Which way is the wind blowing for Asian CFOs?

Let’s face it: those developed economies, that once were the ones spinning the globe including Japan, are currently fire-fighting their daily affairs of debt crisis, unemployment and so on. Emerging markets like South America, China, India and Indonesia are now taking the lead with unprecedented growth surge.

China itself is now the world’s second largest economy, overtaking Japan, and is projected to take the great leap- to exceed the size of US economy in 2026-2030, according to IHS Global insight, a leading economic forecaster. So how is Asia faring with this new shift in economic gravity?

According to this CFO Innovation Insight survey titled Financial Management: When the Centre of Gravity Shifts#, Asian sales to the US and developed Europe are standing still or declining, while business with emerging markets is on the rise with an increase percentage of sales in South America (55%), Africa (50%) and especially in other Asian markets (62%) and production bases in the region (66%), indicating the start of a shift in Asia’s traditional business flows.

It is not surprising, therefore, to see CFOs in Asia taking up a more dominant role in the boardroom from the backroom, playing a role that goes far beyond simply reporting and financial information. They foresee challenges ahead to their firm’s financial management going forward; 32% of the executives surveyed pointed to analytics and business intelligence while 25% say it is budgeting, forecasting and other business planning.

The reliance on a strong financial management system that enables them to meet growing expectations, especially ones that can effectively manage the modern-day complexities of the global business world in which they operate, becomes high on their priority list.

However, it is saddening to see many still running on archaic financial management solutions that were developed in-house and highly customized, or that rely on a one size fits all ERP technology that is not flexible or responsive enough the dynamic nature of their global operations.

To ensure success in their expansion in emerging markets, surveyed executives stated that they will upgrade their financial management systems and other software (50%) and establish a relationship with a global bank that has branches in emerging markets (48%).

CFOs should therefore take a proactive approach by laying a financial management foundation which will enable them to push their strategic role to the next level. Below are the criteria to put in practice so as to conduct a high-level analysis of their existing systems’ global readiness:

• The ability to communicate seamlessly with business systems company-wide
• The ability to augment transactions as a result of changes in the business or requirements for local reporting
• The ability to support multi-company, independent locale
• The ability to support 4-D multi currency
• The ability to accommodate multiple financial calendars
• The ability to provide global access

As the world continues its uncertain economic journey, CFO worldwide must be ready for both the known and unknown and this could be in the form of growing the business in emerging markets or adapting to the additional regulatory and reporting requirements.

Systems and processes that businesses have in place, serve as the foundation for growth. A savvy financial management strategy, supported by the right tool and technology, may be the easiest way for companies to gain strategic advantage. 

 Anthony Lam, Vice-President, Financial Solutions Group - Asia and Japan, Infor Global Solutions