News Article -- August 06, 2007
SURVEY: CFOs NEED BETTER INFORMATION, FEWER FINANCIAL SYSTEMS
Improving data quality and information integrity emerged as the most pervasive critical technology concern, while the previous leader, information security, dropped to fourth.
About 58 percent of the 653 respondents said they consider data quality/information integrity a critical technology issue. Only one in five reported being highly satisfied with their information integrity, and about 70 percent plan to address this issue in the next year.
Poor data quality affects business
CFOs recognize that poor data quality negatively impacts business performance at every level. This includes routine transaction processing, to consolidation and reporting, to the analytical information used to support strategic and operational decisions.
"CFOs are acutely aware of the data quality/information integrity issue. It’s one of the major ongoing hidden costs in most businesses," says Jerry Boltin, a senior partner and the Business Intelligence practice leader in CSC’s Consulting Group. “Because businesses pay for poor data quality every day through higher staffing levels to correct data in transactional systems, or later when they move that data to a warehouse for analytical use, the penalty is often being overlooked."
"You want the information in your transactional system to be complete and correct. You don’t want an order for a customer to be shipped early or late," he adds. "There’s a business penalty to be paid for bad information, even without Sarbanes-Oxley."
The survey found that Sarbanes-Oxley (SOX) is still having an impact, raising the priority of systems integration, as well as consolidation and reporting. This impact grows as company size grows. Forty-five percent of respondents reported an increase in the cost of SOX compliance, while only 29 percent reported a decrease.
The survey noted that larger companies tend to have the business characteristics that make SOX compliance more difficult to achieve and sustain. These include global markets and operations, and multiple acquisitions and divestitures. They often result in diverse business practices and financial systems.
Too little information, too many financial systems
Similar to last year, most respondents feel they have inadequate analytical tools to properly support the analytical information needs of their businesses. Sixty-one percent say they will invest in analytics in the coming year. And the level of the planned investments in analytical information is again up compared to last year. Among respondents from organizations with over $5 billion in revenue, the average planned investment is nearly $23 million. Several plan to spend over $100 million, while one plans to spend $200 million
"They want better performance measurements, better profitability information, and better planning and forecasting processes," Boltin says. "The CFO wants this information for his business so that managers and knowledge workers across the enterprise have more facts to work with." Getting that information, however, can be challenging. Many respondents report a large number of independent financial systems.
Participants were asked the number of business units in their overall organization, as well as the number of independent financial system environments. In the largest companies with over $5 billion in revenue, the average number of independent financial systems environments was almost 12. The greatest was 100.
Boltin says that most companies still have significantly more independent financial systems than can be explained by the number of different businesses they are in.
He adds that survey respondents seem to be saying, "We want better analytical information, but our foundation has a lot of cracks in it." He says that most have a long journey ahead of them to solve the problem.
Better feelings about information security, offshoring
One problem that seems to have lessened somewhat is information security. While still a major concern (46 percent rated it a critical issue), the survey may reflect a growing comfort with the topic. Among those recording incidents, about one out of 14 respondents reported having at least one major incident, compared to about one in 10 in last year’s survey.
"Companies have been making investments to address information security. It doesn’t mean that they’ve solved it, but I think it means more companies are feeling better about it than they did a couple of years ago," Boltin says.
Also showing promise is offshoring, which consistently ranks behind onshore outsourcing (#1) and shared services (#2). Respondents reported higher satisfaction levels for offshoring (25 percent were "highly satisfied" this year versus 12 percent last year). And the survey suggests that offshore IT should continue to experience modest growth in the next few years.
"There was a substantially greater percentage of respondents using offshore indicating they were highly satisfied," Boltin says. "It still gets lower marks than traditional outsourcing or shared services, but that gap isn’t as large as it once was."
The annual survey identifies the IT issues and trends deemed most critical for CFOs and other senior finance executives. Participants were surveyed on financial management issues, IT strategies, technology applications and IT management.
This year’s report includes responses from members of a leading professional association of CFOs and other financial executives in the United States and Canada. CSC worked with the Financial Executives Research Foundation (FERF), the research arm of FEI, to produce the survey.
Related Information:
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