The CFO's new environment-ACCA

TheCFO’snewenvironmentAreportpreparedbyCFOResearchServicesincollaborationwithACCATheCFO’snewenvironmentAreportpreparedbyCFOResearchServicesincollaborationwithACCATheCFO’snewenvironmentispublishedbyCFOResearchServices,25St.James’sStreet,London,SW1A1HG,UK.PleasedirectanyenquiriesorfeedbacktoClaireWolstenholmeon+44(0)[e-mail]tofCFOPublishingCorporation,whichproducesCFOmagazine.CFOPublishingispartofTheEconomistGroup.July2009Copyright©2009CFOPublishingCorp.,whichissolelyresponsibleforitscontent.Allrightsreserved.Nopartofthisreportmaybereproduced,storedinaretrievalsystem,ortransmittedinanyform,byanymeans,withoutwrittenpermission.©2009CFOPUBLISHINGCORP.July2009TheCFO’snewenvironmentContentsAboutthisreport4Executivesummaryandkeyfindings4Studymethodology6Section1—Indemand:Financeinthespotlight8Casestudy:Numonyx11AvoidingpotholesIncorporatingchange12Section2—Whenandwhere?Reviewinginvestments13Casestudy:Odeon&UCICinemasGroup14WatchthisspaceCasestudy:MindTree14AdaptingsystemsforbetterdecisionsupportSection3—Decisions,decisions:Strategicplanning15Casestudy:VirginMobileUSA16BenefitingfromthedownturnCasestudy:SIXGroup17Morethannumber-crunchingSection4—Alltalk:Communication18Casestudy:TAQA(AbuDhabiNationalEnergyCompany)19DeepimpactCasestudy:PitneyBowes20ViewfromthegroundConclusion21Sponsor’sperspective222©2009CFOPUBLISHINGCORP.July2009ExecutivesummaryAboutthisreportInFebruary2009,CFOResearchServices,aunitofCFOPublishingandpartofTheEconomistGroup,beganaresearchprojectwithACCA,theglobalbodyforprofessionalaccountants,askingseniorfinanceexecutivesfortheirthoughtsontheimpactoftheneweconomicenvironmentontheirrole,responsibilitiesandpriorities.Thisreportisbasedontheresultsofanonlinesurveycompletedbymorethan450seniorfinanceexecutivesacrosstheworld,andonin-depthinterviewswithexecutivesatthefollowingcompanies:AbuDhabiNationalEnergyCompany(TAQA)FortisBankGemaltoMindTreeNumonyxOdeon&UCICinemasGroupPitneyBowesSIXGroupSonicHealthcareTNTVirginMobileCFOResearchServicesandACCAdevelopedthescopeoftheresearchjointly.ACCAfundedtheresearchandthepublicationofourfindings,andwewouldliketothanktheirteamforitsinsightandsupport.AtCFOResearchServices,ChristopherWattsconductedtheinterviewsandEmilyWilliamsonwrotethereport.Wewouldalsoliketothanktheexecutiveswhotookthetimetosharetheirviewswithus.TheCFO’snewenvironmentispublishedbyCFOResearchServices,25St.James’sStreet,London,SW1A1HG,UK.PleasedirectanyenquiriesorfeedbacktoClaireWolstenholmeon+44(0)[e-mail]’snewenvironment4WhenCFOResearchServicesandACCAembarkedonthisresearchinFebruary2009,countriesaroundtheworldhadbeeninthegripofthedownturnforwelloverayear,facingwhatsomecalledaperfectstormofvolatileenergyandcommodityprices,unpredictablecreditmarkets,banking-sectordisarray,andjobandhousingmarketsindecline.Inviewofthis,companieshaveinevitablyshiftedtheirprioritiesfrommaximisingprofitstomanagingcashflow,workingcapitalandliquidity,andthisshifthasputthespotlightontheCFO.Thisseemstobeablessingandacurse.Ononehand,theCFOhasachievedmoreinternalrecognition,isperceivedtobemorevaluable,andreceivesmoresupportfromtheboardroom.Ontheotherhand,CFOshavearguablyneverbeensostretched.Theymustrefocustheprioritiesoftheirfinanceteamsandprovideextrareassuranceabouttheircompanies’performancetocolleaguesandexternalstakeholders,whilebecomingmoreheavilyinvolvedinstrategy,investmentdecisionsandday-to-dayoperationalmatters.Thekeyfindingsofourresearchinclude:FinanceisinthespotlightTheeconomicdownturnhasputagreaterfocusonfinancewithincompanies.ThefunctionisnowperceivedinternallyasavaluableguidethroughthedownturnandCFOsarereceivingmoresupportfromtheboardroom.Thisis,inpart,drivenbycompanies’sharpenedfocusoncashandliquidity.(Seesection1)RiskmanagementisnowapriorityTheeconomicdownturnhasgivenCFOsalotmoretocontendwith,andtheyarebeingstretchedinalldirections.Adoptingamorehands-on,managerialroleinbusinessoperations,theyaremonitoringmorecloselythanpreviouslystaffnumbersandworkloads,overheadcostreductioninitiativesandremunerationandbonusschemes,aswellascapitalexpendituredecisions,creditcontrolandcashcollection,andbankingrelationships.Butaboveall,they’rehominginonriskidentificationandmanagement.(Seesection1)July2009©2009CFOPUBLISHINGCORP.InvestmentdecisionsarebeingdelayedMostfinancechiefssurveyedaredelayingnon-essentialinvestmentsuntileconomicconditionsimproveandsomeareevendelayingessentialinvestments.Capitalspendingdecisionsarebeingdissectedmorecarefully,giventhehigherlevelsofanxietyanduncertaintyamongstakeholdersandthewidespreadscarcityofcapital.(Seesection2)TheCFOismoreinvolvedinstrategyFinanceisworkingmorecloselywithvariousbusinessunitsinstrategicplanning.Justovertwo-thirdsofrespondentsagreethattheCFOismoreinvolvedinestablishingmedium-andlong-termcorporatestrategy.However,doingsois5morechallengingthanever,andmanycompaniesaredelayingmakingstrategicdecisions.Othersareadaptingthewaytheydevelopstrategyandpreparingfortheeventualupturn.(Seesect