Finance Re-imagined


Published on

Analytics Forum Doha

Published in: Business, Economy & Finance
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Finance Re-imagined

  1. 1. Consulting Finance Transformation - Challenges & Opportunities for todays CFOs 10:30am – 11:00am April 8th & April 9th 2013Strictly Privateand Confidential
  2. 2. AgendaSection Page1 Introduction 12 Challenges faced by today‟s CFOs 33 What leading companies are doing 54 Why Finance Transformation and How 7 to Benchmark5 Q&A 20
  3. 3. Section 1Introduction 7 April 2013 1
  4. 4. Section 1 – IntroductionPwC’s team with you today Zahid is a Senior Manager in PwC‟s Advisory practice, responsible for Finance Effectiveness. Zahid has over 16 years of experience working with Big Four Accounting firms in USA. He is leading the SAP EPM & BI practice in MENA region. Zahid‟s experience includes wide range of Finance projects from strategic initiatives such as Driver-based Performance Management, Balanced Scorecard and Executive Information System across industries and systems. Zahid is a licensed Certified Public Accountant (CPA) from AICPA licensed in the State of Missouri, USA.Finance Transformation - Challenges & Opportunities for todays CFOs10:30am – 11:00amApril 8th 2013 • 7 April 2013 2
  5. 5. Section 2Challenges faced by today’s CFOs 7 April 2013 3
  6. 6. Section 2 – Challenges faced by today’s CFOsChallenges CFOs today are facingToday‟s CFOs face a complex and challenging business environment that requires tremendous business savvy. In this environment,innovation is an essential driver of excellence, and the finance department is no exception. We regularly hold CFO forums and someof the top issues faced by senior finance executives are:: How can I manage my responsibilities to focus in on the activities that create real value for the business? Insight How do I become a more risk-intelligent CFO? How do I ensure that the data the company relies on provides the most useful information in evaluating projects and investments? How do I develop standard approach to evaluating finance investment decisions? Efficiency In what areas of finance should I be reinvesting to drive innovation and improved performance? How do I ensure that the financial reporting data the company relies on is accurate? Compliance & Control How do I reduce the burden of maintaining my control environment without compromising its integrity? The CFOs are juggling to achieve the right balance between three competing agenda; insight,Finance Transformation - Challenges & Opportunities for todays CFOs10:30am – 11:00am and compliance & control efficiencyApril 8th 2013 • 7 April 2013 4
  7. 7. Section 3What leading companies are doing 7 April 2013 5
  8. 8. Section 3 – What leading companies are doingWhat leading companies are doing • CFOs are focusing on activities that create value for the business, and leaving the rest to someone else • Defining information needs based on the decisions that need to be made rather than by the reports that are expected to be delivered • Giving business leaders a way to evaluate the risks associated with the opportunities they‟re facing Insight • Distinguishing between rewarded risks, like acquisitions or new product development, and unrewarded risks, like regulatory compliance • Making sure the leadership team understands the organisation‟s risk profile • Deconstructing daily operations to show the workforce how decisions and actions affect shareholder value • Evaluating the project/investment portfolio in terms of value drivers • Standardising data definitions, systems and processes across management units • Updating capabilities, tools and skills within finance on a continuing basis to increase efficiency • Making some very tough decisions to upgrade talent in key leadership positions • Hiring people based on their potential to achieve results, not just technical skills and previous experience Efficiency • Moving their finance people around the business so they can create more value and grow • Designing performance management programs that effectively measure the performance of a finance employee • Designing an operating model that considers finance‟s contribution across each objective (Insight, Efficiency and Compliance & Control) • Partnering with the CIO and taking ownership of the collection and governance of financial dataCompliance & • Applying a top-down, risk-based approach to develop lean and balanced controls Control • Rationalizing existing controls and redesigning test plans based on identified financial reporting risks • Leveraging automated controls and enabling technologiesFinance Transformation - Challenges & Opportunities for todays CFOs10:30am – 11:00amApril 8th 2013 • 7 April 2013 6
