As the business environment becomes increasingly global, how can finance professionals seize opportunities and steer through the challenges that lie ahead?
This topic was at the forefront of a panel discussion I participated in at the ACCA Malaysia annual conference. Our focus was on the impact of the ASEAN Economic Community (AEC) and the potential Trans-Pacific Partnership (TPP) agreement, but many aspects of our discussion could apply to international trade in general.
The consensus was that lowering trade barriers is good for business and good for the countries involved, particularly those in developing nations. We also agreed that businesses can’t be complacent about their approach to business in an open market. As the stewards of their companies’ capital, CFOs in particular need to be absolutely aware of the increased risks and have a strategy to mitigate them.
Navigating the complexities of free trade
Political, economic, and legal structures vary widely between trade partners, which can feed uncertainties and inconsistencies on how to expand into new markets. Businesses must overcome challenges related to new regulations, language barriers, local ownership rules, labor practices, efficient customs procedures, and differing product standards.
While navigating these issues, businesses must also focus on the fundamentals of operating profitably with an eye on business performance across the enterprise. CFOs need to be able to analyze and understand unprecedented amount of data, which is now going to be available to them in the digital economy.
How can you prepare? Technology is your ally in addressing these challenges.
Using data and partnerships effectively
Data breaks down barriers. But it can also raise obstacles when moving across borders without the proper technology infrastructure and partner network in place. Information in the context of one market maybe completely different in the context of another. You need access to customer behavior trends, regulatory issues, and best practices for those markets, but you also need to be able to quickly decipher what it means and make good decisions because of it.
Local partners with local knowledge become a critical component of success for companies who want to leverage overseas opportunities. Having a strong partner ecosystem provides businesses with competitive insights into the business environment in which they aspire to operate. A strong technology foundation enables you to act on that insight.
Embracing technology to enable success
If you’ve been working in a heavily regulated, non-free trade environment, your business may be quite inefficient and slow moving relative to potential competitors that will enter the market. By focusing on five key technology trends, companies are positioning their businesses to face aggressive and new competition and be more successful in the free market. They include:
- Hyper-connectivity: Connecting every consumer and every machine is disrupting all established rules around business channels and creating unprecedented opportunities for the exchange of goods, services, knowledge, and wealth.
- Cloud computing: Today’s technology infrastructure is rented, eliminating barriers to entry. Business-to-business transactions are moving to new cloud-based collaborative platforms for millions of businesses and users.
- Supercomputing: The limits of the 20th century are gone. Networking, in-memory computing, and cloud technology adoption allow for the creation of infinite new business opportunities and business innovation at ever-increasing speeds.
- Smarter technology: The digital economy is replacing products and services with icons. Sensors, robotics, 3D printing, and artificial intelligence are becoming the norm.
- Cybersecurity: Certain markets may have a different attitude to risk and security. Trust remains the ultimate currency, giving security-focused businesses a significant advantage in brand reputation.
Outperforming the competition
Free trade offers the potential for innovation, growth, and profitable business opportunities. It also presents challenges if not carefully navigated. To stay competitive, businesses need visibility into operations across geographies. They need agile business processes and the ability to manage and communicate with teams across borders. Armed with the right technology, you can accomplish these things to gain an edge over competitors.
To learn more about the value of instant business insights and how to thrive in a fast-paced digital economy, read CFO.com’s thought leadership report, Financial Planning and Analysis 2016. More great resources for CFOs are available now at the SAP finance content hub.