Agile Finance and the Changing Role of the CFO

Transcription

1 Agile Finance and the Changing Role of the CFO

2 In today s world, constant change and disruption is the new normal and adaptation is a must to succeed Big data and less insights Volatile markets Complex processes and disintegrated systems Diverse and distributed workforce Talent shortage and retaining New normal Disruptive technologies and changing business models Increasing mergers and acquisitions Increasing risk and compliance requirements Innovation and rapid development in technology space Increasing globalisation Page 2

3 The new normal is difficult to manage and stakeholders expect more from CFO as a business partner Investors and analysts Predictive and sustainable profitable growth Regulators Timely and effective compliance with changing regulations Board Lead maximise shareholder value and minimise enterprise risks Business Leaders Influence strategy and business decisions & provide real time insights Operation Leaders Agile planning and budgeting cycle with predictive scenario base analytics Customers and Vendors Ease to do business at lower transaction cost Employees Better and inclusive environment that enables personal growth Page 3

4 The focus for CFOs is moving towards direction setting and away from the traditional book keeping focus Business Skills Commentator Business Partner Finance as commentator, explaining the business story in numbers and variances Business recognises the value of decision support available within finance and requests support & comment as required Acts as business advisor and integrator of the total business view Provides insight and robust challenge and supports commercial decisions Takes ownership for and actively manages the financial drivers of value New focus Process Delivery Score Keeper Custodian Direction Setting Role focused on book keeping Efforts expended on transaction processing and providing month end result Inward looking culture Role focused on leading class governance Works with the business to monitor compliance and manage effective controls Custodian of assets and value protection Conscience of the business Old focus Accounting Skills Page 4

5 Expectations of the CFO role continue to evolve in response to disruptions in the market Page 5

6 The traditional finance function is constrained by its current impediments to meet stakeholders needs Typical impediments and contraints People Process and controls Technology Talent and skills shortage in most countries Finance organisation designed to serve local businesses Silo structure with little integration across businesses Global workforce with limited business understanding Complex and manual processes Ineffective and misaligned controls Rigid reporting with little flexibility Long lead time to deploy new controls Limited use of benchmarks Multiple ERPs and legacy applications Non-integrated architecture with many interfaces Rigid data models Mostly structured data intake Long lag time and data gaps Lead to Sub-optimised Finance organisation Inefficient processes More data but less insights Non inclusive environment High level of errors Manual interventions Low moral and productivity Manual controls Higher IT cost Higher attrition Less insight Data latency Lost business opportunities and higher cost of Finance Page 6

7 Starting the transition to Agile Finance isn t difficult and the benefits are real, lasting and impactful Current Ineffective and expensive acquisition integration Future Effective and timely integration Current Mostly detective controls, ineffective management of business risks Future Automated and preventive controls, Proactive business risk management Delayed and historical information, mostly internal Real-time insights, internal and external Siloes of finance teams Global and inclusive teams Rigid and long planning cycle Capability to simulate & react to changing environment Inflexible and costly IT infrastructure Scalable and innovative IT Complex and non standard processes, obstruct innovation Simplified processes, enable innovation Rigid data model and static user interface Flexible data model and intuitive user interface Transitioning Enabled by big bang large transformation program Frequent and mid size improvements programs Page 7

8 Four Macro Trends driving change and a need for Agile Finance Disruption continues to be evident in Finance Technology, allowing finance to: Put more information in more places (Mobility) Disaggregate data and gain insight (Analytics) Transform business processes robotics and simplified finance Allow the end user to have a focused and rich experience Mobility Analytics (incl. HANA) Robotics User Experience (i.e., UX ) Drives business Drives business transactions transactions or or information information closer closer to the to the end end user user Provides additional Provides additional productivity productivity by by capturing capturing the the moment moment New to New capabilities to move move through through vast vast amounts amounts of of information information and drive new and insights drive Disaggregation new insights allows more tailored views of Disaggregation allows information more tailored views of information Real opportunity to Use automated either: processes to deal with Shorten non value the critical add tasks path of key business processes Valuable resources freed Scale up, volume deal only with Do exceptions something you could not do before Provide a focused user user experience experience that: that: Cuts out the unnecessary information Is role-specific Makes process execution easy Page 8

9 SAP S/4 Finance can enhance Finance s current capabilities to become Agile Finance SAP has released a new version of its Finance suite (S/4 HANA Finance) which is the most significant redesign since 1992 release of R3 SAP has completely re-architected the inner workings and database structure of the core finance modules (FI / CO / AR / AP / etc.) on a simpler, faster, more integrated platform These changes will required Finance organizations on SAP to completely rethink their data structures, processes, reporting, consolidations, budgeting and global technology footprint Data Simplification SAP S/4 HANA Finance Process Flexibility & Innovation Page 9

