<strong>Finance</strong> fitnessEMERGINGSTRONGERTHE CHALLENGE OF making efficienciesis only just beginning to bite. Severalcommentators have said that the easycuts have been made, the fat taken out;now the real challenge starts. The financefunction has been subject to cuts, too. Soin this climate how do we make sure thatfinance is not only at the heart ofdecision making, but leads the change byoffering solutions to take organisationsforward while ensuring that the financefunction itself is fit for the future?The <strong>Finance</strong> TransformationProgramme is raising the bar acrosscentral government. It has to. The recentreport by the Public Accounts Committeehas highlighted that previous efficiencyprogrammes have often added cost, notyielded savings. The total costs forimplementing shared services has been£1.4bn yet the savings achieved (up tothe end of 2010-11) were only £159m.Given the scale of the challenge goingforward this is not an option. Costincreases in one area mean real cutselsewhere. <strong>This</strong> is not a great advert forachieving efficiencies – if we have failedto deliver savings so far, how will wemanage in the future?WHAT MUST CHANGE?CIPFA has just launched a discussiondocument, ‘Emerging Stronger: Shapingthe finance function to meet new andfuture challenges’, which argues thattop-performing organisations must havetop-performing finance functions. But inreality few organisations, either in theprivate or public sector, have been able toachieve this.The discussion document is not a ‘howto’ list. First, it asks finance leaders whatcontribution their finance function makesto delivering the organisation’s objectivesefficiently and effectively. Second, it asksthem to identify the key challenges indeveloping a finance function that isoutward looking and fit for the future,whilst invariably being smaller.The finance function has four keyroles: innovator; business partner;steward; and provider/commissioner.Manj Kalar outlines proposals in a CIPFAdiscussion document aimed at makingthe finance function fit for the future• Manj Kalar is TechnicalManager – Central<strong>Government</strong> & FinancialManagement, CIPFAInnovator: Public service reform isfundamentally assessing what servicesshould be provided and whether theseshould be chargeable either wholly or inpart. The finance community hasknowledge, expertise and a uniqueperspective that understanding thenumbers provides. As an innovator,finance can use its analytical insights todrive the development of future policy.For example, the finance professional canassess the risks and benefits of newapproaches to financing services (such aspayment by results). <strong>This</strong> will informorganisational strategy and thedevelopment of business models.Business partner: Business partnering isseen as the norm in local government –inevitably, as authorities have beenmaking cuts to services long beforeausterity became the centrepiece ofcentral government policy.The business partner supports soundfinancial decision making and promotesgood financial management, ensuringresources stretch as far as possible.Studies have shown how businesspartners offer value added activity byproviding better business intelligence.How? The business partner combinestheir specialised professional expertisewith their unique position at the heart ofthe organisation. <strong>This</strong> is becoming morein vogue in central government – financeis breaking out of corporate services andbecoming part of the business. However,mere rebranding as a business partner isnot enough. Different skills are requiredto effectively operate in this arena – softskills such as communication andinfluencing to build relationships withinternal and external stakeholders, notthe qualities associated with thestereotypical accountant’s personality.Steward: In its stewardship role, financeis the guardian of taxpayers’ money,making sure it is spent on what it shouldbe and how it should be. The steward’sfocus is ensuring that risks are managedeffectively and that effective controls arein place. But we must appreciate thateven though it is counter cultural for anaccountant, especially a centralgovernment accountant, we cannoteliminate risks. It is only by acceptingand managing risks that we can lead theattack on costs locked up in the system.Provider/commissioner: <strong>This</strong> is thebread-and-butter territory of the financefunction – financial operations such aspayments processing. These are goodareas to start the attack on costs throughprocess standardisation, automation andeven outsourcing if this is the cheapestoption. It is important for finance to leadby example in showcasing how it cansupport the organisation in makingefficiencies. Moving forward, theprovider/commissioner will:• Simplify and eliminate processes toreduce costs (lean thinking).• Reduce wasted effort throughdiversionary activity (for example, byproviding training so that work doesn’tneed to be done twice) or discretionaryactivity (for example, by questioning thevalue of some activities and challengingthe “we’ve-always-done-it-this-way”culture).• Assess the procurement strategy.• Get better at defining shared services(especially the adoption of vanillaapplications – retaining the old processesrequires customisation, preventseconomies of scale being achieved andincreases costs).CONCLUSIONThrough the four core roles, the financefunction now can showcase theimportance of finance in taking theorganisation forward. More than that, ithas a moral responsibility to do so, sothat finance emerges stronger postausterity.10 theGASETTEspring 2012
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