Posted by Reg Singh, General Manager and Vice President, Asia, NetSuite
While the official initiation of the ASEAN Economic Community holds enormous potential for Southeast Asia, CFOs believe its principles and parameters will make operating a business in the region more complex, a recent survey by CPA Australia and PwC revealed.
What’s even more alarming is that they don’t think they have systems in place to handle that complexity, the survey and corresponding report, “Finance Futurescape 2030,” which examined the views 70 finance leaders of Singaporean businesses, revealed. CFOs reported that they lack automated processes and struggle with data quality. This is forcing them to focus too much time on administrative tasks and not enough on the strategy required to compete in this new economic reality.
It’s certainly a challenging time to be a CFO in Southeast Asia. But it’s also one in which the role has never been more important. Those who take the lead in implementing business solutions that align with future needs will not only ensure continued leadership for their businesses, but sustained relevancy for their roles.
Is your business ready for the ASEAN Economic Community?
As we move into 2016, the borders of member states (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam) are now officially open to the free flow of trade, labour and capital. It’s an enormous market -- with a combined GDP of USD $2.3 trillion, it is the world’s seventh largest.
To remain competitive, business operations may have to span multiple locations. And a strong knowledge of cross border laws and regulations will be crucial to efficient and compliant business practices.
The need for real-time, relevant and reliable information is an absolute necessity to compete in this environment. Businesses need scalable software that can quickly be provisioned to support operations in different regions, but also provide a single view of what the different units or functions are doing.
Compatible systems lead to reliable data, and give CFOs the tools not only to gain better control of spend management and maintain compliance, but measure business performance.
Yet the reality is, most Southeast Asian businesses aren’t there yet. The adoption of technology to measure and manage performance and to plan and execute strategies is low. Companies in Southeast Asia are not using completely integrated tools for financial management. And they are spending too much time on routine procedures because those existing systems aren’t integrated, leading to inaccuracies and inefficiencies. In fact, the CFOs surveyed reported that they spend nearly 2/3 of their time on administrative tasks and only 1/3 on strategic ones. They also said that within the next decade, they expect that number to flip. The future CFO will need to spend less time on areas like cash flow management and more time on managing profitability.
How can I ensure my business is competitive?
Quick fixes – such as custom-built workarounds – won’t solve the problem. They will only result in operational inefficiencies and higher overall costs in the long term. CFOs need to adopt technology as an enabler to their businesses to help them run highly efficient finance organisations.
Technology must enable them to excel across three areas:
- Operate with efficiency. It’s more crucial than ever before that CFOs standardise processes, have a standard chart of accounts, start looking at shared services, and develop common metrics by which to measure and gauge performance.
- Capitalise on insights. With unified systems and reliable data, CFOs can combine operational and financial data in their analysis to produce more meaningful insights, and act as a strategic partner to the business.
- Create profitable growth opportunities. CFOs must leverage these insights to more effectively manage risk and identify new opportunities for growth.
What are the first steps I should take?
Smart CFOs must get involved in shaping the technology roadmap to ensure it meets business goals. They need to take steps to standardise and simplify operations to increase efficiencies. And they will help ensure a robust talent management plan is in place so that the best talent can be recruited and retained.
Cloud software is the best way forward for CFOs to realise all three objectives. It can be accessed from anywhere, enabling companies to easily scale operations for other regions and countries. While employees may not be in the same location, they are accessing the same system, meaning CFOs will have a unified and real-time view of financial performance.
The organisations that are quick to embrace cloud platforms are most likely to succeed in this new and promising economic reality for Southeast Asia – one in which businesses primed with the right technology will be able to reach as many as 600 million consumers.