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Making headway in a volatile world - Key Business Opportunities - EY - Australia

Making headway in a volatile world

Key Business Opportunities

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What do you think the key opportunities are for business in general over the next few years?

What do you think the key opportunities are for business in general over the next few years?

Base: All (246) ANZ (111) Asia (135)

How much of a priority is cost management compared to three years ago?

How much of a priority is cost management compared to three years ago?

ANZ-based CFOs see improving profitability through costcutting, including business process outsourcing as a key opportunity for business in general. Across the region, 63% of respondents see cost management as more of a priority than three years ago.

“Exposure to rapid growth markets is a key opportunity. The risk needle moves if you invest more in rapid growth markets, but if you work hard enough on assessing the risk, you can come out on the right side.”

Noel Meehan
Executive Director Finance,
Orica Limited

Despite the volatility, the region’s CFOs believe there remain opportunities in rapid growth markets, cost reduction and better use of technology.

Organic and transformational growth in rapid growth markets

Asked about the key opportunities for businesses in general over the next few years, CFOs rated growth in, or expansion into, rapid growth markets very highly. This is an area where Australian organisations have traditionally been slow to identify, understand or act on the growth opportunities available, particularly in China.

When it comes to tapping consumer demand in rapid growth markets, the CFO has an important — and often unique — line of sight across the business. CFOs should be proactively providing insights to decision-makers.

Through integrating customer data, external data and financial information, finance can help to identify areas where consumers will trade down for value or up for a premium.

Ultimately, CFOs should be strategic advisors to the CEO, with a strong point of view about the markets the business should be in, based on the appropriate analysis.

CFOs across Asia Pacific cited organic growth in rapid growth markets as the number one opportunity for business in general over the next few years. In addition, Asia-based respondents see tapping consumer demand in rapid growth markets as a key opportunity.

Improving profitability through cost-cutting

Despite the dangers of cutting too deep, the region’s CFOs see cost cutting – including business-process outsourcing – as all important to improving profitability.

The key to making the most of this opportunity is for the CFO to own the cost agenda, rather than leaving it to individual business units, who will both wait to see what other units are doing and cut according to their own siloed agendas.

From our experience from working with clients, those businesses that form an executive committee with the CFO providing insight and data to address the cost agenda have more effective programs to achieve an enterprise-wide cost reduction program.

The CFO can use benchmarking to help this committee understand where the ‘fat’ really lies — rather than relying on gut feel, which inevitably results in cuts being made in the wrong areas.

Agility — and therefore the capability to take advantage of opportunity – will depend on organisations getting their information platforms right and investing in analytics.

CFOs want to arm executives with critical information that will give their organisations an edge, allowing them to respond more quickly to changing markets. Yet, many organisations have grossly underinvested in the systems that support finance. As a result, menial tasks are still often performed by hand which is not conducive to agility or informed decision-making.

While the CFO has a role as an information integrator, leveraging technology requires a partnership with the CIO. Such alliances can be powerful catalysts for organisations harnessing technology to change their business model and channels to market. Organisations need a multi-discipline team to evaluate major investments like this, including incubating and proving the new technology, then deploying it quickly.

Many CFOs believe additional value can be generated by using technology as an enabler for differentiation. This might include: investing in packaging automation; innovating distribution by reaching consumers through social networking; or leveraging new technology to simplify supply chain management.

However, even where such projects support the organisation’s strategic intent, CFOs often find it hard to build the business case, especially where outcomes aren’t directly related to increased revenue or decreased costs. Right now, most companies struggle to put a dollar value on ‘cross selling’ or ‘increasing share of wallet’. CFOs have to decide whether to take a leap of faith and support investment, or put the brakes on these projects.

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Making headway in a volatile world: the challenges of achieving sustainable growth

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