Research Study: The Strategic Finance Gap

August 2013 | The Strategic Finance Gap 2
New technologies such as cloud/SaaS continue to take
shape in the finance field, offering the possibilities of both
greater flexibility and efficiency. However, in some cases,
finance professionals are using these tools without clear
information about or engagement with issues viewed as
the domain of the IT department. The Strategic Finance
Gap report attempts to understand the causes of this
confusion, the extent of information finance professionals
have, and where they may be leaving money on the table
through poor technology choices.
The research outlines the core findings from a global
research study of financial executives conducted on
behalf of NetSuite by Loudhouse Research between
June and July 2013. The survey interviewed 334 finance
professionals across the US, UK and Australia with
strategic and management responsibility.
The findings revealed that the role of the senior finance
professional is changing rapidly. Strategic decision-making
responsibilities form more and more of the finance remit.
As business goes global, finance professionals provide the
reporting and monitoring that not only allow companies
to measure success and identify risks, but also play key
roles in activities such as global expansion and M&A.
Often enough, the systems in place to manage critical
finance processes are not changing as fast as the role
itself, leaving finance professionals stressed and isolated.
Executive Summary
Figure A: Sample by Country Research Methodology
Online interviews were conducted with 334 finance
professionals in the US (128), UK (106) and Australia
(100) in June and July 2013. All respondents were based
in finance teams, and interacted directly with financial
management systems at least 3 days per week, along
with any other strategic or management responsibilities.
Research managed by Loudhouse, an independent re-
search agency based in London.
68% say that the finance function is so immersed in time-
consuming tactical processes that it has limited ability to
innovate.
Financial professionals who want to be using data to drive
the company forward are instead bogged down in close
procedures, reporting and follow-up requests for data.
To this point, finance professionals noted that their top
challenges include too much time on routine reporting and
close procedures, data gaps and system and tool issues.
The need for access to data is increasing as the data
volumes themselves increase, making control of
information a challenge for finance professionals and
the corporation as a whole. Without a single version of
the financial truth of a company, updated and accessible
to those who need it in real-time, conversations about
financial information become stalled in the monthly
reporting cycle. Data often resides in siloed systems
across departments and geographies and is poorly
integrated across these solutions. This results in business
information being difficult to access, time-consuming to
compile and often outdated. The demands of routine
tasks take so much time and energy that strategic
analysis is often squeezed out, depriving companies
of potentially crucial input from the finance function.
Financial management systems must facilitate seamless
working and collaboration, rather than simply supporting
the status quo.
USA
38%
AUS
30%
UK
32%

Executive Summary Cont’d
The increasing volume of information available to
companies has opened up tremendous new opportunities
for profit and growth driven by innovative uses of
information. Senior finance professionals, with their global
view of the company and their unique understanding of
business data, should be leaders in this change, providing
insight and direction. However, this opportunity has not
been realized as only 17% of survey participants said the
company they work for was primarily data-driven in its
strategic decision-making.
In order for finance leaders to influence this change, they
need systems which provide them with real-time access
to accurate data across departments, geographies and
subsidiaries, while also maintaining central control and
compliance across all of these groups. They also need
routine functions to process faster, such as month-end
reporting and close procedures that are frictionless and do
not take time and energy that could be used on higher-
level strategic contributions to the business as a whole.
The research highlight stats include:
Are “Routine” Procedures Truly Routine?
• Top challenges in finance roles include too much time
on routine reporting and close procedures (45%), data
gaps (40%), and system and tool issues (36%).
• 93% agree that improved tools and systems could
increase their effectiveness and efficiency.
• 91% agree that better tools would make it easier to
protect company assets from loss or misuse.
• Only 27% feel that their financial management systems
adapt quickly to changes in their roles.
The Innovation Gap
• 74% see their strategic responsibilities increasing,
and half of these see no related decrease in tactical
responsibility.
• 68% say that the finance function is so immersed in
time-consuming tactical processes that it has limited
ability to innovate.
• Only 17% of survey participants say the company
they work for is primarily data-driven in its strategic
decision-making.
• 45% of companies are not using completely integrated
tools – they have different systems between locations,
a hodge-podge of tools, or no discernible financial
management strategy.
• Anytime, anywhere access to data is not a reality:
45% of finance professionals are using financial
management tools that are installed on their own
desktops or a team server.
• 64% are either using or planning to adopt cloud / SaaS
solutions to better manage at least a few core business
functions, led by 70% of companies in the United States.
Finance Professionals Feel Isolated
and Ignored
• 85% feel that non-financial managers do not
understand the financial position of the overall
company as well as they should.
• 79% feel that non-financial managers do not
understand their own teams’ contributions to the
overall financial position of the firm.
• 73% feel that ideas driving growth and profitability
within their companies do not originate in finance.

