ibm bis 2014 m. rolfe cfo insights from ibm global c suite study

© 2014 IBM Corporation

Pushing the FrontiersCFO Insights from the IBM Global C-Suite Study

Mark Rolfe, Leader of European Performance Management, IBM

3rd June 2014


New dynamics put new pressures on CFOs

In the U.S., non-financial companies have a record $1.45 trillion in cash (Forbes)

“...growth and job creation are still too weak. New risks are arising while several old risks remain.” (IMF)

75% of security breaches are driven by financial motives (Verizon)

Business model innovation

Uncertainty and volatilityRegulatory environment

• Changing nature of transactions

(e.g., mobile)

• Partnering for speed

• Growth in emerging markets

• Cash-rich balance sheets

• Uneven economic recovery

• Growing shareholder expectations

• Changes to currency and financial institutions

• Globalization and demographic shifts

• Higher levels of transparency

• New cybersecurity / information security

regulations

• Focus on corporate governance


Big Data and the CFO

Over eight in ten (84%) of those financial professionals polled think that big data and analytics will require a change in how they do their jobs in the coming five years. CGMA October 2013

85% of survey respondents believe that increasing their ability to work with big data will enhance their career and employability.


Big data can offer accountants and finance professionals the possibility of reinvention, the chance to take a more strategic, ‘future-facing’ role in organisations. ACCA Big Data: Its Power and Perils.

Big Data and the CFO


19Middle East and Africa 51

Asia Pacific

Central and Eastern Europe

57Western Europe

155Japan

98

North America

102South America

94

Getting the C-Suite Viewpoint - 2013 IBM C-Suite Study576 CFO interviews from around the world

Source: Question E--Participant Country


Our CFO respondents represent a diverse set of industries

Energy and UtilitiesMedia and EntertainmentTelecommunications

Communications sector

Consumer ProductsLife SciencesProfessional and Computer Services

Distribution sector

RetailTransportationTravel

Banking and Financial MarketsInsurance

Financial Services sector

Aerospace and DefenseAutomotiveChemicals and Petroleum

Industrial sector

ElectronicsIndustrial Products

Education and ResearchHealthcareNGOs and Government

Public sector

576interviews

29%

18%

28%

14% 10%

Source: Question M--In which industry does the participant’s enterprise primarily operate?


Pushing the FrontiersCFO Insights and how to transition

The evolution of the CFO

Revisiting the 2010 Global CFO Study: Value Integrators

Pushing the frontier: Performance Accelerators

Perfecting finance efficiency

Capitalizing on business insight

Creating profitable growth

Transitioning into new territory


All CxOs recognize the importance of the CFO role–CFOs rank second only to CEOs in collaborative influence

Collaboration partners

Source: Question B6--Which of your C-suite peers do you work most closely with in support of the enterprise?

78%

65%

24%

CEO CFO All others


Open up to customer influence Breaking down barriers to extend collaboration inside

and outside–bringing the customer’s voice directly into

the boardroom

Pioneer digital-physical innovationFusing traditional activities with social, mobile, and

digital networks to create new products, services, and

business models

Craft engaging customer experiencesCreating and enhancing seamless interactions which fulfill

customer expectations and differentiate the organization

…however, CFOs already have a full agenda running the core finance function

The 2013 C-suite Study explores the newest venture of high-performing enterprises–the Customer-activated enterprise

C-suit cover

9


Importance 2010

50% 100%

CFOs report that almost all aspects of their role have increased in importance over the past 3 years

Areas of importance–historical

Importance 2013

Measure/monitor business performance

Provide inputs into enterprise strategy

Develop talent in the finance organization

Optimize planning, budgeting and forecasting

Drive enterprise cost reduction

Support/manage/mitigate enterprise risk

Drive integration of information across the enterprise

Execute continuous finance process improvements

Strengthen compliance programs/internal controls

Manage investor/stakeholder relations

Process transactions

90%80%70%60%

10

Source: Question CFO1--How important are each of the following areas of responsibility to your enterprise?;


The gaps between importance and effectiveness

Integrate informationacross the enterprise

Optimize planning,budgeting and

forecasting

Develop talent inthe finance function

Provide input intoenterprise strategy

82%

87%

87%

92%

91%

24%

41%

45%

55%

57%

Measure and monitorbusiness performance

Importance of activity Effectiveness of function

58-point gap

46-point gap

42-point gap

37-point gap

34-point gap

SOURCE: IBM, The Customer Activated Enterprise: Insights from the Global C-Suite Study, October 2013.


CFOs report they use sophisticated, enterprise-wide tools to support Finance only one-third of the time

Intuition Spreadsheet ERP Analytic tool

14% 52% 19% 15%

50% 100%0%

Capabilities/tools used to support Finance

Source: Question CFO6--What capabilities / tools does your organization use for the following activities?


