Cima transforming the role of finance into a strategic business partner irelantam

A

Speaker: Irelan Tam, DBA,FCMA,CGMA Date: Nov 5th, 2014

Finance Transformation The Role of Finance becomes a Value-Adding Business Partner

1 ©CIMA

Transforming the role of finance into a strategic business partner

• The role of finance from “Steward and

Controller” towards “Business Partner” • Dual focus on driving costing efficiency towards

supporting decision making and value creation • Embracing broad ranges of ‘business

competency’ in business planning and analytics towards long term business sustainability

• Implementing a journey to Value Creation • Explore how business analytics driving growth

strategies and profitability • How about Business Partnering in SME?

“THE SHIFT FROM COST EFFICIENCIES TO VALUE CREATION DOES DEMAND A BROADENING OF SKILLS FOR FINANCE PEOPLE… DOMINIC P MOORHEAD, PRESIDENT EUROPEAN OPERATIONS, CARIS LIFE SCIENCES 2011

The role of Finance evolves from focusing on cost and process efficiencies and the catalyst in improving business performances to becoming the business partners to create further value.

©CIMA 3

©CIMA 4

Finance Transformation -The Changing Role of Finance

CIMA(2007) Improving decision making in organizations – the opportunity to transform finance

Finance Transformation -Drivers of Change

• Environmental Changes • Technology Changes • New Regulations • Increased Competition • Social Pressure

5 ©CIMA

50% Business Analytics and 20% Decision Support 20% Management Reporting 10% 20% Transaction Accounting 50%

10% Management Control 20% IBM 2010 CFO study

*Best Benchmark SME Study

CIMA2011 Finance Transformation SME study

What are the Challenges for Business Partnering?

7 ©CIMA

Challenges for Business Partners

8 ©CIMA

We want our finance staff not just understand the numbers, but also know what it takes to grow and manage the business.

Dan Crunb, CFO, Kansas City Chiefs

We need people who can strategically influence the business segments they support. They need honed communication skills so they can provide insights in a concise and impactful manner to non-finance people…..

Gary Rourke, VP Finance, AstraZeneca

Finance professionals are often viewed as historians…. but we are working towards a more value added approach: towards a trust-based relationship getting magnified and strengthened as we move up the business cycle….

Anne Lloyd, Executive VP, CFO and Treasure

Martin Marietta Materials

©CIMA 9

Addressing the Skills Gaps

CIMA(2009) Improving decision making in organizations – the opportunity to reinvent finance business partners,

Finance Transformation towards Value Creation

• Understand the motive for change in business organization

• Dual focus – from efficiency initiatives to performance management and business analytics to support decision making for planning and growth strategies

• Pursue finance transformation towards value creation on driving growth and profitability

10 ©CIMA

How Business Partnering Support Business

11 ©CIMA CGMA(2012), From Ledgers to Leadership- a journey through the finance function

Journey to Value Creation

12 ©CIMA

• Automate ,standardize and streamline processes • Analyze information in identifying risks and

opportunities • Use fact-based data to support decisions • Emphasize the theme of getting positive outcomes

towards achieving company objectives

MAXIMISED Efficiency of

business operation

1 DRIVE

Analytics

IMPROVE Decision Making

ENABLE

Value Creation

2 3 4

Business Analytics

13 ©CIMA

Focus on Analytics

14 ©CIMA

• Metric and Dashboard reporting

• Historical Trending • Rolling Average Forecasting • Scenario Planning • Predictive modelling

Focus on driving Growth Strategies and Profitability

15 ©CIMA

Supply Chain metrics • LIFR, OFR, discounts

% and Price % Promotion effectiveness Channel effectiveness

• Key growth platforms • Products and customers

profitability • Market growth /Market Shares

How about Business Partnering in SMEs?

©CIMA 16

50% Business Analytics and 20% Decision Support 20% Management Reporting 10% 20% Transaction Accounting 50%

10% Management Control 20% IBM 2010 CFO study

*Best Benchmark SME Study

CIMA2011 Finance Transformation SME study

How well is the SME Finance function supporting decision making and infusing

greater value for business?

18 ©CIMA

What are the challenges?

19 ©CIMA

What are key priorities for SME?

20 ©CIMA

Business Partnering in SME

21 ©CIMA

CGMA(2012) , The Inside Track; Partnering for value

Role of Management Accountants

22 ©CIMA

CIMA(2014) Global Management Accounting Principles Consultation Paper

Value Creation

23 ©CIMA

Three Major Principles: Data Analytics to create tactical plan for execution Scenario Analysis in

identifying risks and values of opportunities

Engagement with stakeholders to drive better

decisions about strategy execution at all levels

CIMA(2014) Global Management Accounting Principles Consultation Paper

“HOWEVER, BUSINESS PARTNERING ROLES PUT THESE VALUES UNDER STRESS, WHICH IS WHY THESE ROLES REQUIRE MATURITY, STRENGTH OF CHARACTER AND SKILL IN DEALING WITH BUSINESS PARTNERS. DOMINIC P MOORHEAD, PRESIDENT EUROPEAN OPERATIONS, CARIS LIFE SCIENCES 2011

The role of Finance evolves from focusing on cost and process efficiencies and the catalyst in improving business performances to becoming the business partners to create further value.

©CIMA 24 Dominic P Moorhead, President European Operations, Caris Life Sciences – CIMA’s ‘From ledgers to leadership’ report

As a Management Accountant, we need to understand the business

drivers, strive further towards the development and implementation of the partnering role with increased focus on

management efficiency and value creation.

25 ©CIMA

THANK YOU

©CIMA 26