KPMG s financial management practice

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1 KPMG s financial management practice kpmg.com

2 KPMG LLP s (KPMG) Financial Management (FM) practice supports the growing agenda and increased responsibilities of the CFO. We work with our clients with passion and purpose, integrating innovative approaches and deep expertise to deliver real results. Our approach, methodologies, and tools are time-tested across various industries and have consistently demonstrated enhanced strategic value to the finance function. KPMG s global network of financial management professionals helps clients align their finance organizations with the strategies and needs of their businesses to realize and sustain value over the long term. KPMG s Financial Management service offerings include: Finance Strategy Finance s overriding goal is to transform its role from transaction processing and historical reporting to that of a business partner responsible for driving sustainable growth and profitability. We help clients develop strategies to drive finance transformation across the enterprise and create programs to improve, enhance, and evolve the finance function s capabilities in alignment with the organization s business strategy. Our efforts help provide a clear view on Finance s future target operating model (TOM) and a detailed road map of improvement efforts, required resources, and measurements for implementation. Finance Function Performance Assessment and Benchmarking We provide our clients with a holistic view of performance by integrating quantitative benchmarks with leading practices, process maturity assessments, and surveys. We leverage our proprietary benchmark database of over 700 companies in a variety of industries and over 20,000 metrics and survey results to enable an objective comparison to external finance organizations. We then put these quantitative and qualitative benchmarks in context with case studies that help our clients determine the magnitude of a potential change and create practical recommendations for focus and improvement. Financial Planning & Analysis (FP&A) We help clients improve their existing Financial Planning & Analysis (FP&A) processes by focusing on one or more improvement levers: Cycle time Improving the cycle time required to develop a new plan or forecast, resulting in more timely FP&A information Level of detail Reducing the level of detail to help focus the organization on planning what matters Time horizon Implementing a rolling time component to FP&A processes so that the organization is consistently taking a forward-looking looking approach Drivers Incorporating non-financial business drivers into FP&A processes to improve alignment with sales and operations processes Insights Improving management reporting, analysis, and business partnering efforts Finance & Accounting Process Optimization We assist clients with the optimization of specific finance and accounting processes. These processes often cross multiple business units and operating silos and typically require leveraging enabling technologies. Key process areas include: financial and management reporting; planning, budgeting, and forecasting (Plan to Perform); record to report; order to cash; procure to pay; fixed asset (Acquire to Retire); payroll; front-, middle-, and back-office integration; and account reconciliations. Finance Service Delivery Model We assist clients in developing finance service delivery strategies and approaches. KPMG facilitates confirming financial and operational baseline, evaluating alternative operating model options, developing future-state operating models, and preparing a go-forward service delivery model. These initiatives can include shared services, outsourcing, and centers of excellence, as well as determining which capabilities should be retained at the corporate level and in the business units. Integrated Finance Transformation (IFT) Integrated Finance Transformation (IFT) is KPMG s approach to transforming the finance function to drive cost competitiveness and increase value to the business. KPMG s approach is value driven and holistic in nature and recognizes all aspects of the target operating model including service delivery model, people and organization, functional process, supporting technology, data and reporting, and governance and controls.

3 The Finance Function of the Future KPMG provides service offerings that fall within each of these four strategic priorities of Finance: Strategic Decision Support Information delivery focus Meaningful and actionable reporting and information access (business partnering) Strategic planning Integrated business planning Value-driven analysis Strategic Growth Mergers & acquisitions (M&A)/ transaction analysis and support Capital allocation/strategy Investment analysis Funding strategy Tax planning Initial public offering (IPO) support Profitability analysis Business partnering Optimize business strategy/ execution Finance Standard global processes Process automation Robotics Efficient Operations Common enterprise resource planning (ERP) platform Software as a Service (SaaS) enablement Effective/efficient service delivery model including labor arbitrage Continuous improvement supported by metrics Rationalize and monitor controls Centralized management reporting Effective master data governance Task management tracking Enterprise risk management Policy support Governance Financial Management helps organizations build a finance function for the future. We can help the finance function be a catalyst for growth and create value within an organization. KPMG s financial management practice 3

