- Ireland's finance leaders are struggling to become more strategic
- Rising confidence with over a quarter not planning any restructuring at all
- Half say finance is more easily available now compared to 6 months ago, up from just 15% a few years ago.
- Mergers and acquisitions and price increases are becoming more popular as revenue drivers
- Technology is in sharp focus with nearly half (45%) planning to change their digital investments
- Skills an issue - Half (51%) say being under-resourced is a top challenge and is increasing; over a quarter (28%) say they do not have the right skills but they are addressing this as nearly half (47%) are changing their talent management strategies
- Regulation is becoming more onerous
- Room for improvement in the quality of management information
- Survey suggests a need to keep an eye on competitiveness as challenges such as cost control and maintaining margins have eased
- Half plan to grow the workforce and 76% say they will award a pay increase; however, one in five still say there will be a workforce decline
Continued growth in revenue, profitability and headcount, a sharp focus on technology and less restructuring are key findings in the PwC 2015 Chief Finance Officers' Survey launched today. The survey further reveals that Ireland's finance leaders are struggling to become more strategic, regulation is becoming more onerous and there is room for improvement in the quality of their management information systems.
Speaking about the survey results, Brendan Brennan, Chief Financial Officer, ICON plc, commented: "The 2015 CFO pulse survey is a timely reminder that with the changing macro-economy the CFO's role must also adapt, while continuing to focus on efficient business performance we must also take greater responsibility for the future growth and strategic directions of our organisations."
Also speaking at the survey launch, Paul Tuite said: "The survey clearly shows that Ireland's CFOs are more confident and positive about the future which is good to see. They are prioritising talent and investment strategies and increasing their focus on technology and digital media. The survey suggests that Irish businesses are ready for growth opportunities and are more focused on increasing capacity, raising prices and planning M&A activity. However, there is still work to do because the survey also shows that many finance teams recognise that they need to improve the quality of information they produce and become more strategic in how they support their businesses."
Struggling to become more strategic. The survey shows that for three years running only half of Ireland's CFOs are of the view that their finance function operates as a strategic partner to the business. Surprisingly, they reported a decline in the time spent partnering with the business in 2014. The survey also reveals that over half (55%) are still struggling with their budgeting and forecasting processes and more time continues to be spent on data gathering rather than insightful interpretation.
There also remains room for improvement in the quality of management information as less than half (41%) rated it to be either excellent or very good. More than one in ten (13%) rated it to be poor. At the same time an overwhelming majority (82%) recognise the need for improvement and confirmed that they have appropriate initiatives in place to improve the quality of management information including the use of Business Intelligence Tools (69%).
CFOs are moving away from restructuring. With 89% of CFOs confident of the prospects for the Irish economy in 2015, it is not surprising that just over a quarter (26%) are not planning any restructuring in the year ahead. In addition, they have less emphasis on activities such as simplifying processes, reviewing key contracts and critically reviewing the supply chain. At the same time, the survey highlights shifting challenges for Ireland's CFOs. They are more concerned than prior years around areas which are growth focused, for example, the lack of skills, increasing productivity and leveraging growth potential. Nonetheless, 20% expect their workforce to reduce in 2015.
Conquering technology is in sharp focus. Nearly half (45%) of participating CFOs report that technological advances is by far the most important global game-changer impacting their business. To capitalise on these opportunities nearly half (45%) plan to change their digital investments, a third (33%) plan to change their use of data analytics and over a quarter (27%) will change their digital media strategy.
Skills remain an issue: While the quality of the people is rated as the single most important factor for the success of the finance function, over half (51%) of Ireland's finance leaders report that being under resourced is a top challenge. Over a quarter (28%) reveal that they do not have the appropriate skills to support business demands. Ireland's CFOs are tackling this head-on as nearly half (47%) confirm that they are planning to change their talent management strategies in the year ahead.
Speaking at the launch, Garrett Cronin, Consulting Partner, PwC, said: "In our experience, the highest performing finance leaders are those who influence the strategic direction of the business, provide insightful analytics and are involved in key decision making. CFOs realise that they need to be at the cutting edge of technology, including social media and cloud computing with the right skills and management information systems so that their finance function can support the business in sustaining competitiveness."
Other key findings in the survey include:
- Half said that bank finance was more easily available now compared to six months ago - this was just 15% in 2013.
- The increasing concerns in regulatory reporting is particularly stark, with half (49%) of CFOs confirming this is a challenge, up from 36% in 2013.
- Over half (56%) expect costs to increase in the year ahead with 22% expecting labour costs to increase;
- Less than half (46%) said that their function contributed significantly to revenue growth in the last year. Revenue growth strategies becoming more popular include increasing prices, targeting a Merger or Acquisition and promotional campaigns;
- Over a quarter (28%) will strategically re-design their operating model.
- Shared Services Centres (SSCs) and Outsourcing are becoming more popular and there are opportunities for Irish based organisations to leverage the services on offer even further.
- It is surprising that only 28% plan to have an increasing focus on fraud in the year ahead;
Signs that recovery is accelerating, an overwhelming majority (89%) are confident about the prospects for the Irish economy in the year ahead compared to about half that (43%) in 2013. This is reflected in expectations for company performance. For example, three-quarters of Ireland's CFOs expect growth in annual revenues (77%) and profits (74%); around half expect increased capital investment (47%) and one in two expect to hire more people (50%). However, a sign that the recovery is uneven, a fifth still plan to reduce their workforce.
Garrett Cronin concluded: "A word of caution is that it will be important that competitiveness is kept to the fore and complacency does not set in. The survey highlights that areas which have been under close scrutiny in recent years such as maintaining margins and controlling costs have eased. In an increasingly complex world it is critical that opportunities continue to be gleaned by standardising and simplification of processes. CFOs should continue to structure the finance function so that it has the flexibility to respond quickly to market disruption."
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