KPMG

Managing talent and risk: critical success factors for the intelligent finance function

Globally, finance functions have spent much of the past 10 years dealing with rapidly changing financial reporting standards, corporate governance requirements and cost-cutting initiatives. A KPMG survey of more than 440 chief financial officers and other senior finance executives in 15 countries has revealed that the majority are now poised to make the necessary investments and embrace intelligent finance models.

While difficult to master, 44 per cent of respondents ranked talent management as the single most important factor for success of the finance function. More than 50 per cent of respondents expect to see dramatic changes in the people-related processes of ‘retaining staff’ and ‘increasing technical knowledge’ within the finance function.

Respondents named talent management and the technical knowledge of staff as the most difficult to improve. Overall, respondents named risk as the second most difficult measure to improve. High-performing organisations seem to have more success in this area; only 22 per cent found improving these risk processes to be the most difficult (compared with 30 per cent overall).

Martyn van Wensveen, global head of financial management at KPMG, said: ‘The finance organisation of the future, and indeed of today, must go beyond its business-as-usual book-keeping and financial reporting role to become a provider of real intelligence that business units can depend on when making strategic decisions. Intelligent finance functions empower their finance teams to help the business make better and quicker decisions based on the right information delivered at the right time.’

Van Wensveen noted that the most forward-thinking finance functions embed intelligent finance concepts by strengthening their business strategy alignment, planning and control, management reporting and analytical capabilities. They also employ the latest business intelligence tools and innovative (big) data and analytics techniques, as well as investing in resources for transforming this data into insightful reports that enable actionable decisions across all business functions.

Compared with 2011, 25 per cent more respondents in this year’s chief financial officer study say their organisations are ‘very willing’ to spend money on finance function improvements. More than two thirds say their organisation is ‘very’ or ‘somewhat willing’ to spend money to improve the effectiveness and efficiency of their finance function.

The survey compares the results of all respondents against those of high-performing organisations, defined as companies with more than 10 per cent growth in revenue and EBITDA in the past three years.

Key findings from this year’s study show that many, but not all, organisations have had success making this finance transition a reality: 

  • Forty-nine per cent of senior finance executives rate their ability to communicate effectively with their board of directors as a strength, up from 40 per cent four years ago.
  • Forty-four per cent say they are already able to contribute well to the organisation’s long-term business strategy development, up from 33 per cent four years ago.
  • Fifty-six per cent expect their finance teams to have an even larger role in developing and executing business strategy in the next five years.
  • More than half of respondents believe that providing greater support to the business offers the greatest opportunity for the finance function to add more value.

The report reveals that some of the biggest finance function improvement gains come from leveraging new information technologies to seize evolving market opportunities, for example through more integrated, cloud-enabled enterprise resource planning (ERP) and enterprise performance management (EPM) solutions combined with user-friendly mobile technologies.

High-performing companies also employ sophisticated business analytic tools and techniques to continuously improve their forecasts, predict and manage risk, reveal new market opportunities and improve financial results. Four in 10 (37 per cent) high performers plan to invest more in decision support tools and 33 per cent plan to invest in decision support capabilities, skills and methods.

Van Wensveen said: ‘A company-wide business cockpit provides a real-time display for all key business value drivers that can be shared across the global finance function and all business units. Companies gain better alignment between business units, better understanding of movements in their markets and better synchronisation of business decisions to support the company’s strategic goals.’

In summary, the chief financial officer survey shows that intelligent finance functions are built on a strong foundation of Lean Finance principles and Finance Shared Services, reliable forecasting techniques, finance and risk function alignment and, last but not least, proactive talent management.

  • Print

Briefings from KPMG

View more briefings from KPMG

Browse This Firm’s

Overview

15 Canada Square
London
E14 5GL
UK
http://www.kpmg.co.uk