Finance Business Partnering: The Evolving Role of Finance & Accounting

Transcription

1 Finance Business Partnering: The Evolving Role of Finance & Accounting 2 nd Croatian ICV Conference 5 November 2014 Raef Lawson, PhD, CFA, CMA, CPA Vice President, Research & Policy and Professor-in-Residence IMA (Institute of Management Accountants)

2 Agenda About IMA Evolving Role of The Finance Function Challenges to Delivering Effective Financial Insight Enabling Better Finance Business Partnering 5 Q & A 2

3 About IMA IMA (Institute of Management Accountants), founded in 1919, is a leading professional association of accountants and financial professionals in business. A network of members and over 300 chapters worldwide. Global office in US; regional offices in China, Europe and the Middle East. We are committed to helping strengthen members financial management skills, enhancing organizations performance, and growing members career potential.

4 Evolving Role of the Finance Function In this presentation I examine: 1. how the role of the finance function is changing, 2. common challenges finance functions face in delivering effective financial insight, and 3. ways the finance/controller function can improve its efforts to become a business partner.

5 Background IMA has conducted numerous studies with various research partners over the past year on the evolving role of the finance function, including: The Evolving Role of the Controller The Changing Role of the CFO Finance Leaders Survey Report: June 2013 Drivers of Change The Entrepreneurial Finance Function?

6 Evolving Role of the Finance Function

7 Finance Business Partnering Finance business partnering, and the business insight agenda are not new phenomena. Companies had established commercial finance operations before the term finance business partnering was established. The finance function has always had a role to play in providing information insights to the enterprise to support better business decision making.

8 Evolving Role of the Finance Function The role of the finance professional is evolving. Senior financial leaders are increasingly called upon to apply their analytical and business skills to more strategically oriented organizational issues, increasing the value that they provide to their organizations. They are increasingly forming business partner relationships with operational areas to provide and use both financial and nonfinancial data to make better business decisions.

9 How Finance Leaders Spend their Time Business Financing 11% Strategy Development 15% Finance Operations 19% Risk Management 12% Statutory Reporting 13% Business Analysis 30% Source: ACCA-IMA Finance leaders survey, Sep 2013

10 Current Priorities of Senior Finance Leaders Strategy Business insight Cost reduction Forecasting Risk Planning Controls Working capital Talent Regulation Funding Transaction efficiency Investments for growth Corporate finance Tax Investor relations Corporate social responsibility 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Source: IMA-ACCA, Finance leaders survey report: June 2013

11 CFO Taking on More Responsibility Source: IMA, Evolving Role of the Controller, 2014

12 Senior Finance Professionals Taking on more Strategic Responsibility More directly involved in strategic decision making and analysis in addition to day-to-day finance execution and other responsibilities 52.9% while direct role in day-to-day finance execution has been reduced 26.9% The role has changed very little or not at all. 11.8% The role has become less strategic and more about day-to-day finance execution. 8.5% Source: IMA, Evolving Role of the Controller, 2014

13 Evolving Role of the Controller Survey conduct in Sept Controller, financial controller, comptroller 81.7% Finance or accounting manager 7.0% Finance director 5.4% CFO 0.4% COO 0.4% Other 5.2% Source: IMA, Evolving Role of the Controller, 2014

14 Controllers - Applying Broader Skills Source: IMA, Evolving Role of the Controller, 2014

15 Controllers Stronger Relationships with Other Departments Source: IMA, Evolving Role of the Controller, 2014

16 Challenges to Delivering Effective Financial Insight

17 Perception that Finance is not Appreciated by the Business While 80% of respondents believe that the finance function adds a great deal of value to the organization, only 22% believe that those outside of finance saw their role as adding a great deal of value. Source: IMA, Evolving Role of the Controller, 2014

