Financial fitness a top concern for CFOs

Chief financial officers say finance departments are unprepared for many of the challenges they will face in the future, according to a recent survey by IBM Business Consulting Services.

In a survey of 450 CFOs from around the world, including Canada, IBM found that two-thirds of respondents

see business performance management and increased shareholder value as their top priorities in the future. As their duties shift, CFOs will increasingly hang up their mantles as mere financial policemen and step into strategic business advisor roles.

But CFOs are worried about how fit their financial departments are for the task. Among Canadian CFOs surveyed, half say they feel they didn’t have enough high quality professionals, and a third says their existing staff don’t have the skills to meet the new challenges facing finance.

Performance management will have an important place on the CFO’s agenda in the future, says Tom Whelan, the financial management leader for IBM Business Consulting Services (Canada). This is being driven by the regulatory challenges and the need for greater transparency facing CFOs in the wake of the U.S.’s Sarbanes-Oxley law and the Canadian equivalent, Bill 198.

More than 53 per cent of Canadian CFOs indicated that information is a major asset that needs to be better managed. However, only 20 per cent of business managers have access to integrated enterprise data to aid in decision making. Canadian CFOs view this access as critical – but the survey indicates they may be behind their global counterparts in availing themselves of technology that connects them to other people and information.

Only 11 per cent of Canadian CFOs are using portals, whereas, on a global scale, 30 per cent of CFOs are making use of them. That said, 63 per cent of Canadian CFOs plan to use them for information management in the future, whereas, globally, only 30 per cent plan to use them for the same function.

An underlying issue is the relationship between CFOs and CIOs. Historically, there have been conflicts between two, says Doron Cohen, the vice-president and research director of Gartner Financial Services in Toronto. The failure of ERP systems helped define that relationship. CFOs had unrealistic expectations and when CIOs couldn’t deliver, they took the blame. This created bitter feelings among CIOs.

Historically, CFOs also trusted their audit partners, who often came with their own IT departments, more than their CIOs, Cohen said.

“”And many CIOs found it inordinately difficult to work with the CFO, because they relied on the advice that was given to them by the audit partners, to the extent that they ignored the reality that was presented to them by the CIOs,”” he says.

While relationships between CFOs and CIOs vary from industry to industry, these days CFOs are facing more regulatory constraints. This means, in general, they need the help of CIOs to automate compliance, he says.

Too often, accounting focuses on what appears to be urgent at the time – on the latest report with the fast-approaching deadline. But CFOs should instead focus their attention on building an infrastructure that can collect all of the data needed for reports automatically, Cohen says.

As for CIOs, they need to understand the business drivers behind the need to create greater transparency, he says.

“”Unfortunately, too many CIOs come to this with a techie mindset.””

For his part, Marc Parent, the Ottawa-based vice-president and CIO of the Canadian Payments Association, says he sees more of a give-and-take relationship between CIOs and CFOs these days. Generally speaking, the CIO has more power over the budget today, though it is obviously funnelled through CFOs.

While CFOs don’t have to know the nitty-gritty of technology, they do need to have an understanding of what it can do, he says.

If the CFO is not very knowledgeable about the technology end of things, it can create a nightmare situation for the CIO, he says.

In such scenarios, CIOs spend more time trying to justify projects than actually implementing them.

Whelan agrees that CFOs need to learn more about how technology can be applied, but adds that CIOs also need to understand the business drivers behind technology.

“”CIOs and CFOs really do need to work more hand in hand,”” he says.

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Jim Love, Chief Content Officer, IT World Canada

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