Are “Routine” Procedures Truly Routine?
Figure 1: Challenges in the Finance Role Figure 2: Room for Systems Improvement
(Percentage agree)
Reporting and the monthly close process that enables
accurate reporting are key parts of the responsibilities
of senior finance professionals. They are, however,
supposedly routine parts of the finance function,
performed along the same lines on a regular basis.
In practice, it seems that the close process takes an
inordinate part of survey participants’ time and energy.
Add increasing responsibilities to this equation, and it is
clear that financial management systems are failing to
make reporting routine enough to adapt to the current
finance workload. The challenges of the finance role itself
are exacerbated by systems failings (Figure 1). 45% of
respondents rate the amount of time spent on routine
reporting and close procedures as a major challenge in
their positions. They list data gaps (40%) and system and
tool issues (36%) as other major issues, shedding some
light on some of the specifics of what makes close take
so much time. Only 27% of participants think that their
financial management systems are adapting quickly to
ongoing changes in their roles.
The missing ingredient seems to be efficiency. Without
a way to make reporting more automated, with data
moving through the system to create “a single version of
the truth” at the end of each month, close procedures
become inefficient and incomplete. Managers outside of
finance can’t always get the most relevant data for their
needs as quickly as they want it. This situation results
in missing information at close, and requests for extra
information from non-finance managers outside of close
periods. 93% of survey participants agree that improved
tools and systems could increase their effectiveness and
efficiency, while 91% agree that better tools would make
it easier to protect company assets from loss or misuse
(Figure 2). Clearly, the problem is creating widespread
costs in both time and money.
Increased efficiency and data visibility are so valuable
to finance professionals that they are willing to incur
additional costs if improved tools can help overcome
these issues. 62% of respondents rank “the ability of the
financial management system to improve and streamline
financial process efficiency and management” as a highly
influential factor in purchasing such systems. 52% feel
that “the ability of the financial management system to
improve real-time visibility into business performance”
is key. In contrast, only 17% prioritize “the cost of
purchasing and ongoing maintenance of the financial
management system” as a critical requirement. The
lack of efficiency has a cost to the company in strategic
opportunities missed and productivity lost.
40%
40%
39%
36%
33%
Too much time spent on routine financial reporting
or close procedures (such as creating accurate
financial reports and disclosure documents)
Distribution of responsibilites (too much for current
staff to do, hard to balance strategic and tactical
responsibilities)
Difficulty performing analysis because of gaps in
data and/or challenges marrying data from multiple
data sets
Increasing operational costs in the systems/tools that
support my role
Lack of consistency and uniformity or business
Problems with the systems I use to do my job (out of
date, too many, missing tools, too much is outdated or
manual etc.)
Difficulty implementing needed controls or complying
with legal or regulatory standards
Improvements to the tools and systems we use
for our financial management processes and
reporting could increase the effectiveness and
efficiency of our operations
Improved tools and procedures would make it easier
for finance and accounting teams in my business to
safeguard the company’s assets from loss or misuse
93%
91%
45%
44%

