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