The finance team at Independence Blue Cross transitioned from a traditional scorekeeping role to a strategic partner by implementing key performance indicators (KPIs). They worked with business leaders to map out strategic roadmaps and identify KPIs beyond traditional cost drivers. This included understanding how customer service, talent management, and technology impact strategic and financial goals. The finance team then used the strategic driver models to engage in scenario planning and create meaningful budgets that balanced service levels and costs. This partnership approach provided greater insights and allowed for more proactive decision making.

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Changing role of finance from scorekeeper to
strategist
How the Independence Blue Cross finance team partnered
with the business to implement KPIs.
November 7,2or1
by Bob Paladino, CPA and Rand Greenblatt, CPA
For many years, finance functions have engaged internal department heads during the budgeting process focused
on basic "cost drivers," such as headcount, to arrive at their operating budgets. In the past, this approach may have
been reliable to arrive at a reasonable budget. llcwever, the business climate has changed. This traditional "cost
driver" approach could be creating competitive disadvantages for businesses.
Take the example cf Independence Blue Cross {18C). Health care :eforrn, a }righly coarpetitive marketplace, the race
to acquire and retain taient, a heightened focus on customer service, and the desire to grow the company on a
national scaie required a transformatlon of the cornpany's {inance Cepartrnent.
The coinpany's CFO and its chief accounting officer $/ere among the leaders who prol'ided critical executive
sponsorship of the multiyear initiative, leading to a restructuring lrom a classic, scorekeeping and financial
reporting organization to a forward-thinking, strategic business partner. This inctruded understanding strategies for
departrnent business models, custoraers service levels, process exceilence, talent management, and technology
innovation to reveal tradeoffs of a comprehensive set of "strategic drivers" to arrive at department budgets and
operationai and strategic performance goals"
This is how the financiai planning and anaiysis (FP&A) tearn and key business partners at lEC, a $ro billion
company, drove stronger fiscal and operational discipline through ttre use of key perforrnance indicators (KPIs).
The approach described here can be applied to companles cf all sizes and in ali sectors. Below are three steps your
finance tearn can follow to transition from a "cost" to a "strategic" convelsation and a more sophisticated
understanding of busiaess models and key drivers.
1. Engage treaders tc r:lap out tlleir business model
The iBC FP&A organization recognized the value of moving beyond discussions of headcount. ?hey engaged
business leaders in strategic conversations to better understand their business dyr:amics and to identifiu strategic
drivers. This process was kicked offwith awareness training on how to leverage stra:egy road maps. FP&A and
business leaders collaborated to build strategy road rnaps and deveiop KPI scorecards. As a result, departnaent
teams /ere energized to disclss their services, strategic chaltrenges, and opportunities fo: gror,r,'th and improvement.
Below is an exarnpie of the strategy road map for the customer sen'ice call centel {CSCC). The strategy map
constructed has application across all company departments. Notice the peopie, technology, and core process
objectives, as they contain "leading" or "input" objectives that function as strategic drivers. Leading objectives
around people, process, and technology deterrnine the custorner and financial performance levels and outcomes.
{-et's walk through an example to better understand how these variables function. If the customer service cali cenier
is able ao (ES) Retain Customer Seruice Associates, who becone more proficient and experienced, they will execute
(Pz) Resolue trnbound Calls more efficiently and effectively, which ln turn drives outcomes of tC+) Premier N{ember
Satisfaction and the ability to better {Ft} IVIanage trnternal BudEet" Here, FP&A expanded beyond traditional
conversations of {inancial outcomes {e.g., headcount and budget} to understand holv customers, core pt:ocesses,
people, and techlology drive strategic, operational, and financial results.
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. CFO takeaways for engaging leaders i:'r design:
1. Secure buy-in from business leaders]:ip on the pufpose ofstrategic road rnaps and KPI scorecards.
z. Provlde awareness training and guidance on the driver rnethod'
3" Involve departrnentai leadership and leadership teams to formulate their map.
4. Define the business rnodel with particular attention to the customet, financial and leading people, and
process and technology objectives.
,:
2" Hngage in strategic conversations and scerlario planning.
FP&A leveraged the insights gained frorn understanding the CSCC business rnodel and strategic drivers to
reposition itself frorn a scorekeeper to a strategic partner. The conversations between finance and the business
mirkedly changeC. For example, conversations shifted from controlling costs to evaluating tradeoffs in process
service levels.