10 Agile Finance will require additional capabilities across all elements of Finance operating model People & Organization Global,diversified and innovative workface Optimized delivery model balancing insourcing, cosourcing, offshoring and outsourcing Reduced cost structure Process, Policies & Controls Common and simplified processes across enterprise Adoption of robotics and automated controls Accelerated close with no latency Right timing decision making through predictive analytics Process, Policies & Controls People & Organization Data & Technology Data & Technology Real-time, anytime, everywhere information Universal data model supporting both OLAP and OTAP Highest level of granularity with built-in flexibility for rollup Non-disruptive migration (integration & separation) Innovation platform for linkage of structured and unstructured data Assets & Infrastructure Simplified and scalable IT infrastructure with lower TCO Balanced portfolio of on premise, hybrid and cloud based solutions Enterprise mobility with Integrated collaboration and innovation IT Infrastructure Performance Management Performance Management Real time reporting and analytics with insights Forward looking planning with scenario and simulation Page 10 Agile Finance and S/4 HANA Finance

11 S/4 Finance key implication to Finance Data Design and Level of Detail Thick ledger possible - Unconstrained thinking around level of detail in the ledger Single version of truth across enterprise for internal and external reporting Process Redesign Reduced reconciliations and reporting outside of SAP Integration of non-sap / legacy systems on real time basis, not only at month end New options to leverage shared services across different instances / ERPs Reporting / Analytics Consolidations and reporting capability in native SAP (better controls, reporting, etc.) Potential to reduce reliance on BW and month-end reporting systems, with much more reporting done natively and near real time. Significantly more reporting capability in real time or near real-time Roadmap to Common Systems, Processes In the past, companies with disparate instances of SAP only had one option to get common, bigbang global reimplementation. Central Finance is now another option to get real time finance data to a common enterprise and master data model Synchronization with IT strategy / timing It is critically important for Finance to be in lock-step with IT on the migration timing/path to S4/HANA as there is significant pre-work and on-time opportunities for finance to leverage. User Interface and new HANA platform A new interface, Fiori has enhanced the User experience Search functionality helps users get to what he needs quickly HANA offers a platform for innovation with significantly enhanced integration, data base and visualization capabilities Page 11

12 With new capabilities, S/4 Finance can help with five key challenges of Finance organization 1 Reduce cost of Finance Provide better business insights with improved reporting and analytics Enable effective and quicker acquisition integration and divestitures Improve risk management and compliance Accelerate deployment of common processes and shared services Agility Page 12

13 NZ Department of Corrections The Department of Corrections is responsible for the management of New Zealand s corrections system We do this by: Making sure prisoners and community-based offenders comply with the sentences and orders imposed by the courts and the New Zealand Parole Board Providing offenders with rehabilitation programmes, education and job training that will turn their lives around and break the cycle of reoffending Growing muster levels prison population doubled between 1996 and 2016 Increased Government Expectations - Strategic Financial Management Future focused Value for money Performance culture - Know our numbers Page 13

14 Finance Challenges Disparate and distributed data sources creating islands of Information no central credible source of the truth Very long timeframes and costly highly manual intensive processes for standard financial processes such as Annual Reporting, Monthly reporting and Executive Analytics Planning and forecasting inconsistent across the organisation, disparate assumptions and data Inability to quickly run scenario s and modelling for what if and to quickly respond the ELT requests Constrained and manual reporting Inability to respond quickly to changes Lack of traceability between initiatives, finance and outcomes Page 14

15 The Journey What was needed was a way for us to create a single central place where we could store one version of all our financial and non financial information We then needed a way to keep this relevant and ensure the integrity of the information in real time We then needed a way for us to access that information in a structured way for our regular financial processes and the same application also had to be able to give us an unstructured tool kit to enable us to respond to ad hoc queries, to perform analysis without boundaries all without compromising the underlying integrity of the data. Most importantly this had to be owned, managed and run by Finance supported by IT but we had to be masters of our own destiny. To be able to create whatever reports we wanted when we wanted, to ask questions and answer them ourselves immediately and to be able to analyse our information in an unstructured way and search for insights without the need for a 6 month IT project. Page 15

16 The Journey We chose SAP Business Planning and Consolidation Where are we today; We have spent a significant amount of time on the requirements and the design, this is incredibly important We have completed a detailed Proof of Concept which has enabled us to visualise the art of the possible whilst we think about our requirements. We are having detailed discussions about how we deploy such a solution, on premise, hosted, cloud etc.. We are just about to embark on the development and build phase and we are very excited about the future. Page 16

17 Key Learnings along the way The design, development and implementation of these systems is NOT an IT project. Finance MUST own and take responsibility for the system Start with a solid business case and ROI mapping all benefits, tangible and intangible Finance with Attitude! Phased approach You don t know what you don t know GET ANGRY Page 17