The Changing Role of the Finance Organization in a Multi-Polar World

More documents

Recommendations

Info

Figure 5. How finance leadership spends its time Managing finance and accounting operations Managing the performance of the overall enterprise Planning and developing enterprise strategy Addressing workforce effectiveness Interfacing with the Board of Directors/ investor relations Overseeing enterprise risk management Other 1.7% 1.3% 11.0% 11.5% 9.5% 10.6% 9.2% 11.2% 15.6% Today Goal operations and more time driving toward value creation (Figure 5). Part of the problem confronting finance executives today is that they are forced into this operational role due to the fact that in most companies participating in our survey, key finance capabilities are not sufficiently advanced to allow the finance organization to operate at the high level necessary to free up the executive’s time for essential strategic planning. Based on our extensive research and client work, Accenture has identified 16 capabilities that are core to the performance of today’s finance organization. These capabilities fall under five broad categories: • Finance Organization Management: This includes finance strategy, the structure of the finance organization, workforce management, and the ability of the finance organization to support a value-centered corporate culture in which the creation of shareholder value 21.7% 17.9% 21.4% 21.9% 16 | Accenture Management Consulting and Integrated Markets 34.0% is widely understood to be the critical driver behind all enterprise activities. • Enterprise Performance Management: EPM encompasses all the capabilities required to manage and optimize business performance across a single enterprise or business network. These capabilities include strategic planning, goal setting, budgeting, planning, forecasting, and performance management and reporting. • Finance and Accounting Operations: These activities comprise the traditional finance operations of accounting, reporting, transaction processing and the establishment of internal financial controls. • Corporate Finance: This includes capital management (how capital resources are deployed, preserved and grown by managing the income statement and balance sheet in an integrated fashion), tax and treasury management and investor relations. • Enterprise Risk Management: ERM is a top-down process that includes the identification of risks, and their measurement and assessment, the management and monitoring of all possible factors (such as market trends, credit fluctuations, operating variances) that can impact business objectives. We asked our survey participants to indicate how advanced their finance organization was in each of the 16 capabilities by selecting the most appropriate rating on a scale of 1 through 5 (Figure 6). The results show that for nearly all of the finance capabilities, only approximately one-third of the participating companies could be described as advanced (a rating of 4 or 5) in these areas (Figure 7). In other words, two-thirds of the participating companies are just average or below across the finance capabilities. This lack of advanced capabilities in most key finance areas is making it difficult for many finance operations, and their leaders, to perform at the highest levels and thereby maximize their contributions to the overall performance of the enterprise.
Figure 6. Mastery scale Finance Organization Management 1 2 3 4 5 Finance organization strategy and structure Reactive, informative Proactive, aligned with strategy Workforce management Basic, general skills Deep and specialized skills Value-centered culture orientation Enterprise Performance Management Finance governance role Intimate business advisor Strategy development Less focus on value drivers Deep understanding of value drivers Target setting No link to strategy, no distinction between high Linked to strategy, full portfolio analyzed for high return and low return assets returns Budgeting and forecasting Stand alone; time intensive Integrated; accurate; forward looking Performance management and Little insight, multiple systems, simple, adhoc Insight driven; current and future value reporting Finance and Accounting Operations analysis management, dynamic, scenario based analysis Transaction processing Manual processing Outsourced/shared services, workflow management and self-service capabilities, standard processes Financial/Regulatory reporting Non-standardized; 15+ days to close Automated, standardized Internal controls Corporate Finance Poor control, high risk Optimized, low risk Capital planning and management No formal tracking, focus on profit and loss Enterprise-wide capital and investment planning, focus on value drivers Treasury Staff function Strategic focus Tax Tax compliance oriented Intimate business advisor Investor relations No systemized processes, separate, rudimentary Reliable data, based on transparent and self-service Enterprise Risk Management financial reporting reporting Financial risk management No clear risk management goals; limited use of tools Optimized risk throughout company Business risk and operational risk Poor understanding; separate risk management Integrated, enterprise-wide risk management system linked with strategy and operations Figure 7. Percentage with advanced capabilities for each finance capability Transaction processing Workforce management Financial risk management Target setting Business and operational risk management Strategy development Capital planning and management Performance management and reporting 35% Value-centered culture orientation 30% Budgeting and forecasting 31% Finance organization strategy and structure 35% 35% Financial/regulatory reporting 36% Treasury 40% Tax 43% 43% Internal controls 46% Investor relations 46% 23% 24% 25% 26% 26% 27% 30% 30% 30% 31% 36% 40% 46% 46% Accenture High Performance Finance Study 2008 | 17
Page 1: Management Consulting and Integrate
Page 4 and 5: Foreword By Dan London For companie
Page 6 and 7: The most intriguing characteristic
Page 8 and 9: Key Findings As the centers of econ
Page 10 and 11: 3 COLUMNS WIDE Figure 1. Opportunit
Page 12 and 13: Shared services Most often, the bus
Page 14 and 15: teaming with a capable third-party
Page 18 and 19: Figure 8. Critical factors to achie
Page 20 and 21: Figure 10. Greatest challenges for
Page 22 and 23: Finance strategy is about drawing t
Page 24 and 25: the company’s CFO called it “ex
Page 26 and 27: Leading companies view finance tale
Page 28 and 29: Figure 13. Companies with advanced
Page 30 and 31: decisions going forward. Also, for
Page 32 and 33: Figure 16: Finance masters were mor
Page 34 and 35: Figure 18. Masters are more likely
Page 36 and 37: Figure 20. Masters are more likely
Page 38 and 39: Achieving high performance is diffi
Page 40 and 41: Industry of Participating Organizat
Page 42: While one can only make educated gu

The Changing Role of the Finance Organization in a Multi-Polar World

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?