to the survey, 63 per cent of CFOs are going to place more emphasis on being a "catalyst" within their business over the next 18 months, while 94 per cent believe that the finance function shouldn't just focus on financial reporting.
"There is an interesting contrast between the last survey in 2005 and this one," says Shane Mohan, a partner in Deloitte Consulting. "Back then, the three big issues were controlling costs, improving risk management systems, and adapting to regulatory requirements as CFOs dealt with corporate governance issues arising out of regulations such as Sarbanes Oxley.
"That year's survey had a very control-driven, steward-type focus, while this year's survey is more positive and shows that CFOs are looking to be more pro-active in their roles."
Six out of 10 respondents say the finance function within their organisation spends too much time on financial and management reporting rather than on understanding what is driving the business. Seventy-eight per cent say that they currently spend 0-10 per cent of their time on strategy and execution, while 52 per cent say they only spend 0-10 per cent of their time on performance and decisions.
However, CFOs haven't disregarded the need for good internal control, effective financial governance and efficient finance operations. The two key priorities identified in the survey were firstly, to provide better information to the business and then partner with the business to take proactive decisions based on that data, and secondly, cost control.
Mohan says: "It's clear that CFOs in today's much more uncertain economic environment are dealing with numerous challenges and they both expect and need to play an increased role in the strategic direction of the business - providing information to enable better business decisions to be made. They also need to provide answers to questions such as 'what parts of the business, customers and products are profitable?' and 'where can we drive greater cost efficiencies'?"
As the global economy slows and the Irish economic outlook continues to worsen, offshoring looks set to become increasingly popular among Irish companies.
Insurer Hibernian recently decided to move 580 service jobs to India and the survey finds a similar appetite to reduce costs among Irish financial chiefs, many of whom have already implemented cost-saving measures or have them under consideration.
Almost two-thirds of respondents say they have already outsourced parts of their finance operations to third-party providers, many of whom are based overseas, while a third are considering this.
Mohan says that firms are outsourcing a wide number of finance functions including accounts payable processing, payroll and accounts receivable. The larger multinationals tend to outsource internationally, while smaller firms tend to use Irish-based firms, he adds.
"Outsourcing will only get bigger and it's definitely a trend we're seeing more of. While it is worrying for the Irish economy, it is lower value-added activities that we are losing out on. Therefore, there is an opportunity for Ireland to attract more higher-value activities such as financial reporting, taxation and internal compliance."
More than half (51 per cent) of respondents have already implemented shared services centres, while 49 per cent say that shared services centres were under consideration within their organisation.
Shared services are not only used to reduce costs, but also to build specific skills and capabilities within the organisation - as demonstrated by all respondents stating that they have either already implemented or are considering centres of excellence.
Self-service operations, which can also reduce administrative headcount, are being implemented by 55 per cent of respondents, with the remaining 45 per cent considering such an approach.