BearingPoint study: according to 75% of finance chiefs the two megatrends have a substantial impact on the finance function

Frankfurt, January 15, 2014 – Digitalization drives fundamental changes. BearingPoint’s ( latest study of Chief Financial Officers (CFOs) found that it affects not only the process and system landscape, but also the organizational structures of the finance function. The management and technology consultancy found that this megatrend of digitalization offers new possibilities for CFOs to further develop their finance functions and helps to address new challenges such as big data. Regulation, the second examined megatrend, represents one of these challenges, as scope and complexity of regulatory requirements increased heavily in the past years with lasting consequences. Regulation puts the CFO even more into the center of the company and assigns responsibility also for compliance reporting, a task often beyond the remit of finance. The impact of the third trend analyzed by BearingPoint in the finance departments – sustainability - is considered by CFOs as a lower importance, but 50% still expect profound changes in this area.

Digitalization: efficiency driver and great opportunity

75% of the surveyed CFOs are convinced that digitalization has a substantial impact on the financial processes and organizational structure of their companies. According to the study, it is viewed as an opportunity, assisting the CFO in one of its main tasks: extracting meaningful information from the ever-increasing “data jungle”, at constant or even decreasing costs, as a basis for decision making. Without the state-of-the-art use of digital tools this presents a substantial challenge since data volumes have increased significantly. Specifically, CFOs see room for improvement in the areas of data analysis (78%), data security (56%) and user-friendly presentation of information (54%). Further significant potential is seen in the deployment of so-called collaboration tools that enable CFOs to maintain contact with the business, despite increased centralization of tasks, for example in shared services.

“The development of technology is fast-paced. New approaches and tools are constantly added. Critical success factors for CFOs are to approach the new possibilities from the specific requirements and the existing structures of the company and to face the changes in a way that is task-driven, rather than technology-driven”, says Franz Hiller, Partner at BearingPoint. “Then they offer companies the maximum competitive advantage by digitalization of their function.”

Regulation remains a challenge

While digitalization is already affecting the running processes and is seen as an opportunity, the respondents perceived regulation and compliance as key challenges for the financial sector. CFOs are often at the center of the regulatory reporting system in a company and are required to quickly react to complicated and evolving legal requirements. Many of these regulatory requirements are very dynamic and difficult to predict as they are still in the coordination phase. Nevertheless, it is important to be prepared for the worst case scenario and, at the same time, stand up to requirements in terms of efficiency and cost structure of the finance function. Thus, for 70% of CFOs the most important aspect is their team’s flexibility to solve crucial new tasks of the corporate practice quickly and efficiently.

“The regulatory pressure also has another important aspect: the financial sector with its reporting and control function is gaining a central position in terms of compliance”, says Franz Hiller. “For the position of the CFO and its team it is potentially a substantial increase in importance.”

Sustainable management is becoming an increasingly important success factor

The trend towards more sustainability has significantly less direct impact on the financial sectors, but is assessed as important in the context of the entire company. In their role as CFO, 50% of the respondents consider this megatrend as significant. Sustainability rankings, for example, are becoming increasingly important for many companies because they affect the cost of capital and brand value. The greatest need for action with regard to sustainable management for CFOs is to secure the company’s future in continuing volatile times. Therefore, 47% want to further integrate the financial planning into the operational process in order to increase its relevance and accuracy. Franz Hiller says: “Since the pressure from both employees and capital markets for sustainable entrepreneurial action will continue to rise, we expect that this issue will become an even greater priority for CFOs in the future and they will be more involved in this area.”

For the study, 65 CFOs from various industries in Europe were interviewed on the impact of the three mega trends, including their resulting opportunities and challenges. The full study is available for download here.

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