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Organisations worldwide are gearing up to step up investment in finance functions through intelligent finance tools and technology, finds a KPMG International survey of over 440 CFOs and senior finance executives across 15 countries, including India.
Based on the survey, the KPMG study notes that globally the finance function will continue to evolve in a disruptive manner in the Post-Enron period with focus on financial controls and managing the regulatory environment. "As against usual practice of just keeping up with changing financial reporting standards, corporate governance requirements or undertake cost-cutting initiatives, the finance function in an organisation hierarchy is undergoing a strategic make over," says Martyn van Wensveen, KPMG’s Global Head of Financial Management .
Well-performing companies are in the process of employing the latest business intelligence tools and innovative big data and analytics techniques, he adds.
Indian respondents – numbering 23 – said they expect dramatic change in the process of management reporting and decision-making with larger role in the organisation for finance functions over the next five years. The process for risk management activities would also see sizable step up going forward, Indian respondents said.
Compared to 2011, 25% more respondents globally said their organisations are “very willing” to spend money on finance function improvements. Over two-thirds said their organisation is “very” or “somewhat willing” to spend money to improve the effectiveness and efficiency of their finance function. 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.
Globally, 44% of respondents ranked talent management as the single most important factor for success of the finance function. Over 50% of respondents expect to see dramatic changes in the people-related processes of “retaining staff” and “increasing technical knowledge” within the finance function.
"The finance organisation of the future 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,” says Wensveen. He noted that most forward-thinking finance functions embed intelligent finance concepts by strengthening their business strategy alignment, planning and control, management reporting and analytical capabilities.
Majority of Indian respondents (around 65%) stressed on the importance of adopting and embracing “lean finance” model. Around 61% said that the focus is now on improving the effectiveness of finance functions. Most Indian CFOs and finance professionals said that over the next two years they would invest in talent management related to finance functions. They found the process of attracting talent most difficult to improve, said respondents.
Interestingly, companies in emerging markets have on an average 14% less of their finance activities centralised than companies in mature markets.
KPMG International’s global survey of CFOs and other senior finance executives has been conducted regularly since 2006, charting the evolution of finance departments and identifying leading financial management practices of high-performing companies.