The New Value Integrator
Global CFO Study 2010
        Geography                          Enterprise Size (US$)                            Sector
 ...
Increased pressure
     Industry / Sector Changes Over the Next Three Years

                 Pressure to reduce cost base...
Role of finance
                                      Elevated Role of Finance
          Role of Finance in Driving Decisi...
Expectation gap                                                                                        Importance

       ...
Efficiency and Business
   Insight
                        High
  Corporate
philosophy of
 information
  standards


Stand...
Quantifiable benefits
                       Efficiency + Business Insight Contributes to Outperformance

                ...
Theme #1
•Delivering efficiency through standards matters
more than ever


•Providing business insight drives performance
...
Efficiency Accelerators

                                                   Implementation of a Common Ledger and
     Ado...
Theme #2
•Delivering efficiency through standards matters
more than ever


•Providing business insight drives performance
...
Business Insight
                                        • Where exactly is the        • What will happen next?
Key       ...
Business Insight Challenges

      Lack of a common        49%
      planning platform       49%


    Not statisfied with...
Anticipate External Forces

                            ANZ                              Global



   Finance             ...
Timely Metrics
                                                        ANZ
                        High Automation        ...
Non-Financial Data
   Statements
                      High Adoption of Non-Financial Data Standards


                   ...
Theme #3
•Delivering efficiency through standards matters more
than ever


•Providing business insight drives performance
...
Efficiency and effectiveness
                                                                                           Va...
Paths to Higher Value
High efficiency enabled by process                                              Value Integrators ca...
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Stream 1- Enhanced Business Performance

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Stream 1- Enhanced Business Performance

