Finance business partnering Making the right move - Leading business advisors
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Finance
business
partnering
Making the
right move
Leading business advisors
Contents
Snapshot of key findings 5
The role of the CFO is shifting 7
Getting started requires a solid approach 10
You want to do it right, but how do you ensure success? 11
• Define value opportunities 12
• Prioritise and spend time on value-adding activities 13
• Build an information and analytics platform 14
• Develop, attract and retain the right capabilities 16
• Ensure business alignment and capacity 18
Contacts 20
About the finance business
partnering study.
In 2014, Deloitte launched the finance business part
nering study inviting finance leadership from top Danish
and multinational companies to share their views on
finance business partnering.
Snapshot of key findings
Finance business partnering is still hot on the CFO agenda and compared to common beliefs, business wants finance to step
up and act as a true business partner and hereby providing the opportunity for the CFO’s to impact the business agenda.
The business wants finance to step up
95% do not experience lack of buy-in from the business as the #1 barrier.
But, 1 in 4 is unclear about the value that business partnering could provide.
The majority of businesses surveyed, wait for finance to make a move, but many finance organisa-
tions fail to seize the opportunity, because they do not actively involve the business in how and
where finance can add value.
Finance wants to step out of the shadows
91% seek to increase the level of business partnering over the next three years.
2 in 3 spend less than 30% of their time partnering with the business. To succeed, finance needs
to reprioritise and make a serious effort to put business partnering on the agenda.
System barriers prevent success
62% of the companies identify inadequate finance systems as a barrier to effective business
partnering.
If finance cannot get the basics right, they lose credibility as a business partner, so be sure to
prioritise accurate and reliable data.
Moreover, the right tools and systems can enable insight and transparency critical to the success of
a business partner. However, be careful not to put off business partnering initiatives until systems
are perfect (they will never be). Business partnering is mainly about people, relationships and com-
petences.
Finance is lacking the talent
45% state that the biggest challenge in relation to delivering finance business partnering is that
they lack the talent to partner with the business.
Business partnering is a personality – not a job description. While the analytical toolbox needs to
be in place, the business rate capabilities, like business acumen, influencing skills and strategic thin-
king are even more important. Unfortunately, those capabilities are lacking in many finance orga-
nisations.
Not a desk top exercise
31% have no coordinated approach to business partnering – it is ad hoc driven by individuals.
Moreover, many business partners get tied up in operational activities, which limit their availability
to the business and focus on business partnering activities. Successful organisations have freed up
their business partners from the majority of operational activities by clearly aligning roles and
responsibilities throughout the finance organisation.
5
The essence of business partnering: Acting as one with the business to create the highest financial value at an acceptable level of risk throughout the organisation. Deloitte
The role of the CFO is shifting
The role of finance is chang- Making the transition from a traditional back office func-
tion to a strategic business-facing front office is not
ing. Driven by shifts in internal always an easy task and requires commitment and effort.
and external factors, finance Organisations that successfully build business capabilities
needs to be agile, lean and in finance are outperforming their piers.
ready to respond to the needs
Succeeding as business partners will impact the bottom
of the business. line, and the business leaders are turning to finance to
have them step up as true business partners.
The latest trends demonstrate that the role of the CFO is
shifting towards a focus on exploring new frontiers. Deloitte’s view is that finance now has the opportunity to
use the wealth of available data to provide insights that
The ability of finance to provide the insight needed for guide, influence and challenge decision-making in the
better decision-making is rapidly becoming a compara- business. However, this will remain difficult to achieve as
tive advantage. This is especially the case for many com- long as business partnering continues to be an ill-defined
panies trying to achieve profitable growth in difficult mar- discipline. As such, finance must clearly define the role of
kets, however, in many organisations finance does not the business partner, the capabilities required and the
deliver the insight required to drive better performance. performance expectations to take advantage of this op-
portunity.
The increasing demand on finance to create a high-
performing business culture has encouraged CFOs
around the world to look to and embrace finance busi-
ness partnering.
