CFOs in 2010: alter ego of the business
Deloitte Belgian CFO Survey - Q3 2009
Some commentators suggest that a resumption of GDP growth is unlikely to bring a swift return to pre-recessionary conditions in the economy. This caution about the outlook is captured in CFOs outlook and plans for the coming 12 months. Almost all CFOs believe that tight cost control will need to remain very high on their agenda, also when the recession will have ended. For the CFOs, the importance of cost management outweighs the relative importance of revenue growth 2 to1 for the next 12 months. Although a quick return to pre-recessary conditions is judged unlikely, corporates believe they have the necessary skills and capabilities to cope with this new context.
In this context, CFOs might face the important challenge to act as the “alter ego” of the business: they wil have to challenge the business to continue to invest in critical areas - also in the downturn. They will have to educate the business around cash (and not earnings) and change management systems to focus on cash if required. They can have a key role to play in helping the business to distinguish between the different categories of costs, to turn fixed costs into variable and to support cost reduction initiatives.
Some commentators suggest that a resumption of GDP growth is unlikely to bring a swift return to pre-recessionary conditions in the economy. CFOs views tie in with those of the commentators: the large majority of CFOs expect sluggish GDP trend growth, and high volatility of financial markets, also beyond the end of the recession. CFOs also believe that focus on cost control will remain important in the future.
As a consequence, CFOs will focus most of their attention in the next 12 months on further direct and overhead cost reduction and improvement of efficient asset utilization (61% in total attention). Revenue growth remains important with 33% though significant less than the various types of cost reduction initiatives.
As most companies have already cut costs throughout the past quarters, the next wave will likely require further detailed insights into nature and variability of costs, and the criticality of specific investments.
Although CFOs share the belief that a quick return to pre-recesary conditions is unlikely, most feel their organizations have the necessary skills and capabilities (7% of attention) to cope with the new context. Similary, most companies will put little focus on improving management of operational and financial risk (8% of attention).