  1. 1. The New Value Integrator
  2. 2. Global CFO Study 2010 Geography Enterprise Size (US$) Sector >$20B, Others, 1% Asia Pacific, Americas, 14% Communications, >$10B to <=$500MM, Public, 13% 27% 31% $20B, 7% 25% 13% >$5B to Industrial, Distribution, $10B, 11% 25% 28% $501MM to $1B, 15% EMEA, 42% >$1B to $5B, Financial Services, 20% 28% Title Scope of Role BU / Program SVP / Others, 8% Area, 5% Controller / Treasurer, 14% Country, 27% CFO / Deputy Enterprise / CFO / Director, Global, 57% 78% Region, 11%
  3. 3. Increased pressure Industry / Sector Changes Over the Next Three Years Pressure to reduce cost base 78% Need for faster decision making 74% Demand for external transparency (e.g., 69% Board, shareholders, taxpayers, regulators) Product / service demand growth 61% Ability to attract and retain talent 56% Potential access to short-term liquidity / long- 40% term capital As a result of these factors, ~60% of Finance organizations believe that they have to make major changes to respond.
  4. 4. Role of finance Elevated Role of Finance Role of Finance in Driving Decisions Across the Enterprise Enterprise cost reduction management 45% 44% 89% Selection of key performance indicators 47% 41% 88% Capital asset management 34% 50% 84% Risk management 41% 42% 83% Prioritization of resource allocation 53% 26% 79% Strategic revenue planning 54% 24% 78% Business model innovation / reshaping 59% 19% 78% Information management strategy 39% 33% 72% Advisor (e.g., analysis and insight) Decision Maker (e.g., create the plan) Over 70% of CFOs believe they have an advisory or decision making role on the Enterprise agenda.
  5. 5. Expectation gap Importance Effectiveness CFO Agenda: Importance vs. Effectiveness Rank Gap Developing your people in the Finance 49% 84% 35% organization Executing continuous Finance process 55% 83% 28% Core improvements Finance Strengthening compliance programs and 59% 75% 16% internal controls Driving Finance function cost reduction 52% 61% 9% Driving integration of information across 39% 73% 34% the enterprise 1 Providing inputs into enterprise strategy 52% 80% 28% Enterprise Supporting / managing / mitigating 51% 77% 26% Focused enterprise risk Measuring / monitoring business 2 performance 62% 85% 23% 3 Driving enterprise cost reduction 59% 80% 21% 0% 20% 40% 60% 80% 100%
  6. 6. Efficiency and Business Insight High Corporate philosophy of information standards Standard Chart of Accounts 32% 23% Finance Efficiency Standard data definitions Standard processes Low 33% 12% Low High Business Insight Operational planning Common Finance and forecasting planning talent development capability platform
  7. 7. Quantifiable benefits Efficiency + Business Insight Contributes to Outperformance Revenue Growth EBITDA Return on Invested Capital 5-year CAGR, 2004-2008 5-year CAGR, 2004-2008 5-year average, 2004-2008 14.0% 11.3% 12.1% Finance Efficiency 9.8% 3.9% 10.2% 9.0% 9.3% -2.1% -0.1% 7.8% 11.6% Business Insight Business Insight Value Integrators also have an almost 20% better operating efficiency ratio than all other companies examined.
  8. 8. Theme #1 •Delivering efficiency through standards matters more than ever •Providing business insight drives performance improvement beyond finance •The greatest rewards come from doing both well “In the next three years, change will drive the “Finance has undertaken a number of initiatives criticality of decision support. Therefore, we to underpin growth, in particular the must find better ways to do transaction establishment of a shared service center. This support and control activities with improved has enabled us to respond much more quickly, processes and more automation.” close in days not weeks, undertake rapid process change and reduce costs.” Bob Driessnack CFO, Intermec Inc. Richard Yu VP Finance, Aviva-Cofco Life Insurance, Co. Ltd
  9. 9. Efficiency Accelerators Implementation of a Common Ledger and Adoption of Process Ownership Accounting Transaction Applications Enterprises Enterprises with high with high 91% 81% Finance Finance efficiency efficiency 47% 145% more more All other 62% All other enterprises 33% enterprises Adoption of Alternative Delivery Models Enterprises with high 49% Finance efficiency 69% more All other 29% enterprises
  10. 10. Theme #2 •Delivering efficiency through standards matters more than ever •Providing business insight drives performance improvement beyond Finance •The greatest rewards come from doing both well “For multinational companies, regulatory and “Business analytics is one of our most critical political changes can happen arbitrarily at Finance initiatives. We need to have the any time, significantly impacting the right people and tools and stay very close to execution of strategy. As a result, planning the business.” must be much more scenario-based with the Mike Newman ability to rapidly adapt.” CFO, Office Depot Markus Kistler CFO - North Asia and China, ABB
  11. 11. Business Insight • Where exactly is the • What will happen next? Key problem? • What happened? • What if these trends Business • Why is this happening? continue? • How many, how often? Questions • What actions are • What are the risks or needed? opportunities? Rear View Current View Forward-Looking View • Balance sheet, profit • Customer, product and • Cash forecasting and loss, and cash flow market profitability • Scenario-based Examples statements • Spend optimization planning and of • Revenue and cost • Working capital analysis forecasting Business variance analysis • Market, customer and • Strategic investment Insight channel pricing decision support • Sales and supply chain • Volatility and risk-based effectiveness predictive and behavioral modeling
  12. 12. Business Insight Challenges Lack of a common 49% planning platform 49% Not statisfied with operational planning and 61% forecasting analytical 55% capabilitiy Operational metrics 49% produced manually 53% Poor to average at 48% anticipating external forces 44% ANZ Global
  13. 13. Anticipate External Forces ANZ Global Finance Finance organizations organizations with strong 75% with strong 71% business % Better business % Better insight insight 70% 34% All other All other 44% 53% enterprises enterprises
  14. 14. Timely Metrics ANZ High Automation Impact on Analytics Satisfaction Finance organizations Enterprises that automate with strong 83% % More the production of financial 42% % Better business metrics Financial insight 26% 31% Metrics All other 66% All other enterprises 32% enterprises Finance organizations Enterprises that automate with strong 79% the production of 52% % More % Better business operational metrics Operational insight Metrics 93% 116% All other 41% All other enterprises 24% enterprises
  15. 15. Non-Financial Data Statements High Adoption of Non-Financial Data Standards ANZ Global Finance Finance organizations organizations with strong 70% % More with strong 55% % More business business insight 169% insight 49% All other All other 26% 37% enterprises enterprises
  16. 16. Theme #3 •Delivering efficiency through standards matters more than ever •Providing business insight drives performance improvement beyond Finance •The greatest rewards come from doing both well “What makes companies stand out from one “Our job is to focus the enterprise on making another is the ability to use analytics across timely, risk-based decisions by providing the end-to-end business model. Greater access to the right business-relevant transparency from one end of the business information and insight-driven analytics.” to the other is key.” Mark Buthman Dennis Hickey CFO, Kimberly Clark Corporation VP - Corporate Controller, Colgate Palmolive
  17. 17. Efficiency and effectiveness Value Integrators Scorekeepers Disciplined Constrained Value Constrained Advisors (Baseline) Operators Advisors Integrators Disciplined Operators 0% 19% Better 33% Better 59% Better Scorekeepers Driving integration of information across the enterprise Measuring / monitoring business performance Developing your people in the Finance organization Providing inputs into enterprise strategy Executing continuous Finance process improvements Supporting / managing / mitigating enterprise risk Driving Finance function cost reduction Driving enterprise cost reduction Strengthening compliance programs and internal controls 0% 20% 40% 60% 80% 100% 120% 140% Percent more effective than baseline
  18. 18. Paths to Higher Value High efficiency enabled by process Value Integrators can maintain and Finance data standards their advantage through a program suggests Disciplined Operators High of continuous improvement to focus on maturing business insight sustain capabilities and value and partnering capabilities Finance Efficiency Scorekeepers can attempt a direct Constrained Advisors have good path to become Value Integrators. business insight, constrained by This will involve establishing structural complexity, therefore Finance efficiency while Low address process and data simultaneously building business Low High standards to improve efficiency, insight capabilities. Alternatively, a Business Insight accuracy and speed staged approach can also be done

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