Many organisations have already started investing in and
developing finance business partnering capabilities. How-
ever, it is important for CFOs to translate such capabilities
into tangible strategic benefits that are meaningful to the
organisation.
95% of finance organisations do not experience
lack of buy-in from the business as the primary
barrier to succeeding in business partnering.
7
The modern finance function is an increasingly
important strategic partner to the business, acting
within a range of complex roles.
Figure 1: Deloitte's four faces of the CFO
Finance business partnering –
supporting strategy formulation
and execution
Catalyst Leading edge
Strategist
• Gain business alignment
Catalyst • Leveraging
Strategist financial
to successfully identify, perspective to improve
evaluate and execute Ex Threshold
ce risk awareness.
ec
an
ut performance
rm
strategies. io • Strategic
decision-making.
rfo
n
Pe
• Integrating
performance
Finance management.
function
Ef
fic
l
Steward Operator
ro
ien
nt
cy
Co
• Ensure company • D
ynamically balance
compliance with costs and service levels
financial reportingSteward
and Operator in delivering on the
control requirements. finance organisation’s
responsibilities.
CFOs must assess the level of opportunity to deliver more • Better decision-making (76%)
value to the business against the four key roles that their • Enabling strategic initiatives (60%)
finance function has to play: steward, operator, strategist • Improvement of financial performance (60%)
and catalyst. Each role is important. However, while the • Better sense of risk and more responsiveness to
operator and steward activities are important enablers of changes in the economic environment (40%).
finance business partnering, leading businesses aspire to
optimise the amount of time spent on those activities in or- Achieving tangible benefits requires concentration of part-
der to let finance focus on being effective catalysts and nering efforts within the areas of the business that can de-
strategists. liver the most value in return. Understanding particular
business areas where a finance strategist or catalyst role is
The strategist and catalyst roles deliver the most value to most useful is essential to selecting the right focus. Howev-
the business, enabling better decision-making and sup- er, this is often where finance fails. To identify how to de-
porting the delivery of business strategy and performance. ploy efforts successfully requires a strategic approach sup-
CFOs must prioritise the efforts to unlock the benefits that ported by sound knowledge of the business drivers and of
finance business partnering can deliver. The Deloitte fi- the untapped business opportunities across the organisa-
nance business partnering survey confirmed that the main tion.
benefits identified are the ones that support finance’s strat-
egist and catalyst roles, including:
8Why is business partnering becoming more Taking a strategic approach to ensure that finance business
important? partners are focused on key areas of activity will gain trust
Expectations for finance are changing, and there is a hea- and buy-in from the business. A consistent approach to de-
vy demand from the business that finance drives perfor- fining and delivering finance business partnering activities
mance with increased focus on strategic advice and busi- ensures that valuable resources are aligned to the organi-
ness insight. That provides an opportunity for CFOs to help sation’s goals. Acting together with the business in order
drive the strategic agenda of the organisation. to define those activities and goals results in shared expec-
tations of the value that finance business partners provide.
As finance is uniquely positioned by having access to all re-
levant data and analytics, they can focus their effort on the When finance executives are asked to define the
problems and opportunities that are most critical to the main barriers to delivering financial business part-
business. nering, a lack of role definition and a lack of under-
standing of value drivers are at the top of the list
Business partners assist the business with better together with limitations on talent and capabilities
decision-making by focused interventions via their insight to deliver.
into the biggest challenges/opportunities.
While competences and capabilities are critical success fac-
A refocus of efforts towards driving business and sharehol- tors, it is Deloitte’s view that they take second place to the
der value and providing the right environment to success main challenges of having a clear picture of the organisati-
fully create value is a demanding task, and organisations on’s value drivers and well-defined roles in regard to deli-
are thus focusing on implementing strategies to provide vering that value.
better conditions for business partnering. The figure below
illustrates the shift of business support requirements for fi- Figure 3: Finance influence on shareholder value
nance. While standardisation and automation result in less
Partner with the business
time spent on traditional accounting, the finance function
• Define your strategic
increases time spent on supporting the business by increa- business partner focus areas
• Create the business case
sing the information value. The shift results in an increased Value-adding reporting and
direction-setting finance
• Measure the shareholder
value from your activities
focus on providing strategic advice, business insights and Getting the basics right
• Clear visibility to your
internal customers
decision support. • Foundation for your
continued journey
• Often measured indirectly
in terms of managerial
effectiveness
• Your permission to speak
• You will free-up time!
