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Survey: CFOs setting more strategy, crunching fewer numbers

But challenges abound: risk, technology, mergers and acquisitions

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"Whether this is an efficient use of their time or an imposition depends on the availability of tools such as analytics platforms, and on the CFO’s flexibility to do ‘what-if’ analyses"
CHICAGO, IL -- A Grant Thornton LLP survey finds that chief financial officers (CFOs) are spending more than a third of their time as strategic advisers, taking on roles well beyond traditional financial management.

The 2017 CFO Survey also finds that 40 percent of CFOs identify strategic planning as one of their top priorities – only slightly behind more expected activities like increasing cash flow (45 percent) and reducing costs (41 percent).

“Modern CFOs must act as both strategists and scorekeepers,” says Srikant Sastry, national managing principal of Advisory Services for Grant Thornton LLP. “But focusing on strategic planning is a paradox; it can reflect either a cost or an opportunity.”

Sastry points to the example of CFOs getting involved with operating metrics – a step beyond the financial metrics they have traditionally used. “Whether this is an efficient use of their time or an imposition depends on the availability of tools such as analytics platforms, and on the CFO’s flexibility to do ‘what-if’ analyses,” he explains.

Sastry stresses that finding the right balance starts with defining key business metrics and then tying these metrics to how they affect or drive bottom-line performance.

Risk is a top priority

Grant Thornton’s survey shows that managing risk is top of mind for CFOs, with two-thirds of respondents reporting that they want to reconcile their risk management strategy with their business strategy. Additionally, 70 percent expect to increase their use of analytics to measure risk management in the next two years.

“CFOs are clearly losing sleep over risk,” says Brad Preber, national managing partner of Business Risk Services for Grant Thornton. “Slightly less than 60 percent of CFOs see a strong need to manage risk as it affects operational costs and workforce management, followed by 51 percent who prioritize managing risk in order to vet growth opportunities, and 49 percent who prioritize it in order to manage cyber threats.”

Technology posing challenges

The survey also finds that CFOs want to focus on digital transformation initiatives, but cannot do so because they are spending so much money maintaining aging technology. Their three top barriers for future technology growth include managing costs (51 percent), maintenance of legacy systems (41 percent) and seamless business integration (40 percent.)

“The simple truth is that CFOs face an uphill battle when it to comes to adopting technologies like cloud computing and advanced analytics,” says Mike Ward, national managing principal of Business Consulting & Technology for Grant Thornton. “And they are feeling a sense of urgency: Nearly half of survey respondents – 46 percent – believe that their IT platforms lack the ability to operate effectively and require future investment.”

Operations seen as top investment

CFOs are clearly focused on operational improvement, with 70 percent identifying that item as their biggest area of investment focus, followed by sales and marketing as a distant second at 46 percent.

The survey further reveals an incongruity around sales and marketing, with only 14 percent of CFOs at larger companies expecting to invest in this area, while almost half (48 percent) of their peers at small and mid-sized businesses expect to do the same. “This discrepancy demonstrates the need for smaller organizations to better balance their investments,” says Ward.

Mergers and acquisitions anticipated, but not eagerly

Also of note, the survey finds that almost a quarter (22 percent) of respondents say their companies are considering merger and acquisition activities in the next 12 months. The number jumps to nearly a third (31 percent) among middle-market respondents.

But mergers and acquisitions represent an added responsibility for in-house finance departments. CFOs report that the top two challenges to successful merger and acquisition transactions are valuation (53 percent) and target identification (52 percent).

“Mergers and acquisitions are especially hard for CFOs of middle-market businesses,” says Jim Peko, national managing principal of Transaction Services for Grant Thornton. “Many acknowledge they need a mergers and acquisitions partner to help get deals done and realize anticipated synergies post acquisition.”

Advisory Services leader Sastry sums it all up this way: “This could be a transformational year for CFOs. There is no shortage of challenges, but optimism is high. Policy changes abound in Washington, D.C., while technology presents significant promises. In short: The role of the CFO is more important than ever.”

A report on the 2017 CFO Survey is available at www.grantthornton.com/cfosurvey.

About the survey

Grant Thornton LLP’s 2017 CFO Survey was fielded between November 22, 2016 and January 16, 2017. The survey includes responses from 404 CFOs and senior financial executives across the United States. Questions were framed around four main topics, including risk, technology, investment and strategy.

About Grant Thornton LLP

Founded in Chicago in 1924, Grant Thornton LLP (Grant Thornton) is the U.S. member firm of Grant Thornton International Ltd, one of the world’s leading organizations of independent audit, tax and advisory firms. Grant Thornton, which has revenues in excess of $1.6 billion and operates 59 offices, works with a broad range of dynamic publicly and privately held companies, government agencies, financial institutions, and civic and religious organizations.

“Grant Thornton” refers to Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.

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