Financiers do not have the right indicators to evaluate intangible assets of the organization. That’s what the study conducted by CGMA® (Chartered Global Management Accountant®) reveals. It concerned 367 executives in 29 countries from the EMEA zone.
We learn from the study that the value of organizations is essentially coming from its intangible assets. Today, these intangible assets represent 80% of S&P500 compared with only 20% in 1975. An impressive growth that reveals the importance of these assets. Behind intangible assets, we find customer satisfaction (according to 76% of financial surveyed), operational quality of processes (64%), customer relationship (63%), human capital (61%) and the brand reputation (58%).
According to the percentages cited above, intangible assets seem to be essential elements which can increase the company’s performance. They represent key performance indicators! As a consequence, organizations can’t avoid analyzing them.
However, the study reveals that only 16% of financial executives measure customer opinion.This is a very poor percentage that reflects the fact that few financial professionals are not able to access this relevant data which could allow them to measure critical elements of their respective activities.
Financial executives do not take into account these figures which are so very important. Moreover, only 29% confirm that they can measure the quality of operational processes.This observation implies that Financiers have to seriously consider the function of these new key indicators.
If financial executives do not include intangible assets in their key performance indicators, they can be short-circuited by operational people who will generate their own strategic analysis and transfer data to the management.
However, transferring figures to the management is not the role of operational people. It is the finance department which is responsible and qualified to review data analysis. The finance department has to share its experience and expertise to increase organizational performance.
Only 10% of the respondents indicated that their finance department was involved in the elaboration of non financial processes and strategic orientations. This figure shows that there is a need for improvement .
But to rely on this relevant data, they will have to “use performance management system and modern ERP based in the Cloud” declared Laurent Dechaux, Applications Vice President for ERP Western Europe Oracle. Actually, by using a modern ERP Cloud, figures are entered into the system and consequently all data is transferred directly in the right direction.
To support a project of ERP deployment, it is essential that the finance department collaborates with the IT department. It involves a closer collaboration between these 2 departments that have been distant for too long: Finance and IT. In this context, the financial well-being of companies closely depends on the CIO-CFO relationship.
In conclusion to the study, we could say that it is vital that the finance department takes into account intangible assets that represent today`s key performance indicators for all businesses. However, beyond taking them into account, financial executives have to appropriate these figures and analyze them effectively.