Collaboration: The Effective Finance Function’s Magic Ingredient

Joan Warner

Part 4 in a series. Read Part 1,  Part 2, and Part 3.

When we set out to study what the most successful finance executives do differently, we determined that regular collaboration with other parts of the organization is a must for what we call “finance leadership.” Our hypothesis: Business performance improves when the finance team exerts widespread influence.

Sure enough, our new research bears this out. In “How Finance Leadership Pays Off: Six Ways CFOs Stay Ahead of the Pack,” SAP partnered with Oxford Economics to survey 1,500 executives across industries and global regions. The select 11.5% of survey respondents who qualified as “finance leaders” work closely with business areas where finance may not traditionally have been highly visible, including functions like marketing, sales, research and development, and customer service. Their involvement in these areas could explain why, among our survey respondents, leaders were more than twice as likely as non-leaders to reported their organization’s market share grew over the past year.

Effective collaboration between finance and other functions is a hallmark of successful businesses. For example, a whopping 87% of companies with 5.1%–10% revenue growth say finance collaborates effectively with IT, vs. 65% of companies with revenue growth below 5%. And three-quarters of the fastest-growing companies report effective collaboration between finance and R&D, compared with 54% in the 0.1%–5% growth group.

“Collaboration is not a ‘nice to have’—it’s a requirement,” says Julian Whitehead, CFO of Airbus Defence and Space. “Clearly, if you want to be in the front end of the business, you’ve got to have a trusting relationship with sales and marketing, you’ve got to be involved with the engineering and operations teams, and you have to have some relationship also with the human resources team.”

The power of analytics

Collaborative finance can have a powerful impact on performance. In fact, we found that 46% of companies with zero or negative revenue and profit growth say an isolated finance function is keeping them from achieving their business goals. That percentage shrinks to 28% among respondents whose revenues are growing by 5.1%–10%.

According to Deloitte Consulting LLP managing director Sam Parikh, who advises organizations on large-scale financial transformation projects, improvements in information technology, especially analytics, are helping finance executives work more closely with their internal customers—the business operating units. CFOs are reaching out and becoming more client-facing, he says. The relationship then becomes mutually beneficial.

“Once the operating units see the power of analysis that finance can provide, they understand the value of the finance function, which in turn allows the CFO to play the strategic role more effectively,” Mr. Parikh explains. “It’s a win-win situation.”

Please click here to explore the full study, and check back with Digitalist Magazine for future blogs featuring more results.

Joan Warner

About Joan Warner

Joan Warner is managing editor and senior analyst for Financial Services at Oxford Economics. Joanie joined Oxford in February 2016 from The Financial Times, where she managed subsidiary publications covering the wealth management industry and corporate governance. Prior to that, she covered international finance and European business for BusinessWeek magazine, where she worked for nearly 20 years. Joanie was also a contributing editor at Institutional Investor and has written and edited reports for Morgan Stanley, McKinsey, PwC, and former hedge fund FrontPoint Partners. She holds an MA in Comparative Literature and a BA in Classics, both from Harvard University.