By Birgit Starmanns, Finance Solutions, SAP
In 2012, China’s economic growth rate dropped to 7.6% from a rate of 10.4% in 2010, marking a three-year low and six consecutive quarters of increasingly sluggish growth. The European Union’s GDP fell 0.6% in the fourth quarter of 2012, while in the United States the GDP fell 1%, marking the first drop in three and a half years.
Given the data, it’s not surprising that business leaders expect only modest growth in 2013. In a recent survey of financial executives, conducted by Bloomberg Businessweek Research Services (BBRS), the majority of respondents predicted a growth rate of 3% or less. How are they planning to maximize profitability in such a lackluster economy? By turning to advanced reporting and forecasting approaches and tools that allow Finance to partner with their operations counterparts in order to play a greater role in optimizing costs and driving long-term sustainable growth across all departments.
The BBRS report, “Finance as Analytical Partner to the Business,” examines how financial executives in food and beverage, healthcare, chemicals, and other industries are addressing both the top-line and bottom-line to remain competitive and drive future profitable growth. According to the report, the majority of respondents believe that close collaboration between financial teams and business units is now essential.
Finance Takes Strategic Role
By taking a more strategic role in supporting other departments, Finance can help ensure that all decisions are based on strong numbers. For example, companies operating within the retail, food, or beverage industries should have their finance team working closely with operating managers to analyze productivity trends that may be undermining financial performance targets. By keeping on top of the total costs of service ( labor, transportation, warehousing, cost of raw materials) for each product line, they can identify the products that aren’t yielding the desired profitability and alter their distribution and marketing plans to focus on the highest performing products.
Forward-thinking businesses are now investing in technology that allows operations managers to stay on top of their data in real time and make decisions based on numbers that were formerly only available to finance. Managers can take an active role in helping reduce costs, increase productivity, and identify new revenue opportunities. In the survey, 72 % of respondents say they will be increasing their investment in such tools in 2013.
Software solutions like those offered by SAP can help streamline financial management processes, ensure information quality, and place the right information into the hands of decision makers, when and where they need it. You can understand what drives cost and profitability and be ready to analyze, quantify, and compare opportunities and risks. Armed with solid data, you stand a better chance of maximizing immediate and long-term profitability – even during periods of global economic uncertainty
How does your business compare? Is your Finance team partnering with other managers to optimize costs and profitability across the organization? Are they investing in new tools that provide greater insight into costs and profitability across the board? Tell us what you’re doing to navigate through challenging economic times.