Getty ImagesIntangible assets such as intellectual property, customer data, and the distilled talent of an interconnected workforce are driving more value than physical or financial assets. For example, the Ocean Tomo Patent Growth Index was founded after intellectual property merchant bank Ocean Tomo studied the S&P 500 and noticed a hefty 80% of corporate value today resides in intangible assets like intellectual property — up from just 32% in 1985.
New research shows the top 25% of most successful companies surveyed have applied agile management techniques to their finance functions. According to “Agile Finance Revealed: The New Operating Model for Modern Finance (2017),” a paper based on research by the American Institute of CPAs (AICPA) and Oracle, that same top 25% are also the businesses most likely to measure intangible non-financial KPIs like competitive intelligence, brand reputation, and talent analytics. Based on this data, these are the five areas of intangible value businesses should perhaps be taking a closer look at.
1. Customer satisfaction
Tracking potential users based on their interests and behavior once seemed like science fiction, but today’s customers expect businesses to intuitively meet their expectations. “Tracking social sentiment and incorporating that into decision-making is something we use effectively,” says Galagher Jeff, CFO, Walmart eCommerce, USA. “We look real-time at social-media word clouds and other social-media input to understand what’s trending, what customers are saying about our eCommerce site, and what we can do to serve them better. It’s fascinating and a great opportunity for us to do more to meet customer needs.”
2. Brand reputation
Part of understanding your customer is understanding how and what the public thinks of your brand. Although brand awareness ranked ninth among survey respondents, some CFOs consider it essential. Many organizations are now using new non-financial KPIs to address the challenge of managing intangibles, such as the measurement of the customer’s brand experience. Such KPIs are helping them to focus capital better on those intangibles that generate value and ensure long-term success. Ten years ago, businesses measured brand awareness on a quarterly basis; now they are looking at it weekly – and sometimes even hourly.
3. Data quality
Until very recently, agile business structures were the sole domain of the IT industry, but that’s changing. Research shows 67% of respondents’ finance functions currently measure or monitor data quality — including 25% who are trying agile finance models for the first time. Data quality is becoming a priority. Some people might imagine automating the back of the house will put the finance function in jeopardy, but it’s actually putting CFOs in an indispensable advisory role which many companies did not envision, even recently as a few years ago.
4. Customer relationships
David Pipes, CFO of Arby’s Restaurant Group, confirms the role of finance is no longer just the back of the house. Customers are expecting interactions to be interactive, and businesses to be hyper-responsive. Finance functions must actively participate in the search for these new growth areas. “Ultimately, we are trying to move the whole system into the 21st century, in terms of letting the customer interact with us the way they want to interact with us, whether that’s on their mobile device, on their computer, or in person,” notes Pipes. “Finance is very active in this process, using a multi-discipline, cross-functional team to make decisions on capital investments to support this digital initiative.”
Agile finance leaders use digital technologies to analyze talent needs and attract employees who have the new skill sets required to propel a business upward. Using the latest technology helps attract and retain the best talent — especially among millennials, who expect to work using social and mobile technologies, notes Ivgen Guner, SVP of global business finance at Oracle. “The talent out there is very socially, digitally aware; for example, potential candidates do a lot of online research about Oracle,” Guner adds. “The new digital technologies have given them a window into our organization, and it also allows us to comb through candidates very easily. They find us, and we find them.”
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