By Robert Landon
Learn how Oracle Cloud for Finance is the most complete application suite.
Learn how finance agility can give your organization a competitive advantage.
CFOs are under increasing pressure to measure, invest in, and grow the value of intangible assets.
Intangibles now comprise 84% of corporate valuations on the S&P 500 index—up from just 17% in 1975, according to The Digital Finance Imperative, a global research study sponsored last year by Oracle and conducted by the American Institute of CPAs (AICPA) and Chartered Institute of Management Accountants.
Unfortunately, traditional financial key performance indicators (KPIs) aren't much help when it comes to measuring the worth of, say, customer satisfaction or employee engagement. So CFOs are searching for dependable ways to gauge the value of such assets, manage their performance, and drive new strategies to grow their value.
That requires a new generation of KPIs that can reliably connect non-financial indicators gleaned from data collected throughout the organization to bottom-line financial performance. Those connections are not always easy or obvious.
So how can CFOs move forward? Begin with simple KPIs, said Richard Wong, vice president of finance at LinkedIn, to the report's authors. Then use your findings to evolve more complex—and more intangible—KPIs over time.
For each industry and individual company, the connection between intangibles and economic performance can vary widely, but a consensus is emerging among high-performing CFOs to focus on five areas:
With effective KPIs backed up by a modern, cloud-based ERP and performance management system, finance can truly become the new digital guidance system for the enterprise.
For more, be sure to check out the updated insights from newly published research by the AICPA, sponsored by Oracle.
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