Globalization: A Challenge and an Opportunity for the Finance Function -- Summary

Globalization offers both challenges and opportunities for the finance function, and CFOs must develop strategies to ensure that they maximize the finance function's contribution to the enterprise's journey to high performance.

Globalization has entered a new phase in which emerging economies are becoming true players in their own right. As a result, the number of economic centers of power is growing, creating what Accenture calls the multi-polar world. This new economic order places enormous strains on the finance departments of corporations, which must now deal with a business environment that is both dizzyingly complex and highly volatile.

Against this background, Accenture has completed its third High Performance Finance Study for 2008. This comprehensive research effort explores the most pressing challenges facing finance executives around the world as well as the strategies and practices that leading organizations are using to drive high performance in the finance function and within the enterprise at large.

Accenture's research surveyed more than 350 finance executives in 30 countries across more than 20 industry sectors. Survey findings were augmented with in-depth interviews with several finance executives at other organizations and subject-matter experts within Accenture.

• Finance executives believe that the greatest opportunity globalization provides is to support greater value creation by enabling them to restructure their finance function to take advantage of multiple sourcing options (according to 41 percent of respondents).
  
  
• Access to a broader base of skilled workers was cited by 39 percent of respondents as another opportunity.
  
  
• Fifty-five percent of respondents indicated that controlling costs and keeping prices competitive will be major success factors for them.
  
  
• The biggest challenge (cited by 58 percent of respondents) is building and sustaining governance levels and internal controls when entering emerging markets.
  
  
• Almost as large a challenge (cited by 52 percent of respondents) is maintaining standardized processes and technologies as the enterprise enters new markets.
  
  
• The third-greatest concern (cited by 42 percent of respondents) is finding a workforce with the right skills to support expansion in these new markets.

In Accenture's experience, three practices have become critical tools for helping finance organizations address the cost-control and complexity challenges associated with increasing globalization. They are:

• Creation of a shared-services structure. This model turns an internal organization, such as finance, into an internal service provider of largely non-core functions to multiple business organizations within the extended enterprise. Although it is often seen purely as a cost-cutting strategy, Accenture believes that the shared-services model—properly planned and deployed—can become a key strategic driver of high performance in the global business environment by reducing systems complexity and enabling differentiation.
• Strategic approach to outsourcing. Global reach and local savvy will be key determinants of success in the multi-polar world. High performers are increasingly using outsourcing partners to increase their reach and to access local knowledge. Outsourcing thus becomes a driver for strategic value creation and high performance.
• Implementation of enterprise resource planning (ERP) across the entire organization. High performers are using enterprise resource planning systems to integrate increasingly complex global operations, reduce the complexity of a company's legacy environment and help control costs.

Globalization presents companies with the opportunity of finding new markets for their products, and discovering new workforces and sources of raw materials to create those products. It also creates pressure to deal with the risks that emerge from heightened complexity and new competitors—not to mention the continuing need to control costs.

To meet these challenges and drive high performance, CFOs must have a plan to reduce the cost structure of their finance functions. They must also be prepared to compete globally for skilled staff, and have a strategy to retain them.

Above all, CFOs must have the ability to monitor the health of the entire global organization in real time. Only then will they be able to support informed decision making, and consequently maximize the finance function's contribution to the enterprise's journey to high performance.