18 Barriers to Finance Business Partnering

19 Finance Function Challenges Too many finance priorities Poor finance IT Poor internal relationships Over-demands for mgmt info Cost pressure on finance Business complexity Non standardised finance processes Regulatory demands Recruitment challenges Finance transformation challenges Retention challenges Corporate governance obligations Demands from external investors 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Source: IMA-ACCA, Finance leaders survey report: June 2013

20 Challenge Providing Increased Information/Data Access Source: IMA, Evolving Role of the Controller, 2014

21 The Skills Gap Numerous studies of CFOs indicate there is a skills gap they need to raise the competency of their teams. This gap exists at all levels. Many university accounting & finance curricula provide a good theoretical grounding, but do not develop in enough depth the skills most needed on the job. 21

22 Priorities versus Effectiveness 4,4 4,2 4 3,8 3,6 3,4 3,2 3 Importance (on scale of 1 to 5) Effectiveness 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Source: IMA-ACCA, Finance leaders survey report: June

23 Enabling Better Business Partnering

24 Enabling Better Business Partnering In the future, technological innovation will be at the heart of creating competitive advantage. How a business uses the data at its disposal to make more effective decisions will be the make or break of corporate success. In an increasingly information-centric environment, enterprises will create competitive advantage through better decision making, based on data insights. This presents an extraordinary opportunity for the CFO/Controller function to extend its internal influence and leadership across the enterprise to support value creation.

25 Enabling Better Business Partnering Many practices in finance business partnering are failing to keep pace with the rapidly changing environment. There are three impediments: 1. leadership and strategic alignment of these practices are falling short; 2. the finance department is ineffectively tooled up with poor technology; and 3. there remains a shortfall in capability and talent equipped to deal with this changing environment.

26 Enabling Better Business Partnering Source: IMA-ACCA, Finance insight: challenges and opportunities, 2014

27 Create the Mandate The evolving business climate presents an opportunity for the finance function to help the business create and sustain value. More than ever before, finance can move in to provide the enterprise with great decision-support services that will make a real difference to business performance. First, however, it has to secure that mandate and make it sustainable. The perception of the finance organization in many enterprises needs to shift.

28 Create the Mandate There are three critical elements to gaining and securing the mandate to provide the enterprise with great decisionsupport services: 1. Create the right culture in finance 2. Secure commitment 3. Know your proof points

29 Fix the Information The speed of decision making is increasing, and the future will be less predictable and more nuanced than before. In a digital business environment the effective use of enterprise data will be central to creating and sustaining competitive advantage. Yet the data and technology landscape for the finance function remains typically complex and fragmented.

30 Fix the Information With finite resources, finance organization priorities must be to: 4. Measure what matters 5. Simplify the finance technology landscape 6. Sort the data 7. Create effective structures

31 Deploy the Talent The skills, capabilities and behaviors the finance function will differentiate the finance winners from the losers. The changing environment requires quite different capabilities and, critically, a different finance mindset. Ideas, innovation and customer centricity will be the attributes of the future successful enterprise.

32 Deploy the Talent The changing environment requires quite different capabilities and, critically, a different finance mindset. Finance organizations must: 8. Plan for the capabilities that matter 9. Change the finance mindset

33 Most valued skills for business partnering Communication skills Financial and Business Analysis skills Business understanding skills Relationship skills Management Accounting Skills Influencing skills Leadership skills Industry knowledge skills Corporate Reporting Skills Change management skills Negotiation skills Challenge skills Technology skills Project management skills 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% Source: IMA Evolving Role of the Controller study

34 IMA s CMA Program: Helping to Address the Competency Gap The CMA (Certified Management Accountant) is a rigorous, highly respected credential for accountants and financial professionals in business. Recognizes expertise in the critical skills needed to be a trusted business advisor, such as financial planning and analysis, risk management, and more. The CMA is a global certification, not a local license. Over 35,000 certifications issued worldwide. 34

35 Discussion

36 Please feel free to contact me: 10 Paragon Drive, Suite 1 Montvale, New Jersey U.S.A. (800) (201)