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Best in Class Finance Transformation - Best Practices for the Finance Function

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The evolution of the CFO role from controlling and reporting to strategy and support for the exec team now includes responsibility to deliver value for key stakeholders, such as investors. Top finance …

The evolution of the CFO role from controlling and reporting to strategy and support for the exec team now includes responsibility to deliver value for key stakeholders, such as investors. Top finance organizations are capable in multiple components of enterprise performance management (EPM), including strategic planning, execution, cost visibility, driver behavior, forecasting, planning, predictive analytics, ERM, and process productivity improverment (lean and Six Sigma). This workshop covers effective EPM frameworks, optimal organizational structure, talent management, leveraging technology to improve processes, and best practices for process change.

Speaker:
Birgit Starmanns, Senior Director, Solution Marketing, SAP

Presentation delivered at CFO Dimensions 2013
Workshop

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  • 1. 1© 2013 Best in Class Finance Transformation - Best Practices for the Finance Function Birgit Starmanns Senior Director, Finance Solutions, SAP birgit.starmanns@sap.com
  • 2. 2© 2013 AGENDA Market Observations EPM within the Complete Finance Function Innovations Support Finance Transformation
  • 3. 3© 2013 Market Observations
  • 4. 4© 2013 Internal and External Pressures on Finance Require More Value-Added Activities Increasing globalization Increased focus on risk Volatility in economic conditions Pressure on margins Innovative business models On-going changes to regulatory requirements
  • 5. 5© 2013 Top Business Priorities for the CFO Finance executives prioritize closer collaboration with the business Over the next 2 years, priorities for finance are: Control costs and improve profitability Support and fund growth objectives Improve finance efficiency/reduce cost of finance 76% of Finance executives believe at least half their time should be on high-value planning and analytic activities, though only 55% achieve this 76% want Finance to be more involved working with the business during the next two years *Source: Source: CFO.com Research 2013
  • 6. 6© 2013 Technology Supports the Role of the CEO and the CFO 71% of CEOs believe that technology is the top driver of organizational change (the #1 factor), surpassing people skills (69%) and market factors (68%)* Finance expects their business will demand help with growth (strategic planning), increased value (cost management) and managing uncertainty (planning, budgeting and forecasting) ** The top improvement area for finance executives is improving capabilities for predictive analytics and simulations** *Source: IBM Leading Through Connections – Insights from the Global Chief Executive Officer Study **Source: CFO.com Research 2013
  • 7. 7© 2013 Achieve Financial Excellence Enable Finance Transformation to Better Support Business Needs ControlPredict Execute Seamless end-to-end compliance Instant insight to action Agility with simplicity
  • 8. 8© 2013 EPM within the Complete Finance Function
  • 9. 9© 2013 Achieve Financial Excellence with End-to-End Solutions Head of Corporate Reporting Corporate Treasurer VP Finance Head of Finance Operations Chief Compliance Officer Financial Planning and Analysis Accounting and Financial Close Treasury and Financial Risk Management Collaborative Financial Operations Enterprise Risk and Compliance Management 3xLower finance cot as percentage of revenue for top quartile organizations versus bottom quartile organizations Source: SAP Performance Benchmarking
  • 10. 10© 2013 Financial Planning and Analysis 76% Higher operating margin where financial systems provide historical and forward-looking views into financial and operational performance Source: SAP Performance Benchmarking Develop and Translate Strategy Provides enterprise-wide alignment of corporate and operational goals. Planning, Budgeting and Forecasting Helps organizations monitor and achieve critical key performance indicators (KPIs) in a defined period of time. Profitability and Cost Management Manages organizational costs to optimize profitability. Monitoring and Reporting Provides analysis to support financial and operational decision making.
