RiskOperational RiskBusinesses Hampered by Capability Gaps, says Hackett Group

Businesses Hampered by Capability Gaps, says Hackett Group

Companies face significant issues related to improving enterprise agility and address continued volatility business conditions in 2015, reports The Hackett Group.

However the group’s newly-released report, entitled
‘Finance Key Issues in 2015: Prioritising Competing Agendas to Deliver Value and Agility’
, claims that corporate finance organizations are handicapped in their ability to support this enterprise agility objective by cost pressure and inability to deliver in two critical areas – business partnering and reporting and analysis.

“Like the recent oil price collapse that few companies saw coming, in 2015 the next disruptive event is always just over the horizon,” said group principal and global finance executive advisory practice leader Jim O’Connor. “Economic and political volatility remain high, and the drive to improve enterprise agility and innovation is greater than ever before.

“Finance has to be able to play a key role in helping their companies identify opportunities and respond to unforeseen events. Unfortunately, the capability gaps we’ve identified in this year’s key issues study make it very difficult for finance to do this. And after years of cost-cutting, improving finance performance is a tremendous challenge.”

The Hackett Group’s study finds that in an environment of increasing political and economic uncertainty, companies are striving to improve agility and find new ways to innovate. In response, the top priority of finance executives was clear – more than 75% stated their highest priority was supporting the execution of the company’s strategy, which include growth and innovation for 2015.

However, most finance organisations will have to realise this strategy without net new funding. On average, most finance functions will see both headcount and budget trimmed marginally in 2015, with both areas seeing reductions of less than 1%, according to the study.

These results “point to a challenging reality in 2015, namely that finance organisations must pursue dual objectives – relentlessly pursuing a more competitive cost structure while simultaneously pursuing a strategic transformation agenda,” the group reports.

“The two are tightly intertwined – driving down cost will allow finance to self-fund the building of critical capabilities such as improved decision-making, formulating strategy, and managing enterprise risk.

Overall, risk management capabilities are also extremely immature in finance, according to the research. Less than 40% of companies have a chief risk officer (CRO) in place, and only half have a dedicated risk management team within finance. One in five companies lack these structures or others in place for monitoring and managing risk, such as an enterprise risk management team or cross-functional risk management council.

A complimentary version of the research is available with registration at: http://www.thehackettgroup.com/research/2015/pr/keyissuesfn15/

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