If your firm has been waiting to launch an initiative to globalize its finance department, management probably won’t want to hold off much longer. At least that’s the conclusion of several surveys taken over the past year or so.

According to a 2009 survey by the Hackett Group, 22 percent of companies will move to globally based transactional finance positions this year, up from 11 percent in 2008. It doesn’t stop there, however. Leading organizations are moving beyond simply shifting transactions-based positions to lower-cost areas of the world, and also are shifting more sophisticated functions, such as planning and forecasting, to lower-cost areas, says Steven Ehrenhalt, principal with Deloitte Consulting LLP. “We’re seeing the sophisticated end of the market really accelerating.”

The driver behind these moves? “The cost savings are so compelling,” says Ehrenhalt, adding that if it wasn’t for the labor arbitrage, few companies would move to a global financial structure.

What’s more, cutting expenses has become even more critical, given the lousy state of the economy. About 80 percent of the 452 respondents to a 2009 survey by consulting firm McKinsey said that their firms either had or would reduce operating costs in response to the economic crisis, putting it at the top of the list for actions taken. Equally significant, 52 percent of those responding expect the focus on costs cuts to be permanent – again, a number-one ranking.

That said, several factors appear key to companies’ success in their globalization efforts. For starters, initiatives that are led by the CFO tend to be more successful than those for which other execs take charge, a Deloitte survey, “Globalizing Finance? Not So Fast,” found. CFO-led efforts rack up savings of about 21 percent, versus 15 percent for those led by other top brass. It’s not clear why, but it may be that CFOs are better at “things that relate to cost savings,” says Ehrenhalt. That is, they may know more (or perhaps are less hesitant about) chopping expenses.

Also critical is starting with the strategy and vision you plan to maintain; trying to expand the initiative’s goals midway is unlikely to succeed, as the political obstacles become too great. “You’re not going to get more than what you start with,” Ehrenhalt notes. This doesn’t mean that projects can’t proceed in stages, as most actually do. But, management has to have its broader vision in place before it begins.

As touchy-feely as it sounds, a holistic approach also is critical, the Deloitte survey found. “Companies with deeper, more integrated globalization programs achieve significantly better results” than firms that take a piecemeal approach and globalize individual processes, the survey report notes.

Finally, training, not surprisingly, also is key. After all, you’re managing employees flung across the globe, working in different time zones and possibly speaking different languages. What’s particularly important is “role clarity,” Ehrenhalt notes. Management needs to help each employee understand where their role stops and others’ responsibilities begin. “That way, the people in the business units are served as holistically and seamlessly as in the past, but at lower cost,” he adds.

To be sure, companies vary in just how global they’ve become. Only about 20 percent of companies are “pushing globalization for all the value they can get,” the Deloitte report notes. “Different companies not only are at different stages in terms of whether to globalize finance operations, they’re at different stages of what to move to global operations,” says Simon Tarsh, director with Deloitte. So, while many companies are have moved their procure-to-pay processes, fewer have moved planning and budgeting.

When done effectively, a globalization strategy can pay off in several ways. As a starting point, Deloitte found that leading performers in the globalization game can close their books in four days, versus 25-plus days for laggard firms.

One benefit that’s less obvious is the impact globalization can have on employees’ approaches to their roles. After transactional activities move to a lower-cost area, the finance folks who are left no longer can use the time demanded by these activities as a reason for not getting to job functions that add greater value. “By having greater role clarity, it reveals if people are performing,” Ehrenhalt notes.

Finally, of course, there’s the costs savings. Deloitte found that finance costs at companies that are leading in their globalization efforts run about 0.5 percent of revenue, versus 3.5 percent for organizations that are less globalized and efficient. As the world becomes increasingly competitive, this cost advantage will become even more critical. ###