The 2010 Global CFO Study identified 4 Finance profiles, with one group, Value Integrators, outperforming the rest

Low

High

HighLow

Value Integrator

DisciplinedOperator

ScorekeeperConstrained

Advisor

Finance Efficiency

Enterprise-wide information standards

Standard financial chart of accounts

Common finance data definitions and data governance

Standard/common finance processes

Operational planning and forecasting capability

Finance talent development

Common planning platform

Value IntegratorPerformance optimization

Predictive insightsEnterprise risk management

Business decision making

Disciplined OperatorFinance operations focusedInformation provision

Performance interpretation

Constrained AdvisorAnalytics focusedSub-optimal execution

Fragmented data

ScorekeeperData recording

ControllershipMultiple versions of the “truth”

Business Insight

Finance efficiency and business insight

Source: IBM Institute for Business Value, The Global CFO Study 2010, The Global C-suite Study 2013


* Value Integrators are 30% and Performance Accelerators are 7% of the overall

CFO population interviewed.

High

Business Insight

High

Finance Efficiency

Value Integrator

Value Integrator *

Performance Accelerator

Source: “CFO insights from the Global C-Suite Study”, IBM Institute for Business Value, 2014

Comparison of average ranking on measures of profit and

revenue

Source: Question E4--How does the revenue growth of your enterprise compare to your industry peers over the past 3 years?; Question E5--How does your enterprise’s profitability compare to your industry peers over the past 3 years?

70% more

…than the remaining Value Integrators

Value Integrators are pushing the boundaries of efficiency and insight–a subset are emerging as Performance Accelerators


Source: Question CFO2--How effective is your organization in the following areas?

0% 20% 100%

Performance Accelerators have mastered core finance and enterprise duties–outperforming Value Integrators in every dimension

Manage investor/stakeholder relations

Process transactions

Strengthen compliance programs/internal controls

Execute continuous finance process improvements

Provide inputs into enterprise strategy

Optimize planning, budgeting and forecasting

Drive enterprise cost reduction

Support/manage/mitigate enterprise risk

Measure/monitor business performance

Develop talent in the finance organization

Drive enterprise-wide integration of information

Gap43% 62% 81%

60%40% 80%

All other CFOs Remaining Value Integrators Performance Accelerators

Effectiveness across the CFO agenda

17


Performance Accelerator’s focus areas can be grouped into efficiency, insight, and growth initiatives–one ability builds on the previous

Performance Accelerators begin to pull away in terms of business insight

Value Integrator

Value Integrators and Performance Accelerators are neck and neck in

finance efficiency

Performance Accelerators shine when it comes to profitable growth and are truly the engines of change

PerformanceAccelerator

Value Integrator Value Integrator



Finance efficiency Business insight Profitable growth





Perfecting financial efficiency






100%

46%

All other CFOs

100%

Performance Accelerators and

Value Integrators

Performance Accelerators and Value Integrators are defined, in part, by the fact that they have made baseline improvements in efficiency

70%

All other CFOs

Standard financial chart of accounts

Standard/commonfinance processes

100%


Value Integrators

50%

All other CFOs

100%


Value Integrators

43%more more 117%more

Common finance datadefinitions and governance

Improvements undertaken by the organization

Source: Question CFO4--Which of the following improvements has your organization undertaken?

20


50%

31%

27%

57%

44%

Implemented service delivery models for finance processes including business

performance analysis and reporting

Performance Accelerators are more likely to operate as shared services organizations at the enterprise level

59%

Shifted finance transactional activities in a standalone cross-functional

shared service organization

Performance Accelerators Remaining Value Integrators All Other CFOs







Perfecting financial efficiency






78%

54%

Deployed a common planning platform67%

66%

Performance Accelerators have implemented key components necessary to generate deep business insights


Developed analytical talent in finance to partner with the business

Established a strong operationalplanning and forecasting capability

78%

69%

Performance Accelerators Remaining Value Integrators



PerformanceAccelerators

Remaining Value Integrators

Performance Accelerators are integrating internal and external data in order to develop these deep insights

Integration of internal and external data for deep insights

30%

44%

47%

more

Source: Question B1--To what extents do you agree with the following statements: Enterprise capabilities


Evaluate market trends and competitor actions

Performance Accelerators' strong focus on data analytics enables them to excel at scenario planning

Effectiveness of Finance

Apply predictive modeling to improveforesight and trigger action

Collaboratively create timely, reliable forecasts to steer business performance

44%

59%

31%

74%

92%

59%

30%

60%

Challenge business partner’s assumptions, business cases and plans


Source: Question CFO7--How effective is your organization at performing the following?


Performance Accelerators are applying their analytic capabilities to the pursuit of profitable growth

43%

71%

82%

Business model innovation

60%Business unit strategy and execution

Capital management

90%

79%

64%

29%

61%

Performance measurement/metrics

31%

67%

17%

Acquisitions/divestitures

Information agenda to leverage value of big data

Where Finance spends its time


Source: Question CFO3--Where does Finance spend its time?


Performance Accelerators are defined by the fact that they’re both better at performing core tasks and more willing to enter new arenas

Mergers and acquisitions

22%

89%

Pricing

39%Demand planning and forecasting

52%

100%

31%

50%

90%

Product/service development

78%

91%Profitability/Economic Analysis

Core finance

Organic growth

Inorganic growth



Source: Question CFO5--How effective is Finance in the following areas?


