IBM CFO Study- Larger Role In C Suite for CFO

Leadership From Forbes.com

The Big New Role Of The CFO
William Fuessler,
Global Leader of IBM's financial management practice.


The global economic downturn has put a bright spotlight on chief financial officers and the finance organizations they preside over. Amid all the world's volatility and uncertainty they have been drawn ever more often into the boardroom discussions where decisions are made. Their bosses, chief executive officers, no longer want mere number crunchers; they want them to provide forecasts, manage risks and provide insight into issues ranging from pricing to production. As a result, CFOs are emerging with far greater clout and responsibilities than before.

IBM's new 2010 Global CFO Study, based on input from more than 1,900 CFOs and senior finance leaders worldwide, attests to this shift. Although the importance of core finance tasks hasn't diminished in any way, CFOs have had to sharply increase their focus on company-wide concerns. The IBM study indicates that they are seriously struggling to come to terms with the dramatically altered economic landscape, and only half of those surveyed said they feel they're effective in giving their CEOs adequate business insight. An overwhelming majority are planning big changes.

CEOs and boards of directors are counting on their CFOs to be fact-based voices of reason and insight, but those expectations are rising faster than the ability to deliver. However, the study identified one group of finance organizations that have a particular combination of capabilities that buck this trend. We call them the value integrators. Value integrators' businesses have outperformed their peers on every common financial measure we examined. These leaders have stepped up to their new roles helping their businesses make all manner of enterprise-wide decisions better, faster and with more certainty about end results.

How have they done it? First, through efficiency. They have reduced complexity by sticking with common processes, for example using the same definitions across the organization for financial terms like gross margin and revenue. That may sound like a small, obvious thing, but it's huge. Many organizations use multiple terms to describe a single financial function, making reconciliation across the business a nightmare. Common terms make it far easier to consolidate data from the local to the regional and global levels, allowing more time for analysis. Less efficient companies consider it a victory merely to reconcile all their information at all.

Value integrators also have far greater analytical capabilities, enabling them to generate business insights that can help them spot market opportunities, react faster and ultimately predict changes in the business environment. They've even figured out how to drive sustained business outcomes in times of market instability.

This has happened, for example, at Banco Bradesco, one of Brazil's largest private banks, which has total assets of $253.5 billion. Bradesco provides a wide range of banking and financial products and services both in Brazil and abroad. Its leaders recently recognized the importance of more effective financial management and went to work standardizing its accounting processes and revamping its governance model to ensure that all departments had clearly articulated responsibilities. It also built a performance management system that allows it to evaluate risks and view profitability in many different ways, for instance by geography, customer or branch. The system also allows managers to build forecasts into their planning processes. As a result Bradesco is now much faster at gathering, compiling and reconciling data. It has the time for sophisticated analysis and is better able to provide decision support for its undertakings.

That's the kind of commitment and vision it takes to become a value integrator. How can a CFO get started on the journey? There's no one-size-fits-all method; it varies from organization to organization. But you can start by asking these few key questions:

--Do I have all the information I need from all parts of the enterprise at all times?

--Is the company focused on the right business metrics, the ones that truly drive business performance?

--How accurate are our crucial forecasts, such as the ones for customer demand and unit costs?

--Does the organization have sufficient analytical skills?

The answers to these questions will start to point a CFO to gaps in his or her finance organization, and awareness of those gaps will guide the creation of an action plan--an absolutely crucial activity that must be undertaken with great care, as the decisions made for it will have great ramifications down the road.

One thing is certain: CFOs cannot return to the pre-crisis days when they were little more than information clearinghouses. The era of the CFO as a key influencer in the C-Suite has arrived, and those who are ready for it will reap the rewards for their organizations--increased competitiveness and greater profits.

Blog Sponsor: Cambridge Consulting helps CFO increase profits fro their firms by helping then review commercial real estate assets and creating negotiated lease buyouts for unused real estate. Many organizations are looking at their unused office space as an under utilized physical and financial asset. Millions of dollars of capital can be created by eliminating real estate obligations. Foe more information please visit www.commercialleaseterminations.com

Linkedin Important CFO Strategy For Advancement

This was an excellent article on the importance of LinkedIn for CFOs. For more information please visit www.cfo-coach.com

As social media tools continue to be a critical piece of an overall corporate recruiting strategy, CFOs and senior finance executives will want to leverage powerful positioning on Linked In. How your profile is perceived by recruiters is paramount to getting a second look or, even better, a call on a first look.

