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Strategy for the Finance Department

Strategy for the Finance Department

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  • 1. Stragegies for the Finance Dept. By Guillermo González Guereño J&J Consumer Argentina - 2005 Based on latest experiences & studies
  • 2. Holy grail
    • It´s long been the holy grail of CFOs to cast off their traditional role as back-office bean-counters and financial policemen, and instead to become front-office strategists and business partners
  • 3. Pendulum
    • During the 1990s, the pendulum between the extremes of being a financial policeman on the one hand and a business partner on the other had swung to one extreme. In the years since, it has swung to the other extreme.
    • Ultimately, it will settle somewhere in the middle.
  • 4. Pendulum: 1st. swing
    • During the bull run of the 1990s many companies –along with their finance teams- began to ignore governance issues as they became swept up in the euphoria of growth, deal-making, and soaring stock prices. The period since, has been a welcome time of “deferred maintenance” of internal controls and risk management.
  • 5. Pendulum: 2nd. swing
    • The slew of corporate governance regulations that followed on the heels of scandals at WorldCom, Enron, Parmalat, and others has forced many companies to devote considerable time and energy to beefing up internal controls. That burden has naturally fallen on finance staff.
    • Sox rules make it harder for large companies to act quickly and entrepreneurially because every process must be followed to the letter in every instance
  • 6. Finance time
    • According to recent surveys:
      • finance staff spend just 4.6% of their time on planning and setting company strategy, only 3% talking to customers, and a meager 2.9% analyzing potential M&A targets and executing deals
      • finance tasks which were taking more time today compared to three years ago: “Implementing and improving controls”
  • 7. Trends limiting Finance strategy ambitions
    • The growing burden of ever stiffer corporate governance laws around the world
    • The ongoing efforts of installing ERP systems, and setting up shared services of many finance departments
    • The increase in the scope of CFOs´ jobs: Including now the supervision of functions such as IT, real estate, and purchasing.
  • 8. New options for Finance Dept. Strategy: #1
    • CFO = “Chief Focus Officer”
      • CFO job: to help his company define its strategic objectives and then show them how to focus on achieving those objectives
      • There are always so many things going on in any organization that it´s sometimes difficult to see what´s important, to see what are the drivers of revenue, of cost, the drivers of creating value.
      • The job of the CFO is to bring clarity, to bring focus.
  • 9. New options for Finance Dept. Strategy: #2
    • Networking
      • By building relationships, a CFO builds opportunities for the company
      • Once the financial infrastructure is in place, the CFO needs to be creative and innovative and to be intimate with the industry so that he can see where his company can create value
      • Main task: “Communicating”
  • 10. New options for Finance Dept. Strategy: #3
    • CFO = Integrator
      • Integrating Finance with some other areas such as sales operations, facilities management, legal team and human resources, ensures that the finance staff are able to play a much more strategic role than in the past
      • Through intregration there is a lot of knowledge-sharing. Everyone gets a better understanding of the business and how different strategies feed through into financial performance.
  • 11. Steering a Path for Finance
    • #1 Core processes under standarized controls
    • #2 To become the “Business Information Agency”
    • #3 To become the “Business Focus Partner”
    • #4 Networking that build opportunities and bring business for the Company
    • #5 Integration of some other areas
  • 12.
    • J&J Consumer Argentina
    • Buenos Aires - October 2005