Budgeting and Forecasting

CFOs See Greater Need for Accurate, Timely Data, but May Do It on the Cheap

They want to boost finance's analytic, modeling, and forecasting capabilities while maximizing tech's ROI, says Hackett, even though cost pressures will limit them.

By Roy Harris

CFOs are focusing heavily on improvements in the accuracy and timeliness of information as part of a drive to boost their effective decision-making capability, according to research from the Hackett Group. But cost pressures may keep them from investing heavily in the effort.

In addition to looking at how companies are leveraging global standards, resources, and organizational models in the pursuit of better data, the research points to the likelihood that the "jobless recovery" will continue this year -- a recovery that features smaller corporate budgets and fewer finance staffers. The Hackett report is called the “2012 Finance Agenda: The Lean Years Continue.”

The report shows CFOs expressing what Hackett calls “mild optimism about the prospect for enterprise growth in 2012.” But, it adds that “finance departments are going to be expected to manage with smaller budgets and fewer staff.” Corporate revenue growth is expected to increase by nearly 50% this year, 8% higher than last year, although CFOs surveyed for the report expect to see corporate finance budget cuts of 1.5%, and staff cuts approaching 1%. The report says that results point to “an effective 10% increase in productivity.”

Volatility: 'The New Business as Usual'

Hackett said that nearly 200 companies -– two-thirds of them U.S. -- participated in its 2012 Key Issues research, with almost 50 of them participating specifically in its Finance Key Issues survey. About half those executives were vice presidents or at C-level positions. The study was completed in November.

The research suggests that increased volatility is becoming “the new business as usual, and finance leaders are expected to be able to respond rapidly and effectively to sudden market reverses,” according to Hackett. But while cost structures to support this approach are the “number one strategic priority” for companies, Hackett’s study finds that CFO listings of strategic priorities generally reflect a desire to use existing resources for “improving finance’s analytic, modeling, and forecasting capability; maximizing return on existing technology investment; and supporting process management across organizational boundaries.”

Those priorities suggest that companies will be developing new capabilities for supporting corporate globalization, and increasing “the globalization of many finance activities themselves,” Hackett says.

'Skill and Scale'

The Hackett Group's research also recommends that companies be prepared to adapt their business models and priorities in response to economic changes in regional global markets. This will require companies to understand the benefits from adopting global standards and organizational models that let companies leverage "skill and scale." In addition, the increased volatility  in demand across global regions makes it critical for companies to truly understand regional operations, while still gaining advantages from a global platforms.