The Innovation Gap
Figure 3: Only 17% of Companies are Truly
Data-Driven
All of this raises the question of whether the tactical
processes can be streamlined enough to allow finance
to take a more strategic leadership role. The research
indicates that finance professionals are in part suffering
from a problem of company culture, but are also affected
by deficiencies in the tools they use.
When finance professionals are asked what is driving
their organization’s strategic decision-making, the
most common answers are that their companies are
“compliance-driven” (25%) or “people-driven” (26%).
Only 17% characterize their firms as primarily “data-
driven” (Figure 3). Despite the business world’s focus
on “big data”, it seems that data is not flowing or being
utilized effectively at most companies. In the absence of
data-driven insight, companies fall back on policy and
compliance needs, doing what they are required to do
instead of realizing their full potential for success.
Central, unified financial management systems are rare.
45% of companies in the survey are not using integrated
tools – they have different systems across locations, a mix
of tools, or no discernible financial IT strategy. Siloing of
business data between different business locations and
divisions is a potentially serious problem. Just under a
third of businesses (29%) are running multiple disparate
systems throughout headquarters and at other offices
and locations.
Accessibility to data is a highly common issue. 45% of
survey participants use tools that are installed on their
own desktops or a local server. Finance professionals
seem to believe that cloud/SaaS-based tools may be part
of the solution as a clear majority (64% of respondents)
now either have cloud solutions fully or partially
implemented or are planning such implementation –
rising to 70% amongst US respondents.
This hodgepodge of outdated systems across
departments, divisions and geographies contribute to the
overall problem: the finance function is bogged down in
administrative work when it should be free to lead data-
driven innovation. 68% of the respondents agree that the
need to focus on tactical functions is limiting their ability
to innovate.
People-
driven 26%
Data-
driven 17%
Policy-
driven 19%
Compliance-
driven 32%
Tools-
driven 13%

Finance Professionals Feel Isolated and Ignored
Figure 4: Finance Professionals Have
Increasing Responsibilities
Figure 5: The Strategic Challenge for Finance
The role of the senior finance professional is changing
with more responsibility for strategy, often in the
absence of a decreased tactical role. In fact, of the 74% of
participants in the survey who report that their strategic
responsibilities are increasing, only half (50%) report a
concurrent decrease in the tactical side of their roles
(Figure 4). In other words, well over one-third of the
survey participants are simply seeing increased workload,
while roughly three-quarters are seeing the complexity of
the work they do increase.
As their responsibilities increase, information gaps
between departments leave them feeling isolated within
the companies they serve. 85% of survey participants feel
that non-financial managers in their companies do not
understand the overall financial position of the company
as well as they should. Even worse, 79% agree that non-
financial managers do not understand their own teams’
contribution to the bottom line (Figure 5). Information is
simply not flowing between the finance function and the
rest of the business as smoothly as it should be which
limits the perceived value other departments place on the
finance function.
Over half (52%) of the participants in the survey report
that they are being asked more often for financial
information by non-financial managers, and the most
common data requested are basic financials (sales and
revenue, order statuses or commission totals), which 76%
report being asked for (Figure 6). This is followed by budget
data (61%) and operational data (58%). Despite these
high levels of demand, finance managers would like to be
sending more data outside of finance. 59% would like to
give non-financial managers more access to financial and
budget data. 46% would like their non-financial managers
to have access to self-service reporting and 42% would like
them to have tools to better see their own departments’
impact on the company overall.
Finance time and resources are disproportionately tied up
in routine procedures. Asked to identify their priorities for
the closing process, 74% name “making sure that all the
financial information is current and relevant in the system”
as a high priority. Because the movement of data is not
as seamless as it should be, ensuring data accuracy takes
time that could be spent on more strategic areas, such as
spotting inefficiencies or improving financial performance.
The result is that 73% agree that ideas driving growth
and profitability within their companies don’t originate in
finance (Figure 5). A key source of strategic guidance is not
being tapped.
Role entails more responsibility then it used to - senior finance
professionals are more involved in strategic decision-making analysis
in addition to their other responsibilities 37%
Role has become more about strategic decision-making and analysis, while
their direct role in day-to-day finance execution has been reduced 37%
Role has changed very little, or not at all 11%
Role has become less strategic, and more about their day-to-day
finance execution 15%
37%
37%
15%
11%
73%
71%
68%
People in non-finance functions such as operations, sales
or service don’t always understand the general financial
position of the company as well as they should
Managers in non-finance functions such as operations, sales
or marketing don’t understand their teams’ contribution to
the company bottom line as well as they should
The ideas that drive growth and profitability in our
company come from outside of finance
The finance function spends too much time at close
period managing the closing process itself
The finance team at my business spend so much time
and resource on tactical processes that we have little
ability to innovate
85%
79%