60%

more

One third of Performance Accelerators report using data analytics to identify new products and services

Use of big data to identify new products and services

13%

32%

All Other CFOsRemaining Value IntegratorsPerformance Accelerators

20%

Source: Question B1--To what extents do you agree with the following statements: Enterprise capabilities

My objective is to move thefinance staff from a state oftransaction thinking to one of analytical thinking

CFOInsurance company, Canada

”


77%

This enables Performance Accelerators to be more effective at risk management and growth identification

67%


91%

PerformanceAccelerators

76%

Performance Accelerators

36%more

43%


more


Risk managementRevenue growth

opportunity identification and tracking

Source: Question CFO5--How effective is Finance in the following areas?


Journey from Value Integrator to Performance Accelerator

Valu

e

Analytic Data Management

Maturity

Aligninformation

Optimizeoutcomes

Best Practices

Strategy -Aligned Organization

Analyzepatterns

Span Finance & Operations

Process Automation

Enterprise-wide

ContinuousSteering

• Managing multi-dimensional performance information

• Financial Consolidation and Close

• Budgeting

• Incentive CompensationManagement

• Span Financial & Operations

• Leading & External Indicators

• Driver-based modeling

• Rolling Forecasts

• Scenario Analytics

• Metrics and Scorecarding

• Strategy Management

• Profitability

• Predictive Analytics

• Big Data Analytics

• Planning, Analysis, and Forecasting

• Collaborative and Narrative Performance Reporting

• Disclosure Management

• Sales Performance Management

• Agile enterprise

• Risk-adjusted Value Management

Accelerate& LinkEngage

Frontlines

Value Integrators Performance Accelerators


Take a longTake a long--term, strategic view of Finance Transformationterm, strategic view of Finance Transformation

but attack the problem with targeted, wellbut attack the problem with targeted, well--coordinated coordinated

initiatives and focus on delivering rapidly.initiatives and focus on delivering rapidly.

Think BigThink Big – Determine how to become a Value Integrator/

Performance Accelerator

Start SmallStart Small – Focus on discrete changes that will support a

transition

Deliver Quickly Deliver Quickly – Show tangible results, engage team

“Think Big, Start Small, Deliver Quickly”


The Journey to best in class Planning, Analysis and Forecasting

Valu

e

Maturity

Today’s challenge

Realize performancepotential

Drive analyticinnovation

Forecasting success

Elevate with predictive

Better outcomes

Analytic agility

• Spreadsheets for reporting and analysis

• Enterprise resource planning budgeting

• Isolated applications

• Disparate data

• Financial and operational performance management

• Rolling forecasts

• Key performance indicators (KPIs) and scorecards

• Statistical algorithms to improve information under uncertainty

• Predictive intelligence

• Driver-based planning and forecasting

• Near-real-time analysis

• Scenario analytics

• Narrative reporting

• Dashboards and management reports Span the

enterpriseFirst steps

Status quo Integrate and accelerate

Automate and model

• New analytic modeling and enhancement

• Product and customer profitability analysis

• Continual alignment of resources with opportunity


SalesMarketing FinanceOperationsHuman

Resources

• Campaign scorecard

• Promotion plan

• Customer /Product profitability

• Revenue plan

• Sales dashboard

• Sales forecasting

• Incentive Comp

• Quota Plan

• Territories

• Sales Channels

• Enterprise Scorecard

• Strategic Financial Plans

• Profit and Loss

• Balance Sheet

• Cash Flow

• Workforce KPIs

• Headcount plan

• Salary & comp

• Staffing plan

• Training & Development

• Ops KPIs

• S&Op plan

• Capacity & Inventory plan

• Product allocation

• New products

Planning, Analysis, Forecasting, and Scorecardingin ONE platform to span finance and operations

Strategy and activity driver-aligned organization


The Next Level of PM Engagement

PLATFORMS (10s)

Report Analyze Model Plan CollaboratePredictScore Simulate Forecast Visualize PLATFORMS (10s)

CloudBig Data &

AnalyticsCollaboration Mobile

The Nexus of Forces describes the convergence and mutual reinforcement of four interdependent trends: social interaction, mobility, cloud, and information. The forces combine to empower individuals as they interact with each other and their information through well-designed ubiquitous technology.

Collaboration Mobile Big Data &

AnalyticsCollaboration Mobile CloudData &

AnalyticsCollaboration Mobile


IBM Transforms the way you work in Performance Management

Guided Business Processes

� Personalized task list highlight priorities.

Focus on Collaboration

� Act upon insights by easily collaborating and sharing data analysis with anyone, anywhere.

Mobile Enabled

� Activity streams alert you to changes as they occur across the enterprise.

Cloud Deployable

•Take advantage of savings and efficiencies via a SaaS deployment

© 2014 IBM CorporationIBM Confidential

IBM Institute for Business Value

DemonstrationThe Future of Performance Management

Jonty Gethin, IBM Business Analytics Solution Specialist

ibm bis 2014 m. rolfe cfo insights from ibm global c suite study

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