Figure 2: The evolving role of business partnering
Business
Before
Finance
investing in finance business partnering, be sure to
partnering Analytics
Decision
support
Strategy
advice
have the foundation in place.
Finance Business
reporting insight and
and planning decision support
BI Performance
investments Management
Finance
reporting and planning
Transactional
activities ERP, SSC and Data
outsourcing Transactional Management
activities
Traditional view Emerging view
76% of the organisations identified better decision-
making as the key benefit of investing in business
partnering.
9Getting started requires a solid approach
Deloitte's finance business partnering framework
provides a structured approach that enables the
finance function to unlock their business partner
potential.
Deloitte has a proven methodology to help clients identi- Delivery on strategy
fy value drivers, define the finance business partnering The finance business partnering framework identifies
role and recognise the operational enablers required to areas through which business partners can add value.
deliver value to the business. The finance business part- Each value driver can be associated with finance business
nering framework identifies the key activities that finance partner activities that can add significant value to an or-
may deploy to deliver value and the operational enablers ganisation and help unlock opportunities.
required to deliver that value.
Enablers
It is essential to apply a consistent approach across the The underlying enablers required to effectively deliver the
business when implementing finance business partner- desired business partnering activities are identified in the
ing. This ensures that priority areas and activities are iden- diagram below. Aspects such as organisational structure,
tified, and that the financial return on any partnering in- people, data, process and technology are key to empow-
vestment is justified. ering the finance function with the tools to deliver those
value-adding activities.
Figure 4: Deloitte's finance business partnering
framework
OF STRAT
IVERY EGY
DEL
Operating Asset
margin efficiency
Revenue interven Market
growth sed tio expectations
cu
Fo
ns
VALUE Value CHAIN
creation
ge
Tru
ua
an g
t s
Information dc an Talent
o m m on l
and and
analytics capability
Business alignment
RS
FI N
AN and
LE
CE capacity B
BU NA
SI N E GE
SS PARTNERIN
31% of respondents stated that an uncoordinated
approach to business partnering represents the big-
gest challenge to achieving finance business partner-
10
ing buy-in within the organisation.You want to do it right, but how do you
ensure success?
Finance finds it challenging to deliver on the
business requirements, but most of the challenges
lie within finance.
Define value opportunities
Challenges: Understand the key value drivers and work closely
• Spends a lot of the time on getting numbers right with the business to identify and prioritise the big-
gest value opportunities.
• Backward-looking, not forward-looking
Prioritise and spend time on value-
• Inadequate skill set adding activities
Define success measures with the business based
• Fragmented system support on the identified value drivers to ensure that time
and focus are spent on the value-adding activities.
• Risk-based financial controls
Build an information and analytics platform
Equip business partners and the business with in-
Moving finance to the fore sightful information and ensure that you have a
The increasing demand on finance to create a high-per- back office function that provides the analytics
forming business culture has encouraged CFOs around platform and ensures data integrity.
the world to look into and embrace finance business part-
nering. The expectations of finance to add more value to Develop, attract and retain the right
the business are growing, and the opportunity for finance capabilities
to support business success has never been better. Define the capability and competence require-
ments for successful business partnering. Match
If the business wants finance to step up, why do so many against the current organisation and develop a
finance organisations fail to seize the opportunity and de- plan to close the competence gap.
liver according to expectations? In many cases, it is the
transition from the traditionally known finance factu- Ensure business alignment and
al-based work to the more non-factual relationship-based capacity
work and the inability to visualise how to get to the desi- Ensure that clear roles and governance are in place
red end state that prohibits them to step up. to ensure that the environment supports the busi-
ness partners’ focus on value creation. Business
To succeed as finance business partners, the enablers partnering is not a desktop exercise.
need to be in place, but what should organisations start
with - getting the systems and data platforms in place, There are significant opportunities for finance functions
recruiting finance business partners or ensuring alignment to explore when partnering with the business. By trying
with the business on the understanding of the value to manage all opportunities at once, finance will find it
drivers? hard to convince the business of the benefits that a finan-
ce business partnering environment can deliver. However,
Deloitte has identified the key drivers and the sequence to through identification of a small number of value-adding
implement to ensure sucess. opportunities, a pilot approach can be deployed to evalu-
ate the merit of investing in business partnering.
