Asean CFOs lament poor analytics

SINGAPORE--Compared with global peers, CFOs in Southeast Asia are less likely to be satisfied with their organization' planning and forecasting analytical capability, a new study has found.

According to the IBM CFO Study 2010, 76 percent of financial chiefs in the region were dissatisfied with their companies' analytical abilities to perform planning and forecasting. Globally, about 55 percent of CFOs indicated the same.

Over 1,900 CFOs and senior finance executives from 81 countries were interviewed for the study, which was conducted in mid-2009. About one in four respondents were from the Asia-Pacific region, including nearly 50 respondents from Southeast Asia.

Results of the survey were first released in March 2010, but perspectives from the Southeast Asian region were shared Thursday by Big Blue during a media briefing in Singapore.

The study also revealed that 64 percent of the region's CFOs rated themselves poor to average at anticipating external forces, compared to 44 percent globally.

Acknowledging that CFOs in the current corporate context play a broader role than before, needing possess business acumen and insight, on top of ensuring finance efficiency, IBM charted four profiles of finance organizations. High-performing outfits are termed "value integrators", while those on the other extreme are known as "scorekeepers". "Disciplined operators" are defined as finance units with high finance efficiency but lack business knowledge, while "constrained advisors" are the opposite--they possess the ability to advise but are weak in managing efficiency of finance functions.

Don MacCorquodale, senior managing consultant and Asean financial management leader at IBM Global Business Services, noted that "the majority" of CFOs in Asean nations said they were "disciplined operators".

As such, the biggest gaps in finance organizations identified in the study tended to be on the business front, such as the ability to manage or mitigate enterprise risk, advising business units on corporate strategy and driving integration of information across the enterprise.

All finance organizations should strive to become "value integrators", stressed MacCorquodale. This is because high-performing finance organizations in the region have boasted better financial performance than those in other categories. For instance, comparing a five-year compound annual growth rate for revenue between 2004 and 2008, "value integrators" recorded a 74 percent edge over other types of finance organizations. Ebitda (earnings before interest, taxes, depreciation and amortization) of "value integrators" was also on average 53 percent better.

For Asean finance organizations to reach that stage, CFOs need to focus on better business intelligence systems as well as, he told ZDNet Asia.

"If you don't have the right tools in place, then typically what you will end up doing is employ more people, do more spreadsheets, more [Microsoft] Access databases to somehow provide functionality or provide the reports in a less efficient way," he said. "Even if you do get the report [out], it's...less flexible."

Building up talent and skills within finance teams is also crucial, said MacCorquodale. To that end, within IBM, talented finance professionals are encouraged to work in non-finance roles for a period of time to understand the business better.

"If you just talk in finance language, then you're not as useful to the business," he pointed out.

In a separate IBM study released last October, CIO respondents said using business intelligence to gain competitive advantage and improve decision-making was a key priority.