In 2017, SAP sponsored Oxford Economics to interview 1,500 international financial professionals in a wide range of industries. During this process, they discovered several interesting issues that are at the forefront of financial thought leadership. Digitalization and disruption are moving through virtually every industry. It’s vital to future company success that insurance companies adapt to and adopt those changes. Fortunately, many businesses in the insurance sector are beginning to see the advantages of digitalization. At the same time, operations that have traditionally served as support roles are now stepping into leadership positions, including finance. Here’s a quick overview of the highlights; you can find more details within the full study in the link below.
What qualifies a “leader”?
The Oxford Economics study found many different trends among financial professionals worldwide. The study identified six traits that make a “finance leader,” including excellence in core finance activities and strong influence over strategy. Only a select few, 11.5% of the survey respondents, qualified as leaders. It showed that leaders in finance are 90% more likely to report growth in market share than other company leaders. Leading companies were 20% more likely to use technology in collaboration between finance and other sectors of the business at a total of 84%. Three-quarters of leaders in finance collaborate with marketing to drive success and growth. Over twice as many leaders in finance use Internet of Things (IoT) technology. Real-time analytics have also come into their own, with 83% of finance leaders using the technology versus 45% of finance professionals in non-leading companies.
“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 strategy role more effectively. It’s a win-win situation,” remarked Sam Parikh, managing director, Deloitte Consulting LLP.
Insurers rank high
Though insurers accounted for only 7% of the respondents, they made up 10% of the finance leaders. Why do insurance companies have such a difference in percent? A large part of producing growth for an insurance business involves adding new customers, as well as new products and services for existing customers. Finance is no longer focused solely on premiums coming in and payments going out. The role of the finance department is vital in determining what approaches are driving growth and which are holding the company back. Among the industries in the survey, 96% of insurers saw a rise in finance function visibility and influence. And 95% of insurance finance professionals saw a rise in CFO involvement in strategic planning. However, as is common to the industry, 62% of insurance responders cited risk aversion as the biggest obstacle to achieving finance goals.
Of all respondents, insurers saw the strongest rise in finance influence, at 99%. That was much higher than the 77% average for overall respondents. In new market entry, 95% of the insurance finance function had influence versus 83% of the general respondents. They were also more involved in: M&A activity (98% vs. 85%); new business partnerships (94% vs. 84%); and innovation and new product development (61% vs. 51%). They were also 20% higher than the survey average for sales and customer service collaboration.
The Oxford Economics study has pointed to many upcoming trends and issues of concern to leaders in the insurance industry. To thrive, your business must provide a leadership role for finance. If you would like more details about the study, please feel free to download a copy of the SAP-sponsored Oxford Economics study “How Finance Leadership Pays Off.” At SAP, our focus is on keeping your company at the forefront of digital innovation.
For more information regarding SAP’s insurance solution suite, visit SAP for Insurance.