  • 11. 11© 2013 Accounting and Financial Close 26.1%Fewer days to close annual books in an integrated G/L system so that no reconciliations are necessary Source: SAP Performance Benchmarking Financial Accounting Accounting support for multiple financial reporting standards, industries, currencies, and languages. Entity Close Strong governance, fast execution, and real-time insight into the entity’s financial close. Corporate Close Elimination of bottlenecks for faster financial consolidation and reporting cycles. Reporting and Disclosure Publication of regulatory disclosures as well as creation of XBRL filings, for a holistic regulatory disclosure process. Financial Close Governance Trusted view of subsidiary performance and compliance through consistent financial master data.
  • 12. 12© 2013 Treasury and Financial Risk Management 56% Lower treasury and cash management FTEs where the treasury system calculates various treasury analyses such as mark to market and value at risk Source: Source: SAP Performance Benchmarking Payments and Bank Communications Speedy decision making with reduced fees and borrowing costs. Cash and Liquidity Management Real-time insight into global cash management. Debt and Investment Strategies Strategies that lead to the best borrowing rates and lower investment costs. Financial Risk Management Assets and cash flows protected from financial risks. Commodity Risk Management Risks associated with commodity price volatility can be identified, qualified, and mitigated.
  • 13. 13© 2013 Collaborative Finance Operations 44% Fewer finance FTEs in transactional processes with streamlined, automated, and integrated core finance processes Source: SAP Performance Benchmarking Receivables Management Provides automated, integrated, and collaborative receivables management processes. Collaborative Invoice to Pay Automates invoice management and bank communications while improving the archiving process. Travel Management Streamlines the entire trip lifecycle to control costs and enforce corporate and legal compliance. Shared Services Framework Supports financial shared services that improve productivity, help ensure compliance, and cut operational costs.
  • 14. 14© 2013 Enterprise Risk and Compliance Management 22% Lower audit cost with the use of automated controls rather than manual controls Source: SAP Performance Benchmarking Enterprise Governance, Risk and Compliance Reliable insight for preserving and growing business value and compliance management with minimized cost and effort. Access Risk Management Minimized access risk and fraud prevention. Global Trade Compliance Heightened control of international trade supply chain. Sustainability Reporting Tracking and communicating your sustainability performance, collecting data, and compiling disclosures quickly and cost-effectively.
  • 15. 15© 2013 Innovations Support Finance Transformation
  • 16. 16© 2013 Achieve Financial Excellence with End-to-End Solutions 80%of decision makers think access to the right information at the right time is critical to their business SourSource: SAP Performance Benchmarking Applications In-MemoryMobile Analytics Cloud
  • 17. 17© 2013 Application Innovations for Finance 53% Of organizations report a large gap between availability of Big Data and their ability to analyze it Source: SAP Performance Benchmarking Commodity Risk Management Identify, qualify and mitigate risks associated with commodity price volatility. Fraud Management Detect fraud earlier and more accurately to reduce financial loss. Disclosure Management Publish your financial statements and create XBRL filings for fully compliant regulatory disclosures. Electronic Invoicing Digitize your purchase orders and invoices to maximize discount capture and comply with contracts and VAT regulations.
  • 18. 18© 2013 How Can Mobility Transform Finance? Enable the business to make better decisions in real time, anytime, anywhere Enable Finance executives to manage their operations more effectively Accelerate key process cycle times and eliminate approval bottlenecks
  • 19. 19© 2013 Broad Range of Empowerment with Mobile Basic Alerts Pre-built Apps Mobilize Existing Content Next Generation Mobile Analytics Compliance risks Performance thresholds Approvals Operational alerts Travel updates Delivered out-of-the-box Available for download on app stores Extend enterprise data Leverage user roles Reports Explorer data sets Operational data Dashboards Why? What if? When? Take immediate action Mobilizing “big data” Flexible, ad-hoc analysis
  • 20. 20© 2013 Mobile Innovations for Finance 24% Higher operating margins where enterprise mobility is embedded in all business processes Source: SAP Performance Benchmarking Planning, Budgeting and Forecasting Review planning and budget information, initiate analysis and corrective action, and respond to alert and status updates. Dashboards Monitor operational finance information with real-time calculations of configurable KPIs and visual heat maps on iPad devices. Alerts and Approvals Provide access to operational alerts and approvals for payments, travel requests and expenses, and access requests.
