In the past few years, corporate governance-related headlines and high-profile corporate bankruptcies have led to an increased emphasis on financial integrity and business control. But even as finance circles back to the basics, effective CFOs continue to aspire to a more proactive role than simply assuring the accuracy and transparency of financial statements.

The latest IBM Global CFO Study -- a survey of 889 CFOs and senior finance professionals in large companies around the world, the results of which were released in late 2005 -- shows that the most successful finance organizations have increased their responsibilities from just static reporting and data stewardship to also providing dynamic business insight to decision-makers. By applying financial management discipline to the enterprisewide delivery of predictive business insight, CFOs can strengthen their position as trusted advisers and become true business partners with their CEOs and business-unit leaders.

A comparison of findings from our 1999, 2003, and 2005 global CFO surveys indicates that more and more finance organizations are pursuing plans to shift resources from transaction processing to decision-support activities. However, in spite of these plans, the survey results suggest this shift has slowed in the past two years. One primary reason for the slowdown is the significant investment that finance has had to make in ensuring that appropriate processes and technology controls are in place to satisfy increased compliance and risk requirements. Ironically, compliance spending can serve as an investment in making finance more strategic over the long term; highly effective finance teams are using business performance management (BPM) processes and software to leverage information collected for compliance purposes to deliver differentiated business value throughout the organization. This not only builds confidence among directors and officers that they are compliant with Sarbanes-Oxley, but also makes for an altogether better-managed business.

The Truth About Compliance and Risk

Most companies feel that they have spent too much on compliance over the past four years relative to the benefits these investments have delivered to the business. This has resulted in a growing outcry from organizations unhappy about the time, money, and resources they've had to dedicate to documenting processes to ensure they meet the requirements of Sarbanes-Oxley, Basel II, HIPAA, and homeland security regulations. Other than keeping their executives out of jail and their company's name out of the Wall Street Journal, many see their spending on compliance as providing very little differentiated value. But that is changing.

Companies are beginning to realize that many of the new rules they must comply with have a broader objective than may first meet the eye. The real goal is to improve the integrity; the consistency; the accuracy; the timeliness; and now, with Sarbanes-Oxley Section 409, the transparency of information throughout the organization. Companies are also realizing that these same objectives are the basic tenets of BPM. So it's not surprising that finance departments increasingly are embracing BPM as a means of extending the value of investments they've made in risk management and compliance to provide more value to the organization through better use of its information assets.

While reporting processes, documentation of accounting policies, and oversight of the financial close continue to receive a good deal of attention, participants in the Global CFO Study said that they are expanding their scope to include enterprisewide controls; nonfinancial information (customer, products, channel, employee, etc.); and oversight of the company's IT infrastructure. The survey report also indicates that in the future finance will focus more on embedding analytics tools into dashboards, workflow monitoring applications, and management tools in order to more fully leverage information throughout the enterprise (see exhibit 1, below).

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