4 KPMG Powered Finance KPMG Powered Finance is a simple, low-risk approach guided by KPMG leading practice and fueled by cloudenabled technology, delivering speed-to-value for business transformation. It comes with a pre-configured target operating model in a cloud environment. This can address up to 80% of your configuration, leaving you to focus on tailoring the remaining 20% to your unique business needs leveraging our industry and operating model expertise. The result is a solution that will minimize risk, accelerate implementation, and drive speed-to-value. Quality Close & Reporting We assist clients in developing a repeatable, sustainable close and reporting process for internal and external reporting through effective use of resources, streamlined processes, and integrated technology. Our approach involves: helping clients conduct analysis of the organization s current close and reporting processes; developing and analyzing conceptual design; selecting future state (design and potentially) enabling technology; planning and piloting its implementation; conducting a broad-based roll out; and ongoing monitoring and governance. Integrated Business Planning (IBP) Integrated business planning (IBP) represents a new model for coping with volatile market forces and rapidly evolving business conditions. IBP is the process of connecting and coordinating the strategic finance, sales, and operational planning activities in a cohesive approach. IBP creates crossfunctional alignment and integration of planning and execution processes to ensure optimal business performance, including reduction of operating expenses and inventory, increased on-time delivery of products and services, and improvement in budgeting and costing accuracy. This integrated approach emphasizes collaboration across business and finance stakeholders to connect changes in the environment with decision making and ultimately enable a more agile and responsive enterprise. Total Product Cost and Profitability (TPC&P) We help clients manage growth by creating a deeper understanding of profitability along multiple dimensions such as product, customer, and market. Our approach focuses on understanding a company s revenue analytics and creating a set of aligned cost information to support the detailed analysis of both revenue and margin. This is accomplished by creating analytic models and reporting capabilities that leverage new sources of key cost driver data to support a deeper and more strategic analysis of margins and profitability. Financial Process and Transactions Support When organizations merge, acquire, divest, or go public, successfully executing the mandates of integration, separation, or public readiness is one of the biggest challenges faced by the enterprise. We help clients focus on the development of the future state organization, process, and systems that will enable the CFO to manage the new entity. Enterprise Performance Management (EPM) In an effort to achieve value-added status, CFOs can provide better data and insights through Enterprise Performance Management (EPM). EPM is the approach used by leading CFOs to effectively manage execution of the business strategy through: dynamic measurement of goals and performance; alignment of behaviors of stakeholders with strategic objectives of the organization; advanced use of analytical and modeling capabilities; and enterprise-wide, information-driven, decision-making capabilities. KPMG can help you manage through the complexities of EPM transformation and ultimately improve business partnering and decision-making capabilities. We can help develop an action-oriented EPM road map tailored to your business needs and support you through the implementation of your EPM program to realize the targeted benefits. Revenue Recognition Services KPMG helps organizations manage the implementation and risks associated with the new revenue standard issued jointly by the Financial Accounting Standards Board (FASB) and International Accounting Standards Board in May of KPMG s approach to implementing the new revenue standard considers the impact to the entire organization, not just accounting and financial reporting. Our capabilities include assessment, design, and implementation. This mitigates the risks and surprises that arise during the implementation, helping to avoid delayed compliance, restatements, and related costs. Clients gain increased confidence in the implementation process and related financial reporting. Digital Labor in the Finance Function From robotic process automation to cognitive automation, digital labor is driving finance transformation, and KPMG is ready to help clients realize the significant value these technologies offer. KPMG s holistic approach assists clients by: identifying and prioritizing finance areas for automation; developing a multifaceted strategy and road map; selecting providers and partners; creating a detailed solution architecture and user experience; building an automation solution for each use case and configuring bots; testing and deploying automation solutions that integrate with other enterprise systems; establishing a governance strategy and program; and implementing the preferred automation solution either through a pilot or completion of multiple process areas simultaneously.

