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CFO’s view – how do we evolve, to
drive value in the law firm of the
future?
8TH OCTOBER 2019
LONDON LAW EXPO
A large number of disruptors
in the legal sector
How can the CFO rise to
the challenge?
CFO’s roles are changing?
“65% of CFOs believe that there will be
fewer jobs as a result of digital
advancement; and 38% believe their
roles will become very different…”
SOURCE: SAP CFO survey
Cost reductions?
The traditional approach
has been to analyse and
initiate spend reduction
programmes
But… the business requires
“… 92% of business are driven by
positive goals: agility, transformation,
competition. Only 5% are driven by cost
reduction…”
“… 48% of companies are competing
on data and analytics, this is up from
5% of companies in 2006…”
SOURCE: NVP Data Innovation Research, 2019
customer centricity
CxO’s agree that finance
…but, research shows
there is a gap between
finance chiefs’ current
leadership on the
executive team, and what
others expect…
Should spend more time
LEADING
SOURCE: Why CFOs need a bigger role in
business transformations, McKinsey, 2017
According to BCG, only 24% of transformations generate ‘above
market’ value – the CFO’s role is to identify value creation sources
How does a CFO create value?
Invest in growth Transform operations Balance sheet
Understand your business
“… where do you create value? Where
do you leak value?…”
model
1.
The value leakage view of the law firm1
MAXRATE,ACTUALUTILISATION
CONTRACTRATE,ACTUAL
UTILISATION
INVOICEDRATE
COLLECTEDRATE
CONTRIBUTION
NET
MARGIN
£280m
Improve negotiation skills
Improve delivery efficiency
Improve working capital
Improve leverage
Reduce overheads
PROFIT PER
PARTNER
£100m
£75m
MAXRATE,MAXUTILISATION
£350m
Improve sales
£225m
£200m
£190m
Build your analytics
strategy
2.
“… analytics leaders
outperform their rivals by
3% on revenue &
costs…”
SOURCE: McKinsey
How do you get insights from your data?2
We can replicate a spreadsheet in a digital tool –
faster refresh cycle and automated delivery
We can tweak a bit around the edges to improve user
experience and provide greater depth of information
Initial deployment
focussed on
extracting data from
multiple source
systems into
profitability reports.
These replicated
existing reports, with
added interactivity
The data needs to be presented in a way that drives actions2
Represent as a scatter chart – we can focus
on areas of under performance
Diagnostic reporting shows where action
needs to be taken
In phase 2, we
migrated away from
‘traditional’ reporting
and provided a
‘diagnostic’ view of
where to target
performance
improvement
initiatives
£40m
£25m
£8m
£1m
£55m
PRIORYEARGM
CHANGE–EFFECTIVERATE
CHANGE-HOURS
CHANGE-LEVERAGE
CHANGE-PAYROLL
£4m
£6m
CHANGE-OTHER
CURRENTPERIOD
Consider three components of your analytics strategy
2
Data strategyInformation strategy Data governance and data
quality strategy
3 4
What does your team do?
“…70% of time is spent organising
data and managing the process…”
5.
SOURCE: AFP Research, SSON
Finance teams need to change the balance of activities in favour
of decision support, rather than transactional tasks5
Decisions
Decisions
Transaction
Processing
Transaction
Processing
Accounting
& Analytics
Accounting
& Analytics
Value
Value
% of finance time % of finance time
TODAY TOMORROW
In the future operating model, the transactional resources shrink
to just 10% of the total finance team5
The core
(~ 10% of finance
staff)
Stable, lean, highly
automated
transactional
backbone shared
across the entire
business for
transaction
processing
(journal entries,
accounts payable,
tax provisioning etc)
Supports CoEs,
finance analysts
and finance value
leaders through the
provision of
accurate
information
Finance
value
leader
Finance
value
leader
CFO BU 1 BU 2
Finance
value
leader
Finance
value
leader
BU 3 BU 4
Finance
value
leader
BU 5
Finance
value
leader
Finance
value
leader
BU 6 BU 7
Finance
value
leader
BU 8
Dedicated to business unit Shared across units as needed via temporary project assignments Shared across all units in fixed shared services or CoE teams
The problem solvers
(~ 60% of finance staff)
Generalist finance staff aligned to one or more specific communities of interest and deployed on finance projects across
the business as needed, through a robust staffing system
The specialists: CoE’s with deep capabilities
(~ 20% of finance staff)
▪ Centralised reporting and control: Group and business unit level reporting, technical accounting and policies
▪ Revenue analytics: Composition of revenue, revenue sharing, forecasting and budgeting
▪ Client and competitive analytics: Pricing, client and service profitability, competitive positioning
▪ Expense management: Composition of expense, allocation drivers, forecasting and budgeting
▪ Balance sheet: balance sheet and cash/ working capital management, forecasting and budgeting
▪ Tax: Tax planning, tax compliance, tax-audit response
▪ Data engineering: Data modelling, advanced analytics support
SOURCE: New technology, new rules, reimagining the modern finance workforce, McKinsey 2018
The core finance
shrinks to just 10% of
the finance function
A team of specialists
look after e.g.