Conclusion: Finance as an Idea Engine
The business world is changing rapidly, with more and
more data available to companies. Activities that senior
finance professionals used to handle manually and in
spreadsheets now involve so much data and complexity
that they need to be more automated and systematized
in order to manage productivity and compliance risk. The
fast, accurate and controlled movement of data between
corporate departments and locations is rapidly becoming
a data hygiene factor: without it, companies cannot hope
for accurate mandatory timely reporting nor strategic
utilization of their performance data.
Senior finance professionals can lead if they are not
locked into an outdated, administrative view of finance
and its role. As long as their tools and systems are not
adapting to the new reality, finance teams are leaving
opportunities and potential profits on the table.
In order to reach a truly data-driven model of strategic
finance, companies need to:
• Cut time and effort on administrative tasks by
integrating business and financial information
across functions, locations, divisions and systems,
and implementing more modern cloud/SaaS-based
solutions that are designed for today’s constantly
changing business environment.
• Create robust control policies for data access and
automate these, enabling departments with real-time
access to “dashboard” data at any time and from
anywhere and freeing finance from the treadmill of
fulfilling routine data requests and compiling reports
from different data sources.
• Refocus senior corporate leaders away from making
decisions based on gut feel and towards being truly
“data driven” - viewing data as a source of new ideas
and insight, rather than just a reporting or compliance
challenge.
• Refocus finance management on spotting patterns in the
data. Freed from excessive reporting demands, finance
should be on a constant search for potential efficiencies,
opportunities, risks and paths forward.
The corporate leaders of 2013 and beyond will be those
who can make data the driver of strategic decision-making
within their organizations. This entails a new role for finance
leaders as innovators. In order to tap the potential of
finance, the tools that support finance need to themselves
become idea engines.
Figure 6: Basic Financial Data is the Most Requested
58%
53%
35%
1%
Financial data (such as sales and revenue data,
order statuses or commissions)
Budget data
Operational data
Customer data
Data on KPIs
Another type of data
76%
61%

Highlight Findings by Region
Describe the company as primarily “data-driven”
Agree that improved tools and systems could increase
effectiveness and efficiency
Agree that better tools and systems would make it easier to
protect company assets from loss and misuse
See “too much time spent on routine reporting and close
procedures” as a challenge in the finance role
Feel that financial management systems adapt quickly to
changes in the finance role
Feel that non-financial managers do not understand the financial
position of the overall company as well as they should
Agree that the ideas driving growth and profitability within the
company come from outside of finance
See their strategic responsibilities increasing / see these increasing
without a decrease in other responsibilities
Not using completely integrated tools for financial management
Use or are planning to implement cloud/SaaS solutions for
financial management
Say that the finance function is so immersed in time-consuming tactical
processes that it has limited ability to innovate management strategy
Total
Sample
17%
93%
91%
45%
27%
85%
73%
74%/37%
45%
64%
68%
United
States
20%
96%
91%
48%
36%
87%
73%
69%/39%
34%
70%
71%
United
Kingdom
17%
90%
91%
48%
28%
83%
75%
77%/40%
44%
63%
70%
Australia
13%
91%
91%
38%
15%
86%
71%
77%/33%
60%
55%
62%

Research Study: The Strategic Finance Gap

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