CFO Sentiment Study Report Summary

Transcription

1 016 CFO Sentiment Study Report Summary CFOs Look to Impact Sales & Marketing Execution to Deliver on Optimistic 2016 Company Performance Expectations The CFO Alliance, a global community of senior financial leaders and decision makers promoting connectivity and knowledge sharing amongst leading financial executives, conducted its 6th annual CFO Sentiment Study to provide insights into the strategic planning and financial outlook of CFOs for Our study is unique in that it is designed to offer insights into how CFOs plan to address challenges and capitalize on opportunities in 2016 rather than merely identifying them. Over 600 responses from a broad sample of senior financial executives across the United States offer an in-depth perspective regarding how CFOs plan to deliver on optimistic expectations for their companies in the face of what they characterize as domestic, macro-economic headwinds going into CFOs will primarily look to leverage three primary channels to deliver growth in 2016: organic growth (51%), increasing customer spend (17%) and expansion into new markets (13%). CFOs believe company success in 2016 will be defined in large part by: the ability to expand relationships with existing customers, the relative effectiveness of market efforts, operational efficiency, and improvements in engaging and developing new and existing Finance talent. The following is a summary of the 2016 CFO Sentiment report. The full report that compares year over year trends, and a deeper analysis by company revenue, type and industry can be downloaded here: Setting the Stage for 2016: Macro and Industry Level Economic Outlook CFOs have an optimistic view of the current state of the U.S. economy while having a very pessimistic view of the global economy. CFOs have a relatively positive outlook relative to the industries of their businesses. In terms of current general macroeconomic conditions, a few key survey results are as follows: 60% of survey respondents rated their confidence in the US economy as strong or extremely strong, which is consistent with CFO sentiment going into 2015 when 61% of 2015 CFO Sentiment Study respondents characterized the current state of the U.S. Economy as strong or extremely strong 86% would classify the 2016 outlook for the global economy as weak or extremely weak, which is even more pessimistic than CFO sentiment going into 2015 when 70% of 2015 CFO Sentiment Study respondents characterized the global economy as weak or extremely weak The following results reflect the optimism of CFOs relative to the industries in which their companies operate, and the expectations of their company s financial performance in 2016: 72% categorize the current state of the industries in which they operate as strong, which is even more optimistic than sentiment going into 2015 when 64% of 2015 CFO Sentiment Study respondents rated the current state of their industry as strong.

2 In terms of specific industries, Business Services (85%) and Technology (84%) companies are the relatively most optimistic about their industries, while Manufacturing (48%) and Wholesale/Retail (50%) companies are the most pessimistic relative to the other industries represented in the survey. 69% expect to see higher top line revenue in 2016 down from the 79% who reported anticipated higher revenues in last year s survey 58% expect to see higher earnings in 2016 down from the 66% who reported anticipated higher revenues in last year s survey 43% expect to see improved margins in Delivering Results in 2016 CFOs believe improvements in both top line and bottom line growth in 2016 will require their sales and marketing departments to execute to understand their addressable markets like never before and to expand and leverage relationships with current customers. Global Domestic Industry 86% Classify the global economy as weak vs. 70% in % think the US economy is strong vs. 61% in % categorize the current state of their industry as strong vs. 64% in 2015 Sales & Marketing Performance is Critical Over 50% of CFOs identified marketing efforts or expanding relationships with existing customers as the top strategic factor driving company profitability in Almost 40% identify top line revenue growth as the top financial challenge faced in 2016: Effective Sales & Marketing drive top line growth and over 50% of CFOs identified organic growth through expanding customer engagement and tapping new markets as the highest priority for driving growth in Meeting customer expectations was most frequently identified as the top operational challenge CFOs will face in 2016 among 10 common operational challenges. Impacting Sales & Marketing Performance (The How) Improve the Company s Understanding of the Behaviors of Customers and Potential Customers: Only 12% believe they know their customers well enough to influence their behaviors In terms of specific industries, Non-for-profit (6%), and Manufacturing (10%) seem to need to pay the most attention this shortfall in 2016, while Healthcare (27%) and Technology (20%) companies feel the relatively most confident in their abilities to impact customer behaviors.

