Trade wars, regulatory pivots, complex jurisdictional nuances – these are just a handful of the day-to-day challenges that have become major strategic priorities for multinational corporations around the world.
In fact, now is arguably the most vital time for C-suites and their respective enabling functions, such as tax, trade, legal, HR, and procurement departments, to be in lockstep when it comes to everything from day-to-day governance to big-picture growth strategy. However, new research from Thomson Reuters finds a significant disconnect between the strategic value these functional departments play and executive priorities for business growth and expansion.
Value Hiding in Plain Sight
At the heart of this push-pull is a myopic focus on what professional departments such as legal, tax, trade, accounting, risk and compliance have traditionally done, and what they can do in a more agile environment. For example, when C-suite leaders were asked about the parts of their business that are the most significant contributors to reaching organizational objectives, they cited customer success teams (78%) and the technology department (62%) as the top two contributors. By contrast, key enabling functions, such as tax (10%), HR (11%), procurement (16%), legal (17%), accounting (17%), and trade (21%) were less likely to be perceived as significant contributors to overall business objectives.
That’s a problem, not only for the enabling functions but also for the C-suite leaders, who are clearly underestimating the role that these departments play right now as businesses stare down a global trade war, massive geopolitical and regulatory uncertainty, widespread economic volatility, and ongoing technological transformation. Show me a CEO who is thinking about acquiring a foreign company or reengineering a global trade strategy in anticipation of new tariffs, and I will show you a tax, legal, trade, procurement, HR, and compliance department that’s about to play a major role in how smoothly that process will go.
Looking Beyond the Tactical
Unfortunately, some leaders just don’t see it this way, despite widespread acknowledgement of the importance of streamlining compliance and enabling functions. According to our survey of C-suite leaders, time spent on compliance and reporting is the single most common constraint on the effectiveness of enabling functions, with 68% of respondents citing it as a significant or moderate barrier. Additionally, 52% identified ineffective data and information flows between different enabling functions as a significant or moderate constraint.
It’s in this line of thinking that a dangerous disconnect starts to emerge. The C-suite clearly acknowledges the necessity of improving how these departments operate, yet they regard these issues as tactical problems rather than strategic opportunities. Equipped with the right tools and a sufficiently broad mandate, the enabling functions of a business — such as tax, trade, legal, HR and procurement, and others — possess the capability not only to check off requirements and mitigate risks but also to forecast potential challenges, anticipate new risks, and collaborate with the C-suite to foster business growth.
Opportunities in AI
This research also reveals a critical opportunity to elevate legal, accounting, risk, and compliance functions, particularly in the context of AI. While it’s clear that C-suite leaders recognize AI’s transformational potential, they are not fully leveraging their governance functions to drive that transformation. When these departments are properly empowered with AI and digital tools, they can simultaneously strengthen risk management and accelerate innovation—essentially turning what is perceived as a constraint into a competitive advantage.
The research suggests that simplified compliance and reporting and streamlined risk management represent major opportunities for improvement, with C-Suite leaders citing cross-functional initiatives, digital transformation, risk management, and enhancements to customer experience as examples where enabling functions can make significant contributions. By getting more buy-in and consultation from these departments that are on the frontline of many of these battles that organizations are waging, integrations could be cleaner, silos between departments would topple, and the full power of AI can be unlocked.
Progress in New Process
As businesses continue to pursue aggressive digital transformation goals, those that invest in AI-powered tools to empower their governance and financial functions will transform what many C-Suite leaders view as operational constraints into strategic differentiators. But this cannot be done without a fundamental shift in how leaders think about their departments. No longer are accounting professionals just bean counters; they are financial risk forecasters. Legal professionals are now global compliance experts. Risk professionals are forensic accountants. There is so much crossover in the modern corporation that there needs to be a new level of interoperability and a deeper understanding of how these once-siloed functions can collaborate to create a sum greater than the parts.
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