  • 21. 21© 2013 How Can Analytics Transform Finance? Immediate insight into financial performance and profitability of the organization Quick and complete what- if and predictive analysis to determine the financial impact of decisions Combine structured and unstructured information for a holistic view
  • 22. 22© 2013 Immediate Financial Insight for Better Decisions – Finance as the Strategic Advisor Transactional Data Planning Information Market Data Profitability Calculations Corporate Strategy
  • 23. 23© 2013 Analytics Innovations for Finance 15% Fewer days sales outstanding where finance leadership has a financial dashboard that provides a timely view into predefined key metrics Source: SAP Performance Benchmarking Consolidated Reporting and Analysis Obtain holistic performance insight, supported by KPIs and metrics, to measure financial and operational performance. Embedded Analytics Access ready-to-consume analytics while running financial transactions, from accounting and financial reporting to treasury and credit risk. Advanced Analyses Predict and model potential outcomes of strategic decisions to support business growth initiatives.
  • 24. 24© 2013 How Can Cloud Transform Finance? Increased usability and mobility with people- centric design Quick, cost-effective deployment of software- as-a-service with regular updates to capabilities Integration into core transactional systems to leverage existing processes
  • 25. 25© 2013 Flexible Options for Modular Deployment Traditional on-premise On-Premise Hybrid & Cloud Extension Mixed on-premise & cloud. Cloud with Mobile Enterprise and Partner Cloud
  • 26. 26© 2013 Cloud Innovations for Finance 85% Believe the cloud will have a major impact on their organization through efficiencies, innovation, or competitive differentiation Source: SAP Performance Benchmarking Financials Access easy to consume financial information for all lines of business, with preconfigured KPIs for personalized insight and role-based analytics. Travel Control travel costs, facilitate corporate and legal compliance, and increase process efficiency with an intuitive user experience and mobility. Financial Services Network Leverage a single connection point and standardize integration between financial institutions and their customers.
  • 27. 27© 2013 How Can In-Memory Transform Finance? Enable more agile and more effective Finance processes Provide instant insight to action based on real-time information Provide pervasive modeling, planning, and simulation capabilities to better manage uncertainty
  • 28. 28© 2013 Revolutionary Results with In-Memory Report Speed Improvement New reporting experience with near second response time e.g. Treasury position list and Line Item Browser for General Ledger, Customer, Vendor Up to 1350x Profitability Analysis Enables to run Profitability Analysis as online report for different views and cost hierarchies. Gives decision critical insight for business planning and reviews. 124x Incoming Payment Clearing Advanced search for open items (e.g. invoices) to be cleared by incoming payments; all FI customers can improve the processing time of one of the most labor intensive processes in FI-AR 71x Intercompany Reconciliation Intercompany reconciliation runs real-time and enables single source of truth in single instance or central finance system landscape through direct access to finance data tables instead of copied data. Reduction of TCO as data is not replicated anymore. >200x Document Journal Report Stable responsiveness of the application by various combinations of attribute selection 978x Acc. Receivables Dashboard New app that enables the receivables manager to assess and respond quickly and appropriately to changes in customer payment behavior No latency KPIs Up toUp to
  • 29. 29© 2013 In-Memory Innovations for Finance 68% Of organizations have limited or no predictive modeling capabilities or complex optimization techniques for Big Data analysis Source: SAP Performance Benchmarking Financial Planning and Forecasting Develop strategic long-range plans including top down planning with driver-based inputs, rolling period planning, and dynamic event-based forecasting. Cash Forecasting Project liquidity based on the cash position for all operating units, using real-time activity from purchasing, sales, and other cash-relevant systems. Working Capital Management Interactively explore causes of working capital changes and optimize strategies to improve company liquidity, efficiency, and financial health. Financial Close Management Provide real-time insight into the process, quality, and financial KPIs of the financial close.