statutory reporting
and FP&A
60% of the team is
now a flexible group,
who are allocated to
the current priorities
Remaining 10% ‘value
leaders, interface with
the business functions
Can you automate?
6.
“… 54% of finance
activities are either fully
or partially
automatable…”
SOURCE: Bots, algorithms and the future of the
finance function, McKinsey 2018
6
Automation technologies have already yielded benefits within
finance, in many organisations
Accounting
▪ Automating complex journal
entries
▪ Performing and
documenting accounting
reconciliations
▪ Calculating and applying
allocations
Accounts payable
▪ Entering non-EDI invoices
▪ Performing 2-way invoice
matching
▪ Processing expense
approval requests
▪ Completing audits (e.g.
duplicate supplier payments)
Account receivable
▪ Generating and validating
invoices
▪ Applying cash to outstanding
balances
▪ Analysing and processing
disputes
▪ Creating reports (e.g. AR
aging)
Financial planning and
analysis
▪ Building standard
management reports
▪ Consolidating and validating
budget and forecast inputs
▪ Gathering and cleaning data
for analysis
Payroll
▪ Flagging time-sheet errors
and omissions
▪ Auditing reported hours
▪ Harmonising data across
multiple time keeping
systems
▪ Generate GL postings &
allocations
Other
▪ Preparing external reporting
templates
▪ Conducting transaction
audits of high risk areas
▪ Preparing funding transfer
requests
Finance activities automation potential Finance automation use cases
SOURCE: Bots, algorithms and the future of the finance function, McKinsey 2018
Invest in your team
7.
“…Your team’s skills need to adapt
to the evolving requirements,
finance of tomorrow need greater
data science and influencing
skills…”
Do you understand your
8.
“… CFOs are motivated to
change culture, but don’t
always know how…”
“… middle managers are
often blockers to achieving
culture change…”
teams’ culture?
8
A number of cultural models are available to achieve tangible
performance outcomes
Understand culture and correlate with
performance
Culture models help define where we are
now, and where we need to make shifts
National coffee chain used the analysis
change their finance teams approach
from competing with each other to
collaboration
SOURCE: The culture factor by Spencer Stuart, Harvard Business Review, 2018
Learn how to engage with IT
9.
A. Don’t leave it all to IT
B. Choose the right PM
C. Ensure you have programme
delivery governance
D. Choose the right partner
E. Choose the right applications
SOURCE: When finance meets IT: the top 5 pitfalls,
Generation CFO, 2019
Agile is not just a buzzword
10.
“… build in small iterations,
using cross functional teams
to deliver ‘products’ which
are more relevant to the user
requirements…”
10
Agile methodology ensures benefits are realised faster, and is
more likely to meet user expectations
SOURCE: https://medium.com/idealo-tech-blog/what-is-minimum-viable-data-product-49269e338d85
10
Many organisations have adopted the ‘Spotify’ model to deliver
change, which better aligns changing strategic priorities
LEADERSHIP
TRIBE
SQUAD
Current strategic priorities are
defined, along with performance
targets in each area that need to
be achieved
These priorities are cascaded
down the organisation, iterative
loop is used to determine the
effectiveness and ensure 2-way
communications
Current strategic
priorities
Business reviews +
objectives and key
results definition
Squad OKR
Squad ideas backlog
Tribes reflect on results then:
▪ Set 3-5 top objectives