Five key areas to pay attention to include ...

-- A Powerful Branded Summary

This is not your daddy’s boring bio either. This summary, limited by 2,000 characters, is your opportunity to showcase how you do what you do (your brand) that is different and unique from others who do the same or similar things.

This limited summary section forces you to concentrate on the value you offer and deliver it succinctly. The process of unearthing and condensing down your marketable value proposition into a clear and compelling accomplishment statement is one of “the” most valuable things you can do for yourself.

Ignoring the summary section relegates you, by omission, to commodity status. Do what others are NOT doing and get noticed!

-- Complete Experience Section

It is great to have your employers and job titles, past and present, listed as part of your profile. But that is not enough. In the world of key searches, more is better. The amount of information online acts as a pre–qualifier and gives both you and a prospect a framework to begin establishing a relationship.

-- Vanity URL

Grab your vanity URL to increase your Google rankings and add branded consistency to your online presence.

-- Join Groups

Within the 60 million Linked In ocean of users, you are a mere bait fish. By joining groups, the size of the pond shrinks and your presence grows exponentially. Joining groups allows you to mingle with like–minded folks, gain access to their contact information ... even if the person is not a 1st degree contact in your network, and become even more visible to recruiters.

-- Get Recommended

Third party recommendations are extremely important on Linked In. These are very powerful endorsements that add credibility to the statements in your profile and employment history, and are critical to your positioning.

What does your Linked In profile say about you? Do you stand out from the other Chief Financial Officers who have done the same or similar things as you ... or are have you relegated yourself to commodity status?

If you're a Chief Financial Officer and you're on Linked In, please consider connecting with me and joining our CFO Careers group.
Posted by Cindy Kraft, the CFO-Coach on March 18, 2010 at 09:21 AM | Permalink

Wall Street Journal-Retailers Seek Smaller Real Estate Footprint

Wall Street Journal reported that retailers need to reduce their leased real estate. Reporting byElizabeth Holmes at elizabeth.holmes@wsj.com

Retailers have a new strategy to increase profits: shrink to fit.

For two decades, mall-based apparel companies saturated the market, aggressively adding more stores and building them bigger. Chastened by the recession, however, retailers including Gap Inc. and AnnTaylor Stores Corp. are poring over their holdings, looking for stores they can cut down to size.

The effort marks a new phase in the industry's response to the weak economy. After consumers snapped shut their wallets in the fall of 2008, sending sales plummeting, retailers laid off waves of employees and slashed inventory.

Now, many of them see re-evaluating their real estate, one of retailing's biggest expenses, as a critical step on their path to recovery.

Gap expanded tremendously in the 1990s. But in the last decade, sales per square foot have fallen and now, Gap is looking to shrink its footprint."During the '90s era, everybody wanted a bigger box," says Kay Krill, AnnTaylor's chief executive. "Now, all of us are trying to get out of those bigger boxes."Ms. Krill says she is shrinking square footage at AnnTaylor's new namesake stores by a third. Her reasoning: "I like productivity."

Average sales per square foot at American malls, a closely watched measure of retailers' productivity, peaked in 2007 at $454, according to research firm Green Street Advisors Inc. By the end of 2009, the average had fallen to $401, wiping out five years of progress.

For many retailers, the decline has been even steeper. Between 1999 and 2009, sales per square foot at Gap, the country's largest apparel retailer, fell 40% to $329. Total square footage for the company, which also owns the Banana Republic and Old Navy chains, jumped 62% over that period, even though its number of stores increased just 2.6%.

Gap is dealing with "a hangover of yesteryear," says Chief Financial Officer Sabrina Simmons.

The company wants to shrink the size of its namesake stores to between 8,000 and 12,000 square feet, she says. That compares with a current average of about 18,000 square feet, excluding marquee locations, which are among its largest stores.

"Quite frankly, it's just not as positive of a shopping experience as a smaller box that's a more intimate experience," Ms. Simmons says.

In locations where Gap has multiple store formats, such as GapKids or Gap Body, in addition to a conventional Gap store, the company aims to consolidate them into a single store.

