Margins, not market share

A fascinating survey entitled ‘Maintaining Margins While Staying Vigilant’ was recently released by FERF and Protiviti. FERF is the non-profit research affiliate of Financial Executives International and Protiviti is a global consulting firm focusing on finance, technology, operations, governance, risk and internal audit. These two organisation carry out insightful research each year as to what the current priorities of finance functions are. More than 600 finance executives and professionals participated in the research in the third quarter of 2015 so giving the research a robust foundation.

Here are some of the key findings.

‘Margins not market share’. The researchers cite this quote from General Motors Company CEO Mary Barra as she communicated to senior management about strategic priorities in the current competitive environment. Similarly, margin and earnings performance appears as the number one priority across all groups of respondents to the survey. The report suggests that with a modest recovery over the past few years, finance functions are preparing the enterprise for challenges that could materialise at any time by working to preserve margins and also by sustaining a strong focus on working capital management.

This would seem to strike a chord with the recent volatility and downward lurches in many of the stock markets across the world. Perhaps we should also recall a quote from Lord Baden Powell, the founder of the world scouting movement, ‘Be prepared’.

One concern that may not be under direct control of the finance function is the threat of cybersecurity which is now high on the Board agenda of many companies. It was only earlier this week (on the 2nd February 2016) that TalkTalk disclosed that the cyber-attack in October 21st 2015 had caused a trading impact of £15 million and exceptional costs of £40 – £45 million.  That attack resulted in 156,959 customers having their personal details accessed and of these 15,656 had their bank account numbers and sort codes accessed.

Another key priority flagged by the survey was finance’s desire to have a single, real-time version of the truth so as to develop better, more accurate and timelier data analysis, reporting, budgeting and forecasting capabilities. I have come across many, many companies striving to do this but very, very few who say they’ve cracked it.  Perhaps, in this context, it’s the quote ‘if at first you don’t succeed, try try try again’.  This is particularly relevant in these days of ‘big data’ and the ‘internet of things’. Some recent statistics I saw suggested that 46.4% of the world’s population uses the internet (www.internetworldstats.com ) and the number of devices connected to the internet (e.g. cars and fitness devices as well as smartphones) could increase to 25 billion by 2020 which is around four for each person in the world!

The last of the key priorities I want to flag here is ‘becoming leaders’. I think it’s apt to quote from the reports own suggestion of trends to watch: ‘As the nature of business challenges becomes more complex, organisational responses to address need to cut across traditional silos and involve more participants. CFOs and finance executives should expect the need to display leadership beyond the finance function to increase’. I think this fits very well with the theme underlying many of our courses in terms of business partnering and transformation of finance.  It also plays to our portfolio of courses under Leadership & Personal Development.

The report can be found through the link below:

http://www.protiviti.com/financesurvey

 

To learn more about these issues, BPP offers relevant courses including:

Margin enhancement

CFO of the Future 3 – Cost and Profitability Analysis

Driving down costs

Margin management

Pricing Strategies and Tactics

Strategic Cost Optimisation

Working Capital Optimisation – Risk, Reward and reputation Implications

Better Forecasting and Budgeting

Big Data and Business Analytics

CFO of the Future

Data Analysis with Excel – introduction/intermediate/advanced

Excel Dashboards – introduction

I3BAR – Integrated, Interactive & Intelligent Excel Models for Business Analytics & Reporting

Information, Insight & Influence

Develop into a Director

The Biggest Mistakes Accountants Make – & How to Avoid Them

The Strategic Accountant

Transforming Finance Professionals into Business Partners

For more detail of the above and related courses please go to:

https://www.bppprofessionaldevelopment.com/course-directory.aspx?group=1&category=2#c2

Assertiveness – an Introduction

Commercial Skills for Finance Professionals

Communication Skills – an introduction

Influencing Skills

Influencing Skills for CFOs

Managing & Motivating People

For more detail of the above and related courses please go to:

https://www.bppprofessionaldevelopment.com/course-directory.aspx?group=8&category=19#c19

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