They also moved frorn basic, cost line itera variance analysis to understanding how nonfinancial objectives such as
talent management uitirnatety impact operational and fiscal objectives" ln short, FP&A and the business engaged in
a holistic conversation about cornplex interactions among the financia1, customer, process, people, and technology
factors that drive strategic outcomes.
Finance and the business leadership engaged in strategic planning scenarios as budgets were deveioped. Let's
revisit our map to shorv how discussions have changed since implementation of the strategic road maps and KPl
scorecards. Several years ago, a reduction in (El Customer Seruice Assaci{rtes wou}d have led to a scenario where
{Pz) Seruice Leuels would decline, tbereby driving lorver (C4 Customer Satisfaction and a higher payout at (FS)
Performance Guav.antee penalties. The decision to (-Ft) Manage Budgetby immediately reducing costs previously
caused higher penalties and lost revenue from dissatisfied custolners.
Today, with the strategic driver road maps, finance and the CSCC leadership were able to drive more informed
decisions. There was a better understanding of ttre operational and {iscai outcomes desired, as well as the various
levers to achieve such results that could be considered.
. CFO takeaways for engaging leaders in design:
r. Validate the model to help identifu and leverage leading measures.
2. Discuss strategic scenarios with department heads and their teams.
3. Gain deeper insights into departrnent strategic challenges and opportunities for gror,r'th or improvement.
3. Engage depantrnent heads to identif,y measures anC targets to forrnulate badgets
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3. With the strategic cost driver model validateC and a solid understanding cf tradecffs amcng strategic otrjectives,
FP&A and the CSCC teams are creating more meaningful budgei scenarlcs in support cf bu*siness p"erformance
objectives. For instance, beiow, we can reflect on the baseline performance ana iUen run a feror budget scenarios to
optirnize seryice levels and costs. A11 f;gures are illustratlve for simpliciq; and confideatiality p,,.poi*r.
In Scenario r, the CSCC tearn would focus on (ES) Retain custorner care aduocofes by r) ieduclng turnover and z)
increasing the percentage of promotions f;1led by internal employees. A reduction in iurnover 1"*J.r.uu recruiting
costs. These trvo improvernents dlrectly enhance the efficiency and qlality of process execution as measured by?rst
call resolution, average cali handle time, and average speed to answer rates. Improvernents in these perfor:nance
indicators simultaneously improve customer satisfaction and reduce costs per tiansaction
{n Sceaario 2, we fotecast further irnproverr:ents in turnover and internai hire rates and abserve a tnore Dronounced
positlve impact on process executicn, cusiomer satisfaction and financial results.
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All flgurc* are i;llustrative due ls ccnfidentialitv
o CFO takeaways fo:: ereating strategic driver based bqdgets:
1. Facilitate-strategic_modeling with internal departments to undersiano the sensitivity of their business
moCetr to key variables.
z. Agree on strategic targets for all measures to form the core of the budget.
g. Recognize this is a balance and subjective in natrire.
Stephan Roker, IBC's senior vice president of service operations, spoke about the value finance delivered to the
departments he oversees. "The intloduction of a balanied scorecard and the insights from understanding the
business moCel and key strategic drivers has proved to be a win-win partnership"between operations and'finance,,'
he said. "Today's envilonrnent ca]ls for transparency, fiscal soundneis, and innivation. These scorecards allcw us to
be rnore proactive and provide the needed intelligence to control expenses while still drir,'ing ogr business resuits.,,
On average, it takes
lwo !o four years to fully implement KPls across all areas in an organization. One rnay lvant to
considerpiloting with select areas, as r4/as the case with IBC. You: finance team
"u*
.""udily apply these three steps
to yorir planning and budgeting process. The steps,suppo_rt your shift frorn traditional cosi aiiiers to strategic,
operational, and fiscal drivers and objectives, which can forever change the relationship you hu1r* *it1, yo.,."
business partners. Enjoy the journey"
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R-ate this article 5 @xcellent) to t (poor). send your respanses here.
BobPaladino.CPA,isanaduiserandtrainer,andauthorofdozensofarticlesandthreebest-sellingbusinessbooks.HespokeinJulyattheA]CPA,sFinanc
conftence in Las vegas. RandGreenblatt' cPA, is the senior directir of FP&A at IBC. He has tedfn"""i"ii"iiiiiiit-i"ijo*onors in grouth and turnaround situations at IBCandAgna.