CFOs and finance directors see technology as a key to their long term effectiveness, yet express frustration as they continue to battle with dated and misaligned IT systems, according to a new survey by KPMG.
The survey found that more than half (52 percent) of U.S. respondents said that the biggest barrier to improving the effectiveness of the finance function was IT systems that are out of date and inflexible. Similarly, when asked what puts finance at risk for failing to reach its objectives, 73 percent of U.S. finance executives pointed to finance technology and systems. Growing organizational complexity was the only "risk" that registered higher among respondents at 78 percent.
"Finance still has a substantial opportunity to benefit from improved data quality and insight, yet CFOs and finance directors continue to be hampered by inadequate IT systems that do not provide predictive metrics that are aligned with corporate strategy," said Steve Lis, national leader for KPMG Advisory's U.S. Performance & Technology Services group.
However, while finance executives struggle with using IT effectively, they also suggest that technology holds the key to the future. Sixty-five percent of U.S. respondents said IT will be more important to the business over the next five years, the highest ranked issue, followed closely by human capital and government regulations, both at 63 percent.
When asked to identify the weaknesses in their finance processes, almost one-third (32 percent) of U.S. respondents named planning, budgeting and forecasting. This was the weakest process identified by both U.S. and global respondents. However change may be on the way, with 78 percent in the U.S. and 83 percent globally saying they plan to make changes to the budget and forecasting process over the next two years.
"Finance executives now have a seat at the table when strategic decisions are being made, because finance is one of the few areas that can bring a holistic view of the organization," said Don Mailliard, U.S. leader of KPMG's Financial Management practice. "Many companies survived the financial crisis in large part due to the efforts and guidance of their finance departments. Finance is now well positioned to shepherd growth initiatives as we continue to emerge from the recession, and is indicative of a continuing trend we're seeing towards greater finance team involvement in C-suite decision-making activities."
The survey also revealed that finance departments continue to provide greater strategic value to the organization. In the U.S., 37 percent of respondents said that they play a more strategic role than they did five years ago, and only eight percent say they play a less strategic role. Globally, the response was 49 percent more strategic and 12 percent less strategic.
This trend is expected to accelerate, as more than half (53 percent) of U.S. finance executives said they expect to play a larger role in their company's development and execution of the business strategy five years from now. Globally this was even higher, with 62 percent of respondents seeing a more strategic role in the future.
In the U.S., 71 percent of the respondents said that their finance group is highly credible with the C-suite, the board, line of business and functional management, and other stakeholders. U.S. respondents identified their strengths as: communicating with the Board (52 percent), supporting decisions on M&A, divestitures and alliances (46 percent), and contributing to strategy development (41 percent). In the U.S., 62 percent said their company was willing to invest in the finance function, and within that group 23 percent described their company as very willing.
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