The New Value Integrator

The New Value Integrator
Insights from the Global Chief Financial Officer Study

This study is based on conversations with more than 1,900 Chief Financial Officers worldwide.

Mark Loughridge Senior Vice President and Chief Financial Officer IBM Corporation

Letter from the Chief Financial Officer

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A note to fellow CFOs
In the two years since our last study of Chief FinancialOfficers (CFOs) worldwide, a new economic environment has emerged, challenging enterprises in ways both familiar and new. Pressures have intensified for CFOs, but new possibilities have arisen as well – notably, to reshape the mission of the Finance organization. At IBM, our view is that times of upheaval are always opportunities for positive and transformational change, which is why I am heartenedby these findings that show leading enterprises well on their way to charting a new course. Their Finance organizations have both a high level of efficiency and an expanded capacity to provide meaningful business insights that meet the new challenges – and opportunities – being raised across the enterprise. We call these Finance organizations Value Integrators. Value Integrators are skilled atnavigating uncertainty; and on every measure we examined – revenue growth, EBITDA and return on invested capital – their enterprises outperformed their peers. They do so in large part because they excel at integrating information company wide, analyzing it and converting it to a competitive asset – new intelligence. Their more forward-looking insights are applied across the enterprise from strategicplanning to operational optimization and are used to manage risk, reduce costs and spot new opportunities. In short, Value Integrators have stepped up to a new role – to help the business make all manner of enterprise-wide decisions better, faster and with more certainty of intended outcomes. This is the potential unleashed by a smarter planet, taking information in a complex and volatileenvironment and providing predictive insights that give the company a competitive edge. Yet our study also shows that too many Finance organizations have yet to seize this opportunity – or meet their own expectations.

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The New Value Integrator

For almost a decade, CFOs have declared their ambition to shift their organizations’ time spent on transactional activities to areas of greaterinfluence involving analysis and decision support. Yet since 2003, on average, that mix has remained largely unchanged, and Finance continues to spend half its time on transaction processing. Our findings show a growing divide – with some Finance organizations excelling at efficiency and insight and performing well as a result, while far more face a widening gap between their basic ambitions and theirability to act on them. For these Finance organizations, as well as for those at the forefront carving out new roles as Value Integrators, I am confident that the experiences and insights generated by the more than 1,900 CFOs and senior Finance leaders who participated in this study will be of benefit in the years to come. I would like to take this opportunity to thank everyone who participated inthe study for their generous support.

Mark Loughridge Senior Vice President and Chief Financial Officer IBM Corporation

Table of contents

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Executive summary Chapter One Chapter Two Chapter Three Chapter Four Chapter Five

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Expectations V ersus Execution: The Growing Gap The Multiplier Effect: Efficiency and Insight Insight Drives Value Efficiency asFoundation Becoming a Value Integrator
How our research was conducted Acknowledgments The right partner for a changing world Notes and sources For further information

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The New Value Integrator

Executive summary
For Chief Financial Officers, the recent global economic downturn has been a pivotal event – but perhaps not in expected ways. Under a glaring spotlight, CFOs and their...