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Finance Function Excellence: marketingterm of
noodzakelijke voorwaarde?
Amsterdam, 13 november 2014
Prof.dr. Bert Steens RC
Page 2
Conditie 1: Informatiehuishouding is op orde
Shared
Business
Data &
Processes
Mgmt
& Controls
Performance
Based
Pla...
Page 3
Conditie 2: Financiële functie is effectief en efficiënt
georganiseerd
Group F&C
Group functions
(HR, Legal etc)
F&...
Page 4
Conditie 3: Prestatiemanagementsysteem steunt op
waardestuwers
Economic
Profit
4,67 Mio
EP>0 if
ROCE>WACC
ROCE =
NO...
Page 5
Conditie 4: Basis is gelegd voor Integrated Thinking and
Integrated Reporting
Source: International <IR> Prototype ...
Page 6
Conditie 5: Financiële functie bereidt organisatie voor
op toekomst
► Scenarios are external realities, that cannot...
Page 7
Conditie 6: Onzekerheid en complexiteit worden erkend
als fact of life
1
2
3
Level 1: A Clear-Enough Future
► Possi...
Page 8
Conditie 7: Analytics geven daadwerkelijk invulling aan
business intelligence
Page 9
Finance Function Excellence: continue ontwikkelings-
proces
• Reporting
• Data quality
• Challenger role
• Driver-b...
End
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Finance Function Excellence

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Finance Function Excellence: marketingterm of
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Finance Function Excellence

  1. 1. Finance Function Excellence: marketingterm of noodzakelijke voorwaarde? Amsterdam, 13 november 2014 Prof.dr. Bert Steens RC
  2. 2. Page 2 Conditie 1: Informatiehuishouding is op orde Shared Business Data & Processes Mgmt & Controls Performance Based Planning Query & Reporting Enterprise Analytics Destination/End-UsersAn Integrated System for High Performance Data Sources Data Warehouses STRATEGIC REPORTING INTERACTIVE DASHBOARD OPERATIONAL REPORTING Shared Business Data & Processes Mgmt & Controls Performance Based Planning Query & Reporting Enterprise Analytics Shared Business Data & Processes Mgmt & Controls Performance Based Planning Query & Reporting Enterprise Analytics Destination/End-UsersAn Integrated System for High Performance Data Sources Data Warehouses STRATEGIC REPORTING INTERACTIVE DASHBOARD OPERATIONAL REPORTING One Single Version of the truth that transparently reflects performance Homogeneous set of reporting tools / dashboards KPI & Reports in line with strategic and operational prios and business models
  3. 3. Page 3 Conditie 2: Financiële functie is effectief en efficiënt georganiseerd Group F&C Group functions (HR, Legal etc) F&C Board ABC Investment center Profit center Expense center Cost center Revenue center Functional line Hierarchical line F&C F&C F&C F&C F&C F&C F&C BU F&C F&C BU BU Processes in SSCs: • Order to cash: credit management, billing, cash application, collections • Purchase to pay: accounts payable, time and expenses management • Record to report: general accounting, project accounting, statutary reporting, fixed assets, cost accounting, results management In case of one-tier board Internal Audit Supervisory Board Audit Committee Board Division 1 CFO Board Division N CFO Regional SSC 1 Regional SSC N BU BU BU
  4. 4. Page 4 Conditie 3: Prestatiemanagementsysteem steunt op waardestuwers Economic Profit 4,67 Mio EP>0 if ROCE>WACC ROCE = NOPAT/CE 9,17% Net Operating Profit After Tax 36,67 Mio Cost of Capital 32,0 Mio -/- = = x Net Sales 250 Mio -/- -/- Tax on EBIT 13,33 Mio WACC 8% Invested Capital/ Capital Employed 400 Mio Debt/equity ratio Cost of Debt Cost of Equity Non-interest bearing current liabilities Current Assets Fixed Assets Allocation taxable income Tax rates Variances Standard COGS Price ABC Volume ABC = Operating Costs 200 Mio Value drivers Financial Non Financial  Items in value tree  Return on invested capital  Growth  Net investments  Investment rate  Days sales outstanding  Days sales in inventory  Financial risk profile  Financing defaults  Corporate income tax  VAT  Custom duties  Excise duties  Et cetera  Time to market  Complexity of portfolio  Complexity of products  Complexity of processes  Direct measures of costs  Customer satisfaction  Customer retention  Delivery reliability  Quality of processes  Quality of outputs  Insight in developments  Quality of networks  Reputation  Et cetera Furtherbreakdowns Value tree - EP
  5. 5. Page 5 Conditie 4: Basis is gelegd voor Integrated Thinking and Integrated Reporting Source: International <IR> Prototype Framework draft
  6. 6. Page 6 Conditie 5: Financiële functie bereidt organisatie voor op toekomst ► Scenarios are external realities, that cannot be influenced ► Scenarios are based on an outside-in analysis ► Scenarios are extreme pictures, meant to stretch mental models ► Always multiple scenarios are needed to visualize the effect of two key uncertainties ► Scenarios are used to create and test alternative strategies Scenario BScenario A Scenario DScenario C Key uncertainty 1: Keyuncertainty2: EU grows further Economicheyday Member states secede from EU Economicdownturn/standstill Success of EU Economicsituation Ground rules scenario planning
  7. 7. Page 7 Conditie 6: Onzekerheid en complexiteit worden erkend als fact of life 1 2 3 Level 1: A Clear-Enough Future ► Possible to develop a single forecast of the future that is precise enough for strategy development. The forecast will be sufficiently narrow to point to a single strategic direction Level 2: Alternate Futures ► The future can be described as one of a few discrete outcomes. The alternate outcomes all have different implications for strategy development Level 3: A Range of Futures ► Continual range of potential outcomes based on a limited number of key variables. The actual outcome may lie anywhere along the continuum Level 4: True Ambiguity ► Multiple dimensions of uncertainty interact to create an environment that is impossible to predict ? ► Traditional DCF methods ► Traditional EP methods ► Combination DCF and EP ► Sensitivity analysis Valuation methods ► Flexibility value ► Monte-Carlo Simulation ► Decision Tree Analysis ► Sensitivity analysis ► Analytical scenario modeling ► Flexibility value ► Monte-Carlo Simulation ► Real Option Valuation ► Analytical scenario modeling ► Flexibility value ► Real Option Valuation ► Stress testing The higher the uncertainty the more important options
  8. 8. Page 8 Conditie 7: Analytics geven daadwerkelijk invulling aan business intelligence
  9. 9. Page 9 Finance Function Excellence: continue ontwikkelings- proces • Reporting • Data quality • Challenger role • Driver-based control • Business cases • Analytics, analyses & advice • Organization • Reporting lines • Allocation roles & responsibilities • Transaction processing • Control & compliance • Decision support Performing roles of finance function Making key roles happen in practice Driving the finance agenda Differentiating the decision support role
  10. 10. End

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