3 Improve Relationships with Sales & Marketing Leaders: Over 44% identified the Sales or Marketing Department as the department they find Most Challenging to Align with as a Finance Leader In terms of specific industries, Healthcare (35%) and Not-for-profit (35%) finance leaders play most nicely with sales and marketing colleagues, while Business Services (57%) and Wholesale and Retail (52%) finance leaders find it most challenging to collaborate with them relative to the industries represented in the survey 3 This study consistently reflects my own sentiments about the value of building a strong bond between finance and sales/marketing teams. The down turn in the markets have forced us all to create efficiency and cut costs, now during a time of economic growth, the CFO s office must play a key role in driving revenue and top line growth. Jay Roberts, CFO, VirMedica Almost 30% of CFOs reported that their involvement in developing and managing customer relationships will increase in If CFOs were given an additional $500K budget to allocate to their sales department per their direction: 26% reported that the spend would focus on training to improve their sales professionals understanding of addressable markets If CFOs were given an additional $500K budget to allocate to their marketing department per their direction: 34% reported that the spend would focus on market research to improve the company s understanding of addressable markets Hiring and Retaining the Right Talent is Critical 55% of CFOs reported that they are involved in the professional development of their employees to a great extent If given $1 Million of budget to allocate to the finance department in 2016, 30% of CFOs would heavily allocate funds to recruiting and retaining top talent. Hiring, Retaining and Training the Right Talent in 2016 (The How) 56% of companies anticipate raising wages over the next 12 months to attract and retain talent Over 40% of respondents indicated they would be hiring new full time employees in 2016 Over 29% reported that their most meaningful investment in talent would be additional training and development for existing employees At Paysafe, talent is our best asset; however, talent without the right cultural fit doesn t drive the same results. The candidates we are hiring now have a great skill set and they identify with our cause. Companies have to sell the candidates that their firm is the right place for them; a paycheck alone doesn t make you competitive or desirable. Chad Anselmo, CFO, Paysafe

4 Business Agility is Critical The Top Strategic Factor Driving Company s Growth and Profitability in 2016 changed for almost 80% of respondents from 2015 The Top Priority for Business Growth for 2016 changed for 60% of respondents from 2015 The Top Financial Challenge Companies will face in 2016 changed for 67% of respondents from 2015 The Top Operational Challenge Companies will face in 2016 changed for 83% of respondents from 2015 The Top Challenge Companies will face Relative to Risk Management in 2016 changed for 70% of respondents from Impacting Business Agility: Technology Drowning in Spreadsheets- Over 60% of companies surveys reported that they are drowning in spreadsheets Addressing Technology Concerns: Over 37% companies will be using cloud based solutions in the next 18 months 17% are fully converted to the cloud financial solutions 43% have limited use of cloud based financial solutions When asked how they would spend additional $1 Million Budget allocated to the Finance Department: 20% reported they would allocate it all to investing in technology Driving growth through M&A activity Expanding into new market(s) 17% Driving organic growth 51% Driving growth through product innovation 13% Improving customer service 7% What is your highest priority for driving growth in 2016? 6% Summary As CFOs embrace an ever-increasing role of leading across the enterprise, and recognize the value of truly understanding their markets & customers, their confidence and ability to impact top to bottom organizational performance increases. Confidence in their own ability to execute and embrace the role of Chief Future Officer within and outside the walls of Finance may explain their optimism to deliver both top and bottom line growth in Companies will continue to become more customer-centric in focusing strategy and dollars in understanding addressable markets and adding depth to customer relationships, make investments in the acquisition and optimization of human capital, invest in technology to enhance business agility, and leverage existing growth channels to deliver results in 2016.

5 The full 2016 CFO Sentiment Study report contains a much deeper analysis of internal and external factors impacting 2016 financial & operational strategies, leadership strategies, demographic trends by industry and company size, and reveals more details regarding how CFOs plan to engage and better understand their customers, leverage human capital, impact business agility, and spend in other key areas to deliver results in 2016 Download the Full Study. About the Study 5 The 2016 CFO Sentiment Study was conducted by the CFO Alliance over the month of December in A broad sample of senior finance leaders predominantly from middle-market U.S. based organizations was invited to respond to the web-based survey; 605 participated. Most questions asked for a response on a 5-point scale. The standard error of measurement was approximately The majority of respondents were from privately held companies, located in the Northeast. Roughly 57% percent of companies have revenues less than 50 million, over one third (34%), have revenues between 50 million and 500 million and 12% have revenues over 500 million Company Type 11% 17% 72% Public Not for Profit Private Top Industry Concentrations Healthcare Business Services Wholesale/Retail Technology Finance/Banking Not for Profit Consulting Manufacturing 4% $1-10B 5% $ M 6% $ M 11% $5-10M 14% <$5M Annual Revenue 3% >$10B 30% $10-49M 27% $50-249M The questions in this study were used to compare this year s sentiment as it compared to previous years. The following contributors provided questions and analysis, Oracle, FinancialForce.com, Radius Worldwide, ACCA and the National Center for Middle Market. For additional information on this study or specific questions as it relates this study, The CFO Alliance or any of our contributors, please contact: Contact Us info@thecfoalliance.org (610) thecfoalliance.org