Study Highlights Corporate Compliance Issues

Regulatory compliance, risk management and cost-cutting are the big heartburn issues for finance execs in the C-suite. Yet financial planning and analysis—a key antacid—is insufficient.

That's just one of the intriguing factoids to emerge in the first of a series of reports by Genpact, a New York-based business process outsourcing and information technology services company, of how 920 top execs in finance, procurement, risk, marketing, and operations in North America, Europe, and Asia Pacific prioritize strategies and operations.

Here's a snapshot of the findings:

  • Financial planning and analysis, and master data management, are two key areas to watch.
  • There are three aspects of operation model transformation that have widely different impacts: technology, process re-engineering and advanced organizational structures such as shared services and outsourcing business processes.
  • Executives' roles influence their ranking of challenges. For example, 56 percent of respondents overall ranked regulatory compliance as their top concern, followed by cost-cutting and increasing customer satisfaction. But finance execs ranked regulatory compliance first, followed by risk management and then cost-cutting. Procurement execs say cutting costs is their top concern; for marketing execs, it's growth and scalability.
  • Companies with more than 10,000 employees say regulatory compliance and risk management are top challenges.
  • Companies with 5,000 to 10,000 employees rank innovation, growth, and stability as top issues.
  • Financial planning and analysis, and master data management, have the biggest impacts on companies' challenges.
  • Banking, financial services, and insurance execs are more likely than their colleagues in other industries to rate their finance and accounting as mature. But executives in other industries more often ranked order-to-cash and record-to-report as mature.
  • Finance execs gave the highest ratings to "advanced organizational structures," i.e., business practice outsourcing and shared service centers, and hybrids of the two, for their impact on the finance and accounting function.

With so much emphasis on regulatory compliance, cost-cutting, and risk management, how many companies are operating at their highest financial planning and analysis potential to handle these concerns?

"Almost none," says Genpact senior vice president Shantanu Ghosh. "The survey points out that financial planning and analysis, and data management, are two of the most important areas where executives see the maximum potential for change."

And, he adds, "I don't think any one of them thinks they are close."

Ghosh also recommends that finance, procurement, and marketing bosses align their differing views on compliance, risk, and cost-cutting in order to reach company goals.

"I'm not surprised from the marketing perspective that regulatory compliance comes in lower in terms of priority," he says. "Having said that, that's a space where maximum internal dialogue needs to happen among the chief financial officer, chief procurement officer and marketing head to get to a common agenda."

After all, regulatory compliance missteps such as violations of certain laws can damage growth, says Ghosh. And that's got to bring on a few marketing headaches, right?

Ghosh describes as a "welcome surprise" the importance that respondents gave data management. "No one has looked at data management as a group enabler as opposed to a nuisance," he says.

But the lack of a good master data management structure lengthens a company's market cycle and creates operational lack of agility, he adds.


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