The Digital Finance Imperative, new research from Chartered Global Management Accountant (CGMA), found that CFOs in Europe the Middle East and Africa (EMEA) can apply the discipline of management accounting to measuring the value of intangible assets.
According to the study, while the majority of a corporation’s value derives from intangible assets such as customer sentiment and brand, few finance professionals surveyed say they can access the right data to measure and monitor these critical elements of their business – just 16 percent in the case of customer sentiment.
Intangible assets have increased in importance over the last several years and today account for 80 percent of the value of companies that make up the S&P 500 Index. The respondents to the EMEA survey believe the top value drivers for their businesses are customer satisfaction (75 percent), quality of business processes (62 percent) and customer relationships (62 percent).
The report, sponsored by Oracle, argues that CFOs can reduce bias in decision-making by applying professional objectivity to ensure good governance, and ensuring that decisions are made in line with the overall strategy and stakeholder interests.
When asked about the extent to which finance has been realigned to support new value drivers, only 10 percent of respondents reported that finance in their organisation has been fully engaged with regard to ‘providing non-financial measures of progress towards strategic intent.’
However, the survey found that finance professionals in EMEA are struggling to access and analyse data around intangible assets. For instance, only 16 percent of respondents are able to assemble and analyse data on customer sentiment and only 16 percent have access to data about the impact of their brand on their business. Only 29 percent say they can measure the quality of their business process.
“Finance is well placed to become the rudder of modern business, but to do so it needs to be able to draw on relevant data from across the entire organisation using modern, cloud-based ERP and performance management systems,” said Arun Khehar, Regional VP, Oracle Applications “Without this capability, there is a risk that digitally-savvy lines of business will bypass finance altogether; generating their own strategic insights to take directly to management.”
Dr. Noel Tagoe, FCMA, CGMA, Executive Director of Education, CIMA and one of the report’s authors, said, “As digitisation makes it more difficult for businesses to differentiate and earn a premium, the quality of decision making has become essential to success, and finance can take the lead in ensuring this quality. It has the enterprise-wide overview and skill required to work with diverse internal stakeholders, ensuring that the business assembles, analyses, and applies data to improve performance.”
The study features insights from 367 executives in 29 EMEA countries.