Lengthy lease terms can make it difficult to close stores outright. But mall landlords often can be persuaded to accept downsizing, because it keeps the retailer in place, avoiding a dark storefront.

For the rest of the article on reducing real estate leases click here

Cambridge Consulting has successfully negotiated lease buyouts for many Fortune 500 firms. They are independent of any conflicts with landlords because Cambridge does not represent real estate owners. Their sole mission is to help their clients save money by reducing or eliminating their real estate lease commitments. For more information please visit their website- www.commercialleaseterminations.com

Convenience Store Stripes Saving Money Through Lighting Program

Harlingen Texas-based convenience store chain Stripes has signed a 29-month contract with TXU Energy and agreed to retrofit T12 fluorescent fixtures with energy-efficient T8s as part of the initiative.In addition, the company said it would replace less efficient lighting fixtures with LED canopy fixtures and will install TXU Energy iThermostats in select stores.

“The rebate program not only provides strong incentives for our convenience stores to be more energy efficient, but it also helps us do our part to make a positive impact on the environment,” said Mary Sullivan, CFO for Stripes. “We look forward to seeing how this program and our efforts to switch out lighting in our stores and upgrading to more energy efficient air conditioners throughout West and South Texas impacts the bottom line.”

Under the Energy Efficiency Rebate Program, Stripes has received rebates for retrofitting T12 fluorescent fixtures with more efficient T8s and replacing less efficient lighting fixtures with LED canopy fixtures, and installing TXU Energy exclusive internet accessible iThermostats® in a few test stores.

Business customers interested in the Energy Efficiency Rebate Program must sign a minimum 12 month contract with TXU Energy and install proven energy-efficiency technologies, including fluorescent fixture retrofits, LED exit signs, programmable thermostats and high-efficiency HVACs. TXU Energy is the only retail electricity provider in the state to provide this type of energy rebate program to businesses looking to help the environment.

“Our rebate program was designed to help our business customers be more environmentally conscious,” said Tom Leverton, COO for TXU Energy. “Businesses are not only looking to improve their bottom line, but also help the environment. Our rebate program helps them accomplish both.”


As a TXU Energy customer, you can receive energy efficiency rebates by retrofitting to accepted and proven energy efficient technologies, including compact fluorescent lamps, T5 and T8 fluorescent lamps, LED exit signs, programmable thermostats, high-efficiency HVAC* and vending machine controls. Installing energy-efficient equipment is a sustainable way to conserve energy with equipment that lasts a long time and begins producing savings right away.

Redbird LED based in Atlanta is a designer, manufacturer and distributor of high quality energy efficient LED Tube Lights. They recently launched a new website for grocery store owners and facility managers- www.groceryledlighting.com

Bank of West Hires New CFO

Bank of the West announced today that Duke Dayal has joined the bank as Chief Financial Officer. Dayal has more than 20 years of experience in international finance and was most recently a Managing Director of Brysam Global Partners, a New York-based private equity firm focused on investing in financial services. “Bank of the West’s history of sound financial management and its strong reputation in the market for outstanding service position it well to capitalize on growth opportunities,” Dayal said.

“Duke Dayal joins our team with a an impressive record of leadership in growing organizations, which, together with his strong finance and strategic skills, makes him a great addition to our executive management team,” Bank of the West Chairman and CEO Michael Shepherd said.
Prior to Brysam, Dayal was an executive with Citigroup serving in finance roles in the U.S., Europe and Asia. Among those roles was CFO of Citibank West, where he led the integration of Golden State Bancorp. Dayal also held senior finance roles in North America, Europe and Africa at Diageo, a leading consumer products company.


Dayal received a degree in Accounting and Finance from Nottingham Trent University, England and is a member of the Chartered Institute of Management Accountants in England.

Sponsor: Cambridge Consulting Group specializes in providing cost containment strategies to Financial Institutions. They have specific expertise in tax, finance and commercial real estate issues. For more information please visit their website- www.commercialleaseterminations.com

Wells Fargo CFO Played Important Role During Economic Downturn

The cover story of the current issue of CFO Magazine features the Role of Bank CFOs in the recent economic downturn. The excerpt below features Howard Atkins from Wells Fargo:

Wells Fargo knows a thing or two about how to survive a crisis; after all, it had to endure the California Panic of 1855, when the company's mission was to carry gold and freight between the mining regions of the West and the financial centers of the East. Thanks in part to a wagon-load of TARP funding, it appears ready to emerge from this most recent crisis, having reported revenue of $88.7 billion for 2009 and net income of $12.3 billion.