  9. 9. Section 4Why Finance Transformation and How toBenchmark 7 April 2013 7
  10. 10. Section 4 – Why Finance Transformation and How to Benchmark Finance Transformation: Our PerspectiveStrategy - should be aligned to the Strategic Visionoverall corporate strategy. What? Corporate Vision Finance VisionTarget Operating Model -Mechanism by which all activitiesrelating to the key building blocks of Finance Objectives Why?processes, systems, people and Insight Efficiency Compliance & Controlorganisation are delivered. Target Operating Model – Key ActivitiesFinance Activities - Assessing where How? Strategy & Budgeting & Management Business Performance Planning Forecasting Reporting Analysis improvementyou are now and where you want to be Tax Internal Controls Treasuryfor each of the finance activities will Management Audithelp provide a route map to change. Corporate Reporting Accounts Accounts General Payable Receivable Accounting Systems Data People Management Management Management Finance Transformation - Challenges & Opportunities for todays CFOs 10:30am – 11:00am April 8th 2013 • 7 April 2013 8
  11. 11. Section 4 – Why Finance Transformation and How to BenchmarkFinance Function Measurement frameworkFinance functions must continually re-assess and refine their role Business insightwithin the organisation:  Strategy & planning• As Finance functions serve the ever-  Budgeting & forecasting increasing demands placed on their  Business analysis resources, an appropriate balance of  Perf. Impr. projects Insight, Control and Efficiency is  Management reporting required.  Business partnership• Whilst specific to individual businesses, we have often found significant time and resources dedicated to driving greater compliance, at the cost of providing real insight or efficiency.• High performing functions must continually look to refine this balance, either through targeted change or a more holistic review of the functional Operating Model. Compliance & control Transactional efficiency  Treasury  Accounts payable  Internal audit  Accounts receivable Insight: Relevant, accurate and timely KPIs to support  General accounting &  Process controls & compliance business managers in decision making financial reporting  Tax accounting & compliance Efficiency: Elimination, standardisation and automation to  Financial reporting free up resources for value added activities Compliance and Control: Sustainable, flexible embedded Current state controls to meet current and future regulatory demands Aspiration Top quartile performanceFinance Transformation - Challenges & Opportunities for todays CFOs Above median10:30am – 11:00am Below medianApril 8th 2013 • 7 April 2013 9
  12. 12. Section 4 – Why Finance Transformation and How to BenchmarkOur view of typical finance processes Analysis Areas Analysis Categories Business Insight • Strategy & planning Control Framework & Segregation of Duties • Budgeting & forecasting • Business Analysis Efficiency and Effectiveness • Performance improvements projects Policies and Processes Systems Architecture Transactional Efficiency • Accounts payable (P2P) Data • Order to Cash (O2C) • Billing, Credit and collections • General accounting • Record to Reporting (R2R) - Financial / external reporting Control • Revenue assurance, risk and fraud management • Treasury and cash management • Internal auditFinance Transformation - Challenges & Opportunities for todays CFOs10:30am – 11:00amApril 8th 2013 • 7 April 2013 10
