FAO 2010: Responding to the Corporate Agenda
Stan Lepeak, Managing Director, EquaTerra Global Research
EquaTerra recently completed a new market study on finance and accounting (F&A) and F&A outsourcing (FAO) market trends. Through this research EquaTerra identifies and assesses challenges and opportunities facing F&A organizations in 2010 and analyzes and weights options F&A groups can employ to respond to these challenges and exploit these opportunities. Specific focus is paid to the role of alternative service delivery models like shared services and the role FAO can play in supporting the corporate and F&A agendas. The market study surveyed and interviewed more than 100 corporate and F&A executives in the US and UK markets. EquaTerra discussed the results of this market study via a webcast held on January 28th and through a series of blog entries, articles and podcasts featured on this site.
To define and mobilize a 2010 plan of action, an F&A group must first clearly understand and map their efforts to the overall corporate strategy and agenda. This is especially important — and challenging — under turbulent market conditions. The market study assesses what are the most critical challenges, issues and goals facing organizations today. Respondents identified their top three most critical issues and ranked them in order (see figure).
- The most frequently cited challenge, selected by 55 percent of total respondents, is managing down and cutting costs. This is not surprising given today’s economic conditions.
- The most important challenge cited is growing the business, scoring a 1.57 on a one to three scale, where one is the most important challenge identified. To highlight, 44 percent of total respondents cite growing the business as one of their top three challenges.
There were some variations in response levels.
- Smaller organizations ($3 – $10B annual revenue) more often cite competing against new or emerging competition as a major challenge.
- Larger organizations ($20B+ revenue) are more likely to identify growing the business as a key imperative.
- UK respondents, more often than those from the US, indicate that finding, training and retaining F&A staff globally is a major issue.
These results show that organizations are affected by current market conditions in different ways. While few respondents, for example, identify competing against new or emerging competition as a major challenge, those who do score its importance very high. Similarly, while managing down and cutting costs is cited as an issue by the most respondents, it is ranked as seventh in terms of overall criticality. Clearly this highlights the importance of understanding and interpreting the corporate agenda when putting together the F&A strategy to support.
Next up: defining the CFO’s agenda for 2010
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