CFO Howard Atkins is a survivor as well, having outlasted the finance chiefs at the nation's other largest banks. Atkins attributes both his and the bank's success to the fact that Wells Fargo stuck to its business model and stayed out of activities that entangled other large banks. It was also helped by the capital position it enjoyed as the crisis began two years ago. Early last decade, many banks issued hybrid securities — instruments that combine elements of debt and equity — to buy back their common stock. "We never really thought that was a smart thing to do," Atkins says. "It may have helped earnings per share in the near term, but it weakened the banks' capital structures." The Basel Committee on Banking Supervision has come around to that view and plans to phase out the acceptance of hybrids in banks' Tier 1 capital calculations and make retained earnings and common equity more prominent.

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Wells Fargo Assets

Wells Fargo hardly stayed above the fray, however, largely due to its all-stock acquisition of Wachovia Corp. for $12.5 billion. The move caused many experts to scratch their heads, given Wachovia's high-risk loan book. But Atkins is unwavering in claiming it was the right decision. Despite Wachovia's weaknesses (which were compounded by its acquisition of a large California mortgage lender right before the housing market peaked), "we looked through its problems and found an affluent customer base that represented a huge cross-selling opportunity," Atkins says.

Fixing the Hole

Nonetheless, as it struggled to absorb the acquisition, Wells Fargo saw its Tier 1 capital ratio fall 75 basis points, to 7.9%. After stress tests conducted by the Federal Reserve last May, Wells was told to raise $13.7 billion, despite already having received $25 billion through the TARP program. The bank launched a series of massive follow-on stock offerings, raising $33.5 billion in 13 months. "We got it done in a short period of time with a lot of pressure in the marketplace," Atkins said. As a result, the bank was able to repay its TARP infusion, with interest. "TARP served its purpose, and we returned a billion and a half dollars to the taxpayer," Atkins says.

Atkins is glad to have thrown off the TARP, in part because he can now turn to other matters, such as how a rise in interest rates will affect Wells Fargo's investment portfolio. To match its assets to liabilities, Wells typically buys long-duration mortgage-backed securities, but term interest rates are still at historic lows. "Even though we have a growing base of deposits, we are intentionally underinvesting to avoid the risk that rates go up and we have to take a loss," Atkins says.

The bank may face new regulatory pressure as well: it boasts a 10.8% deposit market share nationally (about the highest in the United States) and above the 10% limit created by the Riegle-Neal Interstate Banking and Branch Efficiency Act of 1994. If regulators decide to address the "too big" aspect of "too big to fail," Wells Fargo will definitely appear on their radar screen.

However, in a community-banking climate in which there are fewer competitors and credit pricing is more rational, Wells Fargo's customer focus will serve it well, says Atkins. "A lot of banks got into trouble when they drifted away from focusing on doing the right thing for customers," he says. "We never drifted."

For the complete article please click here

Industrial Production Rose in February

As reported by Bloomberg;

Industrial production unexpectedly rose in February, due in part to gains in demand for computers and semiconductors that signal the pickup in U.S. business investment is being sustained.Output climbed 0.1 percent, the eighth consecutive increase, as utility use and mining increased, figures from the Federal Reserve showed today in Washington. Businesses are stabilizing inventories and buying equipment in a bid to meet growing global demand.


Capacity utilization, or the proportion of plants in use, climbed to 72.7 percent from 72.5 percent, today’s Fed production report showed. The gauge averaged 80 percent over the past two decades and suggests inflation will remain low.Manufacturing output declined 0.2 percent after increasing 0.9 percent in January, the report showed. “Production was likely held down somewhat by winter storms in the Northeast,” the Fed said in the release.

Production of business equipment increased 0.4 percent, a third consecutive gain, as demand for computers, communications gear and semiconductors climbed, a sign business investment is picking up. Spending on equipment and software climbed at an 18 percent annual rate in the fourth quarter, the most since 2000, the Commerce Department said Feb. 26. Some companies are upgrading their sales forecasts.