Companies must redesign their corporate finance, according to a survey published by Andersen Consulting in cooperation with the Economist Intelligence Unit. The report shows that many CFOs view their companies as lacking the necessary structure and culture to cope with today’s e-business conditions.
“Our survey, the first of its kind focusing on the impact of e-commerce on corporate finance, indicates that many CFOs doubt the ability of traditional metrics to evaluate key elements of operating in the new economy,” said Daniel London, a partner in Andersen’s Finance & Performance Management group. “Most corporations are still applying traditional business evaluation techniques to e-business,” he said.
Many CFOs say that if e-business and legacy-business strategies are aligned, it is because traditional-economy relationships and performance are being viewed through the prism of e-business.
“E-commerce is changing the rules of the game and broadening the role of financial officers,” says London. “New business models and innovative technologies are requiring greater levels of finance leadership to ensure long-term viability and success. Transforming brick-and-mortar companies to e-commerce players requires CFOs to reassess their approach to capital investment and rates of return. They are being asked to evolve at e-speed and, in several instances, reorder their priorities.”
The survey shows that by 2005, more than half of e-business initiatives will have a planning cycle of less than one year.
Andersen Consulting’s Finance and Performance Management group specializes in transforming finance organizations and building solutions to generate bottom-line value. With expertise in e-finance, finance strategy, shared services, operational excellence, business process outsourcing and capability development, this group works with clients across a broad range of industries and geographies. It employs more than 65,000 people in 48 countries.
The Economist Intelligence Unit, the business-to-business arm of the group which publishes The Economist, is the world’s provider of global business intelligence. Through its global network of analysts, the EIU continuously assesses and forecasts political, economic and business conditions in 195 countries. The EIU, traditionally a print-based publisher, is now a fast-growing e-business, with over 500,000 networked users. Its analysis includes: the daily EIU ViewsWire; ebusinessforum.com, specialising in global intelligence on e-business; the data service, EIU CountryData; and the company’s flagship website and online store at eiu.com. The Thought Leadership Services division of the EIU develops leading edge research in cooperation with the world’s foremost consultancies, financial services and technology firms.
The report, “E-Commerce and the CFO: A framework for finance in the new economy,” covered 276 major corporations with a growing array of e-business initiatives. In addition, personal interviews were conducted with CFOs and other senior finance executives at 35 companies in North America, Europe and the Asia-Pacific region.
Companies participating in the survey included General Motors, General Electric, Chevron, Cummins Engine, British Telecom, Shell, Sabena, Southwest Airlines, Hutchison Whampoa, UBS, Astra Zeneca and UBS.