11Define value opportunities
If the strategy delivers real value to the business, it can act as a springboard for finance to take
on further business partnering activities.
It is Deloitte’s view that in order to maximise the effects, the first step to succeed is to engage
the business and in collaboration perform a value-mapping session to identify the areas in
which the finance function can contribute to value creation in the business.
Figure 5: Finance's influence on shareholder value
Shareholder value
Revenue growth Operating margin Asset efficiency Expectations
Selling,
Price Cost of goods Property, plant Receivables Company External
Volume general and Sold Income taxes Inventory
realisation and equipment and payables strengths factors
administrative
Leverage Improve Improve Improve Improve Improve Improve
Acquire new Retain and income- customer corporate/ development logistics and Improve Improve Improve receivables and managerial and Improve
grow current Strengthen income tax PP&E inventory execution
customers generating pricing interaction shared service and production service provision payables governance
customers efficiency efficiency efficiency efficiency Efficiency efficiency efficiency efficiency effectiveness capabilities
assets
Product Product Demand and Marketing IT,Telecom Logistics Accounts,
and service Cash/asset supply and and Product Income tax Real estate Finished notes Operational
and service management development and management infrastructure goods and interest Governance excellence
innovation innovation management advertising networking receivable
distribution
Work in Accounts,
Marketing Account Price Equipment notes Business Partnership
management Sales Real estate Materials Merchandising process and and interest and
and sales management and systems raw materials planning
payable collaboration
Customer
service and Human Service Program Relationship
Retention resources Production delivery delivery
support strength
Order Business Agility and
Cross-sell/ fulfillment Procurement performance
up-sell and billing management flexibility
Business Strategic
management assets
Financial
management
Value-creating opportunities By engaging the business at this stage, organisations
Business partner strategy and activities should always maximise the likelihood of getting buy-in and acceptance
take a starting point in the business strategy. of the business partner initiative.
Developing a successful partnering organisation requires Once the value opportunities have been defined, organi-
finance to be clear about its role in value creation in the sations will have a commitment from the business and
business. can better determine the kind of analytical data they
need access to and the kind of competences that are re-
Effective business partnering should therefore focus on quired to succeed. That approach will ensure a
the key drivers of value in the organisation. faster, more efficient and less expensive deployment of
business partnering and will ensure that success can be
In the process of building a business case and measuring demonstrated faster. While business partnering requires a
the value of business partnering, it is important to focus mandate to succeed on a broader scale with the busi-
on the activities and interventions that deliver the most ness, these smaller scale successes will ensure increased
value for the given resources and thus pick the low-han- credibility and buy-in on the operational business level
ging fruits. and increase the demand for business partnering ser-
vices.
12Prioritise and spend time on value-
adding activities
Deloitte's studies show that the business controllers
spend 75% of their time preparing reports, which
only 25% of the audience find useful when managing
the business.
Once the value opportunities have been defined, it is Figure 6: Example of prioritised business partner
necessary to ensure that organisations prioritise the value map
activities that create the most significant value to the
Shareholders value
business and deselect the others.
Revenue growth Operating margin
Are business partners freed up from
Volume Selling, general and administrative
operational activities?
Customer Order
Business partnering is performed whenever the request Acquire new
customers
Cash/asset
management
Sales service and fulfillment and
support billing
and opportunity presents itself.
Value opportunity low Value opportunity medium Value opportunity high
In order to be positioned and able to act as a true busi-
ness partner, the CFO's strive towards freeing up business
partners from operational activities, as business partner-
ing takes place all week.