  13. 13. Section 4 – Why Finance Transformation and How to BenchmarkOur gap report includes KPI benchmarking, improvement opportunitiesidentification and sets out the framework for improvement roadmap Finance Gaps and N-tile Assessment Key Recommendations Business Insight 10 Positive initiatives Findings / opportunities  XYZ Ltd  Top Quartile Performance • 1 Chart of accounts on single • Process: After close, it takes 7 days to report  Peer Group Above Median GL for group reporting where team are at full capacity and have no • Time to close accounts is in top bandwidth for projects and business partnering  Peer Group Below Median quartile (5 days) • AR: PwC acknowledge the complexity of AR • Use of reporting Cube as a process, however 123 FTEs is high compared to primary data repository median Compliance Transactional • SSC Project Sun project aimed • AP: No coordinated purchasing policy or vendor & Control Efficiency management or discount / supplier terms 10 10 to increase process quality at SSC (AR/Database) sharing management for Opex Lower quartile Median Top quartile best practices • Organisation: An opt-in approach to using the • Travel & Expenses processing SSC has led to an in-country focus on Transactional efficiency improvements rather than adopting learnings costs less than peer median 1 Days to period end close 5 5 from other countries. • Appointment of an Operations 2 Days to publish financial results 7 4 • Technology: IT systems (e.g.15 ERPs across Controller to look at 3 Single data repository for reporting No Yes implementing process best Group – one of which is CODA) are not fully 4 Complexity of key financial systems Highly complex Standard / practices integrated, resulting in a complex, fragmented integrated data architecture 5 Efficiency FTEs per €bn revenue 255.3 55.8 Key Recommendations FTEs normalised to XYZ Ltd revenue 1 Accounts payable 61 16 • Organisation Blueprints from the Project Sun project now need to be implemented, with 2 T&E accounting 1 1 best practice initiatives centrally coordinated under the Group FC and the Head of SSC 3 Accounts receivable 123 13 and driven by the SSC 4 General accounting and financial reporting 72 20 • Establish pan-European Executive committee to include members of the Board to 5 Total FTEs – Trans. efficiency 241 53 oversee Group-wide process improvements and standardisation Process cost as a % of revenue • Continue to share and apply best practice from across the organisation: E.g. invoice 1 Accounts payable 0.12% 0.05% raising under single process ownership supported by a 3rd party provider; enforcing a 2 T&E Accounting 0.01% 0.003% standard billing policy across Group to reduce the drivers of back-office A/R activity 3 Accounts receivable 0.37% 0.06% • For future Finance strategy to be leveraged effectively, process standardisation under 4 General accounting and financial single pan-European ownership and consistent system tools will need to take effect to 0.31% 0.12% reporting allow Bolivia, Argentina and New Zealand to make better use of the SSCFinance Transformation - Challenges & Opportunities for todays CFOs 5 Total costs – Trans. efficiency 0.80% 0.22%10:30am – 11:00amApril 8th 2013 • 7 April 2013 11
  14. 14. Section 4 – Why Finance Transformation and How to Benchmark Roadmap sets out the priorities and timeline to implement the changes Improvement Opportunities and Roadmap Activity Dictionary New Environment 5 1. Receive valuation and impairment testing results from I&A rework to provide format for GL team 6 4 3 Use Trial Balance to extract data for Financial reporting (manual FSG mapping)Implementation* 4. Make off-line adjustments (outside GL) to Financial Reports to reflect IFRS compliance Existing Environment Generate 5. Coordinate with HR to source Disclosure Reporting(e.g. End of Service , Senior staff remuneration) 1 3 10 Consolidated Financial Reporting 6. Work with C&L team on IFRS related disclosures (segment reporting, current / non current liab. etc 7 8 per IFRS and Parent Company Reporting 2 7 Produce books from multiple sources including standalone results for non UAE entities 9 8. Manually consolidate results and eliminate intercompany accounts Low Medium High 9. Manually update income, valuation and impairments w.r.t. JVs and Associates Criticality 10. Produce Standalone financial Statements (outside uae co) and relevant notes to accounts. Monthly IFRS Income Statement 6 monthly full IFRS reporting Key Priorities 11. Produce Consolidated financial Statements Systems: 1. Full utilisation of sub-ledger functionality 2. Automated code combination validation process 3. Investigate capabilities for rolling it out for all leasing / sales 12. Support Internal & External Auditors ,coordinating with finance and other functions transactions 4. Implement Consolidation functionality 5. Implement Planning Budgeting capability 13. Produce Statutory audited IFRS statements 6. Implement Reporting / BI solution by replacing current Discoverer environment 7. Maintain Financial Statement Generator reports 8. Use of Revenue recognition functionality in AR sub ledger 9. Share drive access to be extended to allow for „pulling‟ of data and reporting schedules 10. Automate HR liabilities accruals and other allocations using Mass Allocations Process / Policies 1. Revenue recognition process need to integrate with % completion of work Finance Transformation - Challenges & Opportunities for todays CFOs 10:30am – 11:00am April 8th 2013 • 7 April 2013 12