5 Case Studies Global Consumer Products Company Completes Integrated Finance Transformation Affected by numerous growth challenges, this company needed to create efficiencies in the back office. Finance leadership prioritized migrating to a next -in-class operating model. A cost analysis indicated that the company s cost of finance was 1.7 percent of revenue compared to a median benchmark of 0.9 percent of revenue for similar companies. Activities KPMG addressed the client s cost and effectiveness challenges by developing a leading next -in-class operating model blueprint enabling Global Finance to: Build an organization that is as global as possible while supporting local efforts Provide services through an efficient structure Standardize and simplify global end-to-end processes with an integrated information technology framework Connect and collaborate with commercial teams to drive faster and smarter decisions Generate funds to support growth. During Phase 1, KPMG conducted a global benchmarking analysis, performed a current state assessment, defined a future state operating model, and built a road map and business case. Phase 2 was focused on developing global to-be designs for all of Finance, designing the future state finance organization, supporting multiple technology initiatives, defining migration/ knowledge transfer approaches, planning migrations, performing location analysis/site selection, defining service delivery enablers, establishing a PMO, developing global communications/training, and helping ensure appropriate change management. Outcomes The integrated finance transformation reduced the cost of finance from 1.7 percent to 1.3 percent a steady-state savings of $58MM with additional savings identified at $18.1MM. Aside from financial results, the company gained global work flow efficiencies, more effective internal controls, enhanced business partnering, and deeper levels of expertise and organizational capability. It is a smarter organization that is doing more for the business with reduced costs. Broadband and Telecommunications Company Transitions to a Consolidated Service Delivery Model After various mergers and acquisitions, the company had a decentralized finance structure burdened with redundancies in work functions, multiple versions of the truth, and disparate systems. In the hopes of achieving an integrated finance organization, the company wanted to consolidate its hundreds of scattered locations and focus on providing meaningful insights to help leaders make better decisions. The company had to transition thousands of employees to the future-state delivery model while at the same time maintaining its current day-to-day operations. Activities KPMG and the client formed a team to design and implement the future-state delivery model while mitigating potential risks. This team performed a high-level breakdown of its operations to determine the future location for the company s various finance activities; this included identifying transactional functions that could be moved to a shared services model, as well as other finance operations functions that would gain synergies by co-locating. The KPMG-client team developed a transition approach from current state to future state that involved a series of transition waves managed by a robust program governance structure. The team also developed an approach to capturing, storing, and managing knowledge that could be used to replicate the approach from one transition wave to the next. Outcomes The KPMG-client team streamlined the client s finance model by centralizing resources into fewer locations, realizing a 60 percent consolidation in finance locations. The team had a well-governed approach that allowed the client to relocate thousands of employees. The new service delivery model allowed the client to achieve: nine-figure cost savings from operational improvements an increase in talent development improved analytics to support decision-making KPMG s financial management practice 5

6 KPMG s FM practice employs almost 4,000 FM professionals across the globe. FM North America 1,360 FM Latin America 240

7 Since January 2011, KPMG has made more advisory acquisitions than any other Big 4 firm. The strong growth of our global FM practice has been achieved both organically and inorganically, as we continue to invest in training people, developing specialist teams, and acquiring and/or aligning ourselves with strong business partners. FM Whole of Europe 1,560 FM Africa & Middle East 280 FM Asia Pacific 560 KPMG s financial management practice 7

8 KPMG s Point of View and Contact Information To learn more about KPMG s Financial Management practice, please visit kpmg.com/us/finance. Discover CFO/Real Insights, designed to help improve business performance across the enterprise and in your finance organization. This program features powerful data, analysis, and opinions from the minds of KPMG. To subscribe to CFO/Real Insights, please visit kpmg.com/us/cfosubscribe. John E. Mulhall Financial Management Service Network Lead jmulhall@kpmg.com kpmg.com/socialmedia Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. affiliated with KPMG International Cooperative ( KPMG International ), a Swiss entity. All rights reserved. The KPMG name, and logo are registered trademarks or trademarks of KPMG International. NDPPS