FOR IMMEDIATE RELEASE
IBM Business Consulting Services Releases Findings of New Zealand Chief Financial Officers Survey
NZ CFOs slow to realise benefits of outsourcing, but score well in corporate governance
AUCKLAND, 26 February 2004 - IBM Business Consulting Services has released the results of its New Zealand Chief
Financial Officers (CFOs) Survey. The findings reveal less use of finance process outsourcing among New Zealand
companies compared to overseas, slower conversion of expensive fixed overheads into variable costs, but seemingly more
robust corporate governance frameworks.
The IBM New Zealand CFO survey was conducted from September 2003 to January 2004, involving CFOs from 36 of New
Zealand's top 100 companies. The NZ CFO Survey follows the release of the IBM Global CFO Survey in November last year.
According to Tim Ellis, Partner, IBM Business Consulting Services, a comparison of the two surveys suggests that New
Zealand CFOs lag behind their global counterparts in two significant respects. "While they recognise that they are
central to driving the performance of their organisations, they are less active in establishing progressive, resilient
performance management regimes. Furthermore, they are slower to rise to the challenge of converting traditional fixed
costs of corporate support activity into variable costs," he said.
Reluctance to outsource hinders assault on fixed costs
The surveys show that New Zealand CFOs are not embracing the opportunities represented by outsourcing as quickly as
their global counterparts. The two surveys indicate that while 60% of global CFOs either outsource or plan to outsource
specific processes, only 9% of New Zealand CFOs currently outsource any activities. Although outsourcing is expected to
increase dramatically over the next 3 years, there is an element of scepticism among CFOs as to the true value of this
strategy in a small market such as New Zealand.
The comparatively low use of outsourcing and shared services means that New Zealand companies have been slower to start
converting traditional fixed overheads into variable costs, and therefore slower to realise the benefits this
flexibility brings. Mr Ellis suggests there are probably a number of reasons for this. "The local process outsourcing
market is still emerging in New Zealand. For many organisations the spectre of moving jobs overseas, to Australia or
Asia, is perceived as too radical and fraught with risk, not least in respect to the loss of control. It is vital that
organisations clarify their thinking and position in respect to outsourcing, so that as circumstances evolve as they
surely will, they can take timely advantage of it," he said.
NZ corporate governance appears robust
In the aftermath of well publicised corporate failures such as Enron, Worldcom, and, more locally, HIH, most CFOs in the
global survey indicate that maintaining robust corporate governance systems is a top priority. Furthermore, there is a
strong perception that, in today's climate, the markets will reward those companies that adopt a higher standard of
corporate governance procedures.
In New Zealand, CFOs are confident that risk management and control environments are already suitably robust. "This may
partially reflect the nature of the New Zealand sample which included a number of unlisted and public sector
organisations," said Mr Ellis. "With the exception of subsidiaries of major global multinational companies, there is a
marked absence of any real sense of urgency, and possibly this is for good reason. The New Zealand survey results were
consistently more impressive that the global findings in respect to control and governance measures already in place or
planned over the next few years."
"Where there has already been a high adoption rate of resilient corporate governance, CFOs tend to be less fixated with
this issue. In New Zealand corporate governance is treated as a given rather than a competitive advantage," he said.
ERP systems poorly utilised, but CFOs plan greater emphasis
There is wide recognition amongst all CFOs, globally and locally, that much of their investment in technology, and in
particular Enterprise Resource Planning (ERP) systems, has not been fully exploited. In the global survey, only 19% felt
they use the full functionality of their ERP systems. While this point was not specifically surveyed among New Zealand
respondents, Mr Ellis expects that a similar result would apply in this country.
In New Zealand, many CFOs are reviewing the status of their recent ERP implementations to ensure that the expected
returns on investment are delivered. Globally, CFOs intend to triple the current levels of exploitation of ERP systems
and data. Within three years, CFOs plan to increase the use of ERP modules to enhance planning processes to twice the
current levels.
About the IBM CFO Surveys The IBM Global CFO Survey was completed in September 2003 and involved 450 CFOs from 35
countries including New Zealand. The average revenue of participating companies was US$8.4 billion. The IBM New Zealand
CFO Survey, completed in January 2004, involved 36 of the country's top 100 organisations. The average revenue of these
companies was NZ$500 million.
About IBM Business Consulting Services With consultants and professional staff in more than 160 countries globally, IBM
Business Consulting Services is the world's largest consulting services organisation. IBM Business Consulting Services
provides clients with business process and industry expertise, and the ability to translate that expertise into
integrated, adaptive, on demand business solutions that deliver bottom-line business value. For further information
please see: http://www.ibm.com/nz
ENDS