While the role of the CFO has always demanded constant evolution, the pace of change has significantly increased over the past five years. It would be easy to attribute this to the global financial crisis, but other factors – geographical expansion, shorter product cycles, the availability of newer products and heightened competition – have all been contributing factors.
Today, a CFO has to adopt a more forward-looking approach rather than undertake a deep analysis of past. This means he or she must undertake business-partnering and make futuristic decisions on budgeting, forecasting and planning.
The benchmarking practice, too, has evolved. While always a part of the CFO’s office, its function was restricted to benchmarking the current year’s performance against that of the past year, or of one internal unit versus another. Today, I believe there is need for a broader approach to yield success. There are benchmarks available for purchase that offer CFOs cross-industry best-in-class information. These benchmarks don’t merely serve as data points, they detail how to drive the change that optimizes performance. Their approach is granular and they help compare benchmarking best practices across industries to enhance performance.
The CFO’s office is facing another challenge – bandwidth. In the past, the controller’s office or the financial planning and analysis teams would take on the benchmarking exercise. However, with increased demand for analyses of new geographies, new investment avenues and markets for competition, there is a need for more forward-looking analysis. While this has not only led to a shortage of bandwidth, I feel it has also exposed gaps in the available analytical talent.
Additionally, in the past, when CFOs made comparative studies within their own organization, they were driving performance towards ‘best-in-class’ internally. Today, they need to look outside and take industry-level benchmarks to define new best-in-class standards. CFOs are also realizing how important it is to ultimately best those benchmarks.
In such scenarios, the experience of delivering results becomes a coveted asset – that’s where BPM companies become more and more relevant in the whole benchmarking exercise and in helping the CFO’s office. A BPM company, with the ability to compare and contrast performance at a very granular operating metrics level across multiple organizations from different industry groups, is far more effective than a company that conducts surveys to arrive at benchmarks.
A BPM services provider can also set a benchmark of best practices, as well as payback on implementation of those best practices.
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