NEW YORK, March 7, 2012 /PRNewswire/ -- After several years focusing primarily on efficiency and cost cutting, the corporate finance function is building on these gains to focus on deploying scarce resources to aid growth, according to a report released by KPMG International. Based on interviews with senior finance executives in Europe, Asia and the Americas, the study also found that a majority of finance leaders are renewing their commitment to improving their function's contribution to line-of-business management.
With little left to cut, growth remains the primary path to profitability. Achieving it requires companies in uncertain market conditions and a weak economy to expand into new and unfamiliar markets. The dicey environment is placing a premium on the finance function's strategic analytical and performance management capabilities.
"Through the survey, we found that finance functions are playing a larger role than ever in mapping their companies' paths to growth by improving support to line of business management and consequently improving finance's contribution to overall company performance," said Donald Mailliard, principal, KPMG Advisory and Financial Management Practice leader in the U.S.
While the report, entitled "From Keeping Score to Adding Value," found that finance functions are already moving from simply evaluating past financial performance to adding more strategic and sophisticated analysis, respondents also indicated that a number of challenges still stand in the way of creating a more forward-looking and integrated finance department.
Almost all of the participants in the KPMG report cite some form of human capital challenges. Particularly in fast-growing markets such as China and India, finance leaders are struggling to assemble and retain finance staff with the right mix of capabilities and talents to reflect the bifurcation of the finance function into more discrete areas of expertise. This development has changed the traditional career path from more routine transactional work at the junior level to senior-level analysis and strategy.
"Over the past few years, the finance function has started to divide their activities into two distinct areas: core functions such as accounting and reporting, versus advanced functions like forecasting and strategic business partnering," added Martijn Van Wensveen, KPMG's Global Head of financial Management Advisory services. "With data collection and analysis now increasingly concentrated in shared-services centers, corporate-level finance staff are increasingly being shifted from transaction-oriented work to more strategic responsibilities."
Respondents to KPMG's survey also expressed continuing frustration with the limitations of technology. In many cases, out of date applications and legacy IT systems were cited as barriers to improving the finance function's effectiveness. Given the fundamental emphasis on delivering accurate, consistent and timely financial data, many executives said that they would look to play a more pivotal role in bridging the gap between IT and finance.
However, respondents also cautioned against rushing headlong into new technologies in an all-out sprint to achieve the utopia of a 'single version of the truth.' So while executives tended to agree that more automation in finance was generally a good thing, they also warned that new technology rollouts are often significant change projects that can quickly absorb scarce time and resources and often fail to deliver the expected results.
"This report shows that the finance function is becoming more integrated with the decision-making processes of the organization, transforming the function from a remote provider of information into a trusted advisor and strategic partner to people at every level and function of the business," added Van Wensveen.
For a copy of the report, please contact John Cline.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 145,000 people, including more than 8,000 partners, in 152 countries.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 152 countries and have 145,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
SOURCE KPMG LLP