  15. 15. Section 4 – Why Finance Transformation and How to BenchmarkRate your subsidiary in terms of the followingControls and ProcessesFinancial reportingprocessesMI & AnalysisPlanningExpensesBusiness partneringOrganisation and Scope ofFinancePeopleSystems and Data Key As is Desired state – Desired state – Low performingFinance Transformation - Challenges & Opportunities for todays CFOs assessment 12 mnths 2/4 yrs High Performing10:30am – 11:00amApril 8th 2013 • 7 April 2013 13
  16. 16. Section 4 – Why Finance Transformation and How to Benchmark Our approach towards benchmarking Voice of Internal Customer ‘how head office supports Business Domains and key challenges’Areas of focus Identify business activity of head office functions  Finance Set out the benchmarking KPIs • Global best  Legal practices-PwC benchmarking  Human Resources Obtain and analyse historical performance data Database  Operations • Saratoga Compare data with industry / cross-industry peers  Marketing (Internationally based on available database /  Risk research) • SCORE database Process Diagnostics and Benchmark Integration Develop SCAN report Finance Transformation - Challenges & Opportunities for todays CFOs 10:30am – 11:00am April 8th 2013 • 7 April 2013 14
  17. 17. Section 4 – Why Finance Transformation and How to BenchmarkGlobal best practices database• Steps leading organisations take to achieve peak performance.• Improvement opportunities, corrective measures and related recommendations• Objective, evidence-driven baseline of current performance in terms of efficiency and impact, compliance, control and business insight; and• Identification of opportunity savings, potential for service improvement and any areas for feasible change and action. Benchmarking and Process Appraisal Tools Fact-based consulting (Qualitative and Quantitative). Best Practices Offers our point of view on the optimal way to perform a given business process based on the PwC experience and in- depth market research of over 2000 assignments from different organisations. Risk & Controls Offers PwC point of view on the optimal controls and checksFinance Transformation - Challenges & Opportunities for todays CFOs needed at the process level to mitigate key risks10:30am – 11:00amApril 8th 2013 • 7 April 2013 15
  18. 18. Section 4 – Why Finance Transformation and How to BenchmarkWe leverage our benchmarking and analytics service – PwC Saratoga PwC Saratoga can assist your organisation to: Saratoga holds one of the world’s • Build a clear analytical understanding of existing human largest and most robust database of capital profiles; • Highlight potential cost savings, efficiency gains, service people and functional improvements and effective support function delivery opportunities; performance metrics, with • Select suitable organisations against which to benchmark key benchmark information from over performance indicators and best practice; and • Plan, implement and drive the actions necessary to realise 2,400 international organisations. value added objectives. Benefits What is Saratoga? • A strategic benchmark with practicality and alignment to the • Saratoga is PwC‟s measurement and benchmarking service organisation strategy which was developed 25 years ago. • Large available data breadth providing reliability and • Saratoga comprises performance data from over 2,400 objectivity companies globally across a variety of industries. Saratoga • Process provides a measurement framework to be used going holds one of the world‟s largest, most robust databases of forward in the business people related performance metrics. • Benchmark captures quantitative measures and a qualitative view of business practices • Saratoga analyses an organisation‟s data and their key metrics • Opportunity to investigate and raise areas of concerns which which show the strengths and limitations of the organisation‟s are highlighted by the analysis and data human capital and financial resources. It focuses on issues • Saratoga functional effectiveness allows the organisation to that can have an impact on improving performance and understand areas that may require their review and increasing competitive advantage. improvement.Finance Transformation - Challenges & Opportunities for todays CFOs10:30am – 11:00amApril 8th 2013 • 7 April 2013 16
