Strategy

Finance Looking for Growth, Not Cuts

Many senior finance executives who responded to a new study see more value in generating new products and services than in focusing on executing th...
Stephen TaubApril 22, 2005

Three-quarters of senior finance executives believe that over the next three years, top-line growth will be a greater contributor to earnings than cost containment. That’s one major finding of “The Activist CFO,” a new study by consulting firm Booz Allen Hamilton and CFO Research Services (a sister organization of CFO.com).

Of the more than 1,600 respondents worldwide, nearly half are from companies with revenues exceeding $500 million; more than 800 have the title of chief financial officer. Fully 44 percent said that the CFO interacts with the board of directors significantly more than two years ago.

Closer relations with the board can be a sign of “operating distress,” the study observed. Of those respondents who indicated increased interaction with the board, 38 percent also acknowledged a need to overhaul their company’s operating model, 30 percent revealed external pressure from analysts for change, and 27 percent reported significant executive turnover.

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Perhaps surprisingly, of those respondents who are looking to the top line for earnings growth, 54 percent said they see more value in generating new products and services than in focusing on executing the basics.

Other findings:

• To execute their agendas, financial executives’ top priorities are collaborating with operations (66 percent), IT (52 percent), and sales (51 percent).

• Their lowest collaboration priorities are product development (29 percent), external stakeholders (24 percent), and human resources (20 percent).

• The greatest obstacle to executing their agendas is outmoded business intelligence and forward-planning capability, cited by 38 percent naming of respondents. “Fragmented technology” and “unsophisticated business processes” followed close behind.

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