There is currently no shortage of issues to keep CFOs busy and worried in the GCC, from ongoing digitisation, to the introduction of value-added tax (VAT), IFRS accounting standards, lack of skills and a very competitive landscape.
However, on the bright side, there are also practical solutions to help alleviate the pain of this period of transformation.
VAT
It was in the pipeline for years and after much discussion, VAT will soon be a reality. From Jan. 1, 2018, the introduction of indirect tax on most goods and services will be launched across the GCC.
Although VAT is ultimately a tax on consumption, businesses will have to collect it at every stage in the supply chain on behalf of the government. This means that VAT implementation will affect and involve every stakeholder in an organisations' ecosystem, from suppliers to customers.
Enterprise resource planning (ERP) systems will need to be re-examined or simply deployed for those who didn't have a system in place. This implies relationships with vendors will also have to be re-invented, while employees' skills and processes will have to be updated.
Poorly executed, VAT implementation could lead to significant cash flow management and compliance problems.
The solution, in one word? Preparation now.
Technology
McKinsey's report, Digital Middle East: Transforming the region into a leading digital economy, suggests that the contribution of the digital market to the Middle Eastern economy remains low at 4.1 percent of GDP. However, by 2020 McKinsey estimates that the digital market will increase, contributing U.S.$95 billion to the region.
The GCC is indeed bracing itself for the introduction of more advanced and innovative technologies like the cloud, artificial intelligence, the Internet of Things (IoT) and Blockchain.
Rather than fear the impact on existing business models, CFOs should see technology as a powerful way to improve productivity, gain a competitive advantage and simply stay relevant in a fast-changing world.
With two-thirds of the population in the Middle East under 30, the region's business leaders should also make better use of the youth's knowledge of technology by using them to bring digitisation into every office and train colleagues.
Cyber resilience
Cyber security, although a global phenomenon, is a particular challenge for the region's firms. PwC's latest Global State of Information Security survey reveals that businesses in the Middle East are more likely to have suffered a cyber incident (85 percent of respondents) compared to the rest of the world (global average of 79 percent).
Furthermore, local businesses suffered larger losses than other regions last year as a result of cyber incidents: 56 percent lost more than U.S.$500,000 compared to 33 percent globally, and 13 percent lost at least three working days, compared to 9 percent.
Supervisory expectations will rise in the region, and so will the need for increased risk control.
Agility
The urgent need to diversify the region's GDP amid lower oil prices and the ongoing disintermediation of the economy, coupled with greater uncertainty about the world, means that finance leaders nowadays need to be more flexible and have more vision than their predecessors.
Businesses in the region need real "change managers" - adaptable leaders who can work across technology, process and cultural change and can manage regulatory change.
That's for the soft skills. To support the shift to a more agile, transparent and reactive business environment, the cloud will have to become ubiquitous.
Shortage of skills
The war for talent in finance across the region shows no signs of abating. Recruitment firm Robert Half 's recent survey of 75 CFOs based in the UAE showed that 29 percent find recruitment "very challenging" and 60 percent "somewhat challenging".
The introduction of VAT will add additional pressure. Recruiters are already reporting an increase in demand for in-house tax experts such as VAT project managers and consultants. Furthermore, many businesses will have to re-configure their ERP systems or deploy a new one and may not have the inbuilt capacity to apply VAT onto the invoice value.
Beyond VAT, ongoing digitisation will require firms to hire key IT talent such as coders, programmers, developers, data scientists, and security and information officers.
While there is no immediate and obvious solution to the skills problem, training in-house teams, creating steering committees, leveraging external resources and using more technology provide a large part of the solution.
© Oracle 2017