  19. 19. Section 4 – Why Finance Transformation and How to BenchmarkPlan to complete SCAN phase in six-weeks leveraging our Methodology andbenchmarking toolkits Project Assess (Scan – Maturity assessment & benchmark Maturity Mapping and Roadmap initiation performance) Planning Stage 1 Scan Stage 2 Scan Stage 3 - Maturity Mapping and Roadmap Voice of InternalDevelop project Customer plan and Project Kick - off CXO level Functional maturity discussions assessments vis-a-vis performance benchmarks Review existing policies & processes Functional roadmap - Initial Functional Final Functional functional workshops – Workshops – Functional integration touch Leading practices & maturity models and points KPIs to be collected benchmarks / trend relevance Cross functional workshops and roadmapFinance Transformation - Challenges & Opportunities for todays CFOs Project Management10:30am – 11:00amApril 8th 2013 • 7 April 2013 17
  20. 20. Section 4 – Why Finance Transformation and How to BenchmarkWe have over 30 years of presence in the Middle East with a dedicatedteam of Finance Consulting practitioners Libya Syria Iraq Iran Kuwait PwC at a glance: Tripoli Damascus Baghdad Tehran Kuwait Areas of service include: City● $31.5 billion revenue for Lebanon ● Performance improvement FY2012 Beirut Bahrain ● Transactions● 180,000 people West Bank Manama ● Global tax structuring● 776 offices and Gaza ● Global tax compliance Jerusalem● 158 countries Bethlehem Qatar ● Crisis management Gaza Doha ● Assurance Egypt ● Human resource servicesPeople by region: Cairo UAE Abu Dhabi Dubai Our Finance Consulting expertise● 40% Europe Jordan Emaar Sq. Amman DIFC includes :● 23% North America Sharjah● 24% Asia Pacific Saudi ● Finance transformation and fast Arabia Oman● 7% MENA Riyadh Muscat close design● 6% South and Central Al Khobar ● Operational finance Dhahran Yemen America Jeddah Sanaa ● Enterprise resource planning & performance management ● Treasury managementA strong regional firm… ● Business operating model ● Project and program management● Unified regional practice with presence in 15 countries ● Process design / best practices● Diverse pool of over 2,700 professional across the region ● System design, build and testing● Largest pool of resident Advisory staff fully connected to the global network ● Training and roll-out● The Middle East region is fully integrated with in the global PwC network ● Data reconciliationFinance Transformation - Challenges & Opportunities for todays CFOs ● SEC, GAAP, Tax and SOX controls10:30am – 11:00amApril 8th 2013 • 7 April 2013 18
  21. 21. Section 4 – Why Finance Transformation and How to BenchmarkMiddle East Finance Consulting Leadership Team Sharat Seth Manoj Shah Partner Partner T: +971 4 3043300 (ext. 3303) T: +971 4 3043300 (ext. 3362) M: +971 50 6538234 M: +971 56 6820554 Rob Hucknall Partner T: +971 4 3043300 (ext. 3266) M: +971 56 6820512 Transformation - Challenges & Opportunities for todays CFOs10:30am – 11:00amApril 8th 2013 • 7 April 2013 19
  22. 22. Section 5Q&A 7 April 2013 20
  23. 23. firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. for more information.“PwC” is the brand under which member firms of PwC PricewaterhouseCoopers International Limited (PwCIL) operate and provide services.Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any othermember firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its memberfirms nor can it control the exercise of their professional judgment or bind them in any way.PwC in the Middle EastEstablished in the region for over 40 years, PricewaterhouseCoopers Middle East has offices in 12 countries: Bahrain, Egypt, Iraq, Jordan, Kuwait,Lebanon, Libya, Oman, Palestine, Qatar, Saudi Arabia and the United Arab Emirates, with around 2,700 people.Complementing our depth of industry expertise and breadth of skills is our sound knowledge of local business environments across the© 2012 PricewaterhouseCoopers. All rights reserved.