21% of business partnering time is spent on true
business partnering activities.
13Build an information and analytics
platform
With the opportunities defined and prioritised, it is essen- reporting and analytical tools required to enable finance
tial that the required data become easily accessible. business partnering activities?
Figure 7: Current level of system support of FBP Some of the key questions to help defining the data re-
activities) quirements are:
• What information is required to support realisation of
Reporting and predictive tools, value opportunities?
allowing informative analytics 5%
• To what extent does management reporting include
Mainly spreadsheets 14%
operational, external and forward-looking measures?
Reporting and predictive tools
widely available, minimal use
of spreadsheets 17%
A practical approach
Finance business partnering requires a combination of
Basic reporting tools supported
by offline spreadsheets 64% financial and operational data supported by robust
finance systems. In addition, finance has a tendency to fo-
cus on what is comfortable – historical backward-looking
Internal and external data need to be high quality, timely data. With support from finance, organisations must fur-
and easy to analyse in order to fully equip finance busi- ther embrace looking to the future through the use of
ness partners with the tools to perform their role. Many leading performance indicators. Finance should drive the
organisations have invested in new ERP platforms and organisation to consider future indicators and outcomes
have optimised business processes. The question is – and should source the data and information that will sup-
have organisations sold themselves short by not broaden- port finance business partners with forward-looking pro-
ing their transformation investments to incorporate the active data enablement .
62% of respondents believe that their finance
systems are a barrier to effective finance business
partnering.
14Finance business partners are a valuable resource, yet they often spend a significant amount of time on data manipulation, reconciliations and reports that are of no direct value to the business. Typically, that is caused by poor systems and proces- ses. Fundamentally, there is a lack of understanding of the activities that will add value to the business, and until that is resolved, they will be unable to drive the required change and unlock the potential.
Develop, attract and retain the
right capabilities
With the value opportunities defined and prioritised, the Higher performance through functional and personal ex-
core competences required from the business partner can cellence leads to bigger organisational value. Successful
be defined. finance business partners are seen as leaders who can in-
fluence the decisions that a business makes beyond the
A personality not a job description numbers. Traditionally, finance development programmes
A simple one size fits all approach to finance business have focused on honing technical proficiency and not on
partnering does not work, and blindly sourcing more commercial leadership or influencing behaviours.
technical accounting skills is not the answer. Defining the
skills, knowledge and behaviours necessary for effective The combination of the identified top competences sug-
finance business partnering requires a prescriptive ap- gests that finance business partners should be business
proach. Developing those competences requires a clear leaders and strategic advisers. That is a move towards a
talent strategy. more commercial skill set than has traditionally existed in
finance.
Figure 8: Defining the #1 challenge to delivering
finance business partnering With this list of necessary competences comes a challen-
ge of how to recruit, train, develop and retain talent that
40%
meets the criteria. Organisations need to look at their
34%
existing talent agenda and ensure that focus in relation to
30% the changing role of finance is correct.
22%
20%
15%
12% 12%
10%
5%
0%
Lack of talent Lack of defined Lack of Technology Inefficient Weak existing
with the organisatorial understanding limitations processes relationship
appropriate structure of value with the
skills and roles drivers and business
accessibility
of information
Commercial acumen was ranked #1 competency
required by a finance business partner.
1630% of organisations believe that they do not have
adequate resource capacity in finance to successfully
deliver business partnering.
A practical approach The Deloitte approach to help clients identify their indivi-
Managing employee performance when there are com- dual partnering competences and develop finance busi-
plex reporting lines and responsibilities to both the busi- ness partnering talent follows a structured path, and con-
ness and finance requires a strong definition of those re- sideration is given to tangible outcomes that individuals
sponsibilities and accountabilities and a set of clearly can describe, recognise and deliver. These outcomes – we
described performance outcomes. call them value events – are again focused on identifying
priority activities that help finance’s business counterparts
create additional value.
Figure 9: The number one competences to prioritise when developing finance business partners
Analytical capability:
88%
Challenge, negotiation
Strategic and influence: 52%
thinking:
43%
Project management:
Relationship 31%
management: 19%
Ability to
Customer reprioritise when
focus: 55% strategy and/or
environment
changes 36%
Commercial
acumen/ Outcome focus
decision-
making: 90% 26%
17Ensure business alignment and
capacity
With the value opportunities defined and prioritised, the A focus on the minute details will direct the focus of the
CFO needs to ensure that the organisation is ready to de- finance function to the operator/steward activities and
liver on these opportunities. hence reduce the likelihood of the finance function evolv-
ing into business partners.
Are the roles clearly defined?
To ensure success as a business partner, the finance oper- What activities does the business partner
ating model needs to be aligned with the business part- perform?
nering vision, and the internal KPI’s and compensation The business partner will operationalise the value oppor-
models need to be structured accordingly. tunities by creating supporting initiatives and ensuring
that necessary data and analytics are available to track
A clearly defined finance operating model will ensure a and illustrate progress.
cost efficient finance function, as duplication and poor al-
location of tasks and resources will be eliminated. The business partner will participate in the scheduled
business meetings and get an understanding of the stra-
Figure 10: Finance operating model tegic and operational challenges. From this insight, the
business partner will create transparency for the business
Business area Business area
Business partnering Business partnering
decision-makers of the impact of the decision options.
Finance Sales and
operating model
Supply chain
marketing
Supply chain From this insight, the business partner will create
Centre of
transparancy of the impact of the decision options for the
Excellence
descision-makers.
Decision Support Decision Support
Management reporting
The business partner will spend a lot of time with his busi-
Controlling
ness counterparts and less time in front of the PC, as
Transactional Finance most of the insight and impact are generated from the
engagement with the business counterparts.
Financial controlling
RtR, P2P, O2C
The business partner will ensure that the decision-makers
have the necessary KPIs, data and analyses available to
share insight and enable informed decision-making.
Are business partners freed up from operational
activities? Are you ready to harvest the results of business
Once the finance operating model is defined and opera- partnering?
tional, the roles and responsibilities within the finance Successful business partnering has bottom line impact,
function are clear, and hence the business partners will and can play an active role in outperforming peers in the
be fully dedicated to their partnering activities. industry. It is essential to visualise the value they bring to
the business – and to the table where decisions are made.
Do you have visible buy-in from top management?
To succeed with business partnering, top management Make sure to communicate and celebrate successes, and
needs to lead by example. continuously strive towards contributing to the success of
your colleagues.
The board sets the operational standards of the finance
function by the level of details they require from the CFO.
What's the point? 1 in 4 is unsure about the value
that business partnering can provide.
18”Finance is excellently positioned to be a catalyst for growth – but reprioritisation is required for business partnering to be a success.” Jeppe Larsen, Partner “Finance business partnering is not just a job description. It requires that you see beyond the numbers to create value for the business.” Claus Thorne Madsen, Partner “It is no longer enough to approach the business with challenging questions. Direction is needed.” Dorthe Harding Keilberg, Partner “Next generation business partnering requires flexible analytics tools to deliver data-driven business insight.” Alan Jespersen, Partner
Contacts For more information on the Deloitte business partnering survey please contact: Jeppe Larsen Partner | CFO Services +45 22 20 23 14 jelarsen@deloitte.dk Claus Thorne Madsen Partner | CFO Services +45 30 94 41 32 cmadsen@deloitte.dk Dorthe Harding Keilberg Partner | CFO Services +45 30 93 54 93 dokeilberg@deloitte.dk Alan Jespersen Partner | CFO Services +45 22 49 44 66 ajespersen@deloitte.dk Copenhagen, Denmark Weidekampsgade 6 2300 København S Tlf. +45 36 10 20 30 koebenhavn@deloitte.dk www.deloitte.dk About Deloitte Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte has in the region of 200,000 professionals, all committed to becoming the standard of excellence. Deloitte Touche Tohmatsu Limited Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. © 2015 Deloitte Statsautoriseret Revisionspartnerselskab. Member of Deloitte Touche Tohmatsu Limited
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