Key Findings from Latin American CFO Summit
By jmorourke on Mar 02, 2012
I recently had the pleasure of speaking and attending a Latin America CFO Summit in Puerto Vallarta, Mexico, sponsored by Oracle and Deloitte. The event drew over 50 CFOs from mainly Mexico, Columbia and Ecuador for a day and a half of presentations, workshops and networking. Here is a summary of some of the key points and findings that were discussed at the event.
Keynote speaker: Alfonso Stransky Paniuahua, Partner, Mexican Institute of Finance Executives. In his keynote, Mr. Stransky revealed new research from the 1600-member IMEF on the “Evolving Role of the CFO in the 21st Century”, and the CFO’s increasingly important partnership with management and the business to drive value and mitigate risk. He highlighted the CFO's increasing role in talent management and development, focusing on intangible assets, and encouraging innovation. He also discussed the new global economy and the need for CFOs to take a bigger role in strategic planning, driving efficiency, and re-engineering business processes, and encouraged CFOs to embrace change, adapt to the new rules of business and be prepared for increase risks. His discussion of risk management included information risk as well as social risk and responsibility. In summary, his research revealed an increasing focus on the CFO as a strategic business partner, key driver of both performance and risk management, with an increasing emphasis on creating long-term business value vs. short-term profitability.
Francisco Silva, Partner at Deloitte Latin America followed with a session focused on “current opportunities and challenges facing Latin American CFOs. In this session, Mr. Silva highlighted the results of a recent benchmark study of LAD CFOs, and their recent CFO Signals survey on the transformation of Finance. Some of the key finding from the benchmark study included the following:
- Costs of Finance in LAD are generally 25% lower than for US companies at 1.10% of revenue. LAD companies spend less on Finance Staff and IT, but they spend more time and resources on transaction processing and less on performance management and analytics than their counterparts globally.
- LAD companies tend to make less use of technology, and apply more Finance staff – this was identified as an opportunity for productivity improvement via better use of technology.
- LAD companies have a high degree of complexity in Finance – too many controls and costs of compliance, they need to strike the right balance of controls.
- With regards to compensation, Brazil has the highest Finance salaries, much higher than the LAD average and very close to the US. Chile has the lowest Finance salaries.
- With regards to FTEs in Finance, Mexico and Argentina have the highest, albeit with some of the lowest costs of Finance staff.
- In general, it was found that the larger companies had the lowest cost of Finance as a percent of revenue, but LAD in general has a lower cost of Finance across all sizes of companies vs. the US.
- One interesting point is that multi-national companies operating in LAD have higher Finance costs than local companies, but with fewer FTEs. This trend reflects the higher salaries of LAD staff of multinational companies, but better use of technology and fewer FTEs.
Mr. Silva also highlighted some of the key findings of Deloitte’s recent CFO Signals Survey. Some of the key points include:
- The role of Finance in driving strategy is growing in response to economic uncertainty, creating new demands on the broader finance organization. This is causing significant growing pains, as many CFOs already operate lean organizations.
- CFOs see the recession continuing, but most are focused on growth. Even as companies eye longer-term growth, they are focused on protecting near-term profitability.
- Continuing global economic malaise appears to be causing rising uncertainty around global market demand and heightened competition for revenue. Pricing trends are a top concern for 52% of companies (up from 40% last quarter) and new competitive tactics are on the rise.
- Over a third of North American CFOs surveyed cited economic uncertainty in Europe as the biggest potential risk they face - this despite European CFOs being among the most optimistic of the regions surveyed by Deloitte.
- Despite focusing on growth and investment, CFOs in North America don’t expect hiring to pick up.
Marie Hollein, President and CEO of Financial Executives International (FEI) discussed “The Growing Influence of CFOs Over Technology’ and the finding of the 2011 survey on the use of Finance technology. Some of the key findings included:
- 42% of CIOs report to the CFO, and this will likely increase.
- Performance Management/BI/Analytics is the #1 priority for technology investments followed by Enterprise Business Applications. This trend will continue in 2012.
- Licensed software will continue to be the primary delivery platform, with 76% of respondents running their applications in-house. But Cloud-based adoption is increasing with 10% embracing SaaS and 12% running with ASP models.
- ERP consolidation is a preference, with 64% of organizations favoring a single instance ERP.
- 54% of companies are making improvements in BI now or are targeting BI investments over the next year.
- Planning/Budgeting/Forecasting is the #1 focus for BI/PM investments, followed by Performance Scorecards/Dashboard applications.
- The market for XBRL financial statement generation products is growing with 30% looking for in-house solutions and 24% of respondents outsourcing XBRL tagging to 3rd party publishers.
- Only 16% of respondent companies are planning or evaluating the impact of IFRS (this was not surprising since the survey base was mostly US companies)
There were also sessions at the event delivered by Oracle executives on key market trends and the investments Oracle is making to help CFOs address today’s challenges, as well as some customer case studies. Key takeaways include:
- The role and influence of the CFO continues to evolve and expand beyond Finance into corporate strategy, talent management, IT management all with a focus on optimizing performance while managing risk
- While costs of Finance in Latin American companies is generally lower than in the rest of the world, CFOs in this region can improve productivity by better leveraging technology and shifting the focus of Finance staff from transaction processing to value-added analysis.
- Performance Management and Analytics are key priorities for CFOs globally, and can help organizations plan and forecast more accurately through market volatility, while improving the timeliness and quality of information they deliver both internally and externally.
To get access to some of the content presented at the Oracle LAD CFO Summit, please visit Oracle’s CFO Central web site at http://www.oraclecfo.com/Main/Events/Events_w.html?step=3