The Changing Role of the Finance Organization in a Multi-Polar World: Accenture High Performance Finance Study 2008

Accenture’s third High Performance Finance Study shows the challenges facing the finance function in today’s multi-polar world—and outlines the practices leading companies are adopting to create a finance function that truly enables high performance in this environment.

We surveyed more than 350 finance executives in companies representing 30 countries across a range of more than 20 industry sectors. In addition, Accenture also conducted in-depth interviews with several finance executives at other organisations to explore in more detail how they were dealing with the challenges faced by the finance organisation.

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Globalization is entering a new and complex phase, with new multiple centers of economic power and activity. In this environment, high-performance businesses will be even more dependent on their finance functions to achieve competitive advantage.

Multiple currencies and electronic exchanges combined with the sheer complexity of operating on a global scale in countries or regions of differing degrees of development, all place extraordinary demands on an enterprise’s finance function.

Accenture conducted its third High Performance Finance Study since 2004 to explore the most pressing challenges facing finance executives around the world, how they are faring in addressing these challenges, and the strategies and practices that leading organizations are employing to contribute to high performance in the finance organization and the enterprise at large.

Accenture surveyed more than 350 finance executives in companies representing 30 countries across a range of more than 20 industry sectors. It also conducted in-depth interviews with several finance executives at other organizations to explore in more detail how they were dealing with the challenges today’s finance functions face. Researchers also spoke with numerous experts within Accenture to get their insights on some of the keys to high performance they have observed in their roundtable discussions with hundreds of finance executives as well as their work with finance organizations at businesses and government entities around the globe.

Accenture’s research shows that the greatest challenge for the finance organization over the next two years is building the finance capabilities needed to support an increasingly complex enterprise strategy.

However, few executives today believe that their finance function is performing at the highest level. Other key findings include:

• Performance management and reporting, and finance function strategy and structure are the two most important critical factors in achieving high performance through the finance function. For the enterprise as a whole, the two most important functions are strategy development and performance management and reporting.
  
  
• Many executives believe they lack the processes, data, tools, organizational structures, governance and skilled workforces they need to capitalize on the new markets, resources and opportunities the global economy offers.
  
  
• While executives know they need to improve their finance capabilities, a majority is unsure of where to begin.
  
  
• Although enterprise performance management, enterprise risk management and the finance workforce are critical to the finance organization’s ability to enable high performance, a large percentage reported ineffectiveness in these vital areas.

Some organizations, however, do demonstrate advanced practices.

Some of these practices include:

• Adopting enterprise resource planning to consolidate operations, reduce complexity and produce a streamlined, coordinated financial information flow that makes it easier to drive enterprise value.
  
  
• Implementing numerous workforce programs that help the company address the challenge of managing talent across developed and emerging economies.
  
  
• Developing a robust strategy that emphasizes the systems, processes and people it needs to help ensure the right governance, marketing, compliance, reporting and other practices are in place.

Finance masters recognize that they do not need to excel at everything, and, in fact they do not. The finance masters in our survey were highly adept at identifying the finance capabilities that are critical to supporting the business in its pursuit of high performance. They pinpointed where those capabilities fell short of what was required and aggressively applied their resources to close the gaps.

As finance executives around the world continue to grapple with how to most effectively support their enterprises while maintaining sufficient control on costs and dealing with the increased speed, complexity, competition and risk inherent in a multi-polar world, they should keep in mind three important concepts:

• Strategy matters—a lot. Without it, there is no way to know which finance capabilities are most relevant and which consume scarce resources unnecessarily.
  
  
• Superior finance practices can change the game. Finance organizations that can keep pace with the speed of change and effectively deal with complexity can drive substantial bottom-line results.
  
  
• The status quo won’t work. The role of the chief financial officer today is broader and more complex than ever and, consequently, requires finance executives to develop new approaches to managing their function and interacting with the business at large—or risk being left behind.

Organizations that use these principles to guide their finance-function activities are significantly more likely to find themselves on the road to high performance today and in the uncertain future ahead.

Explore Accenture’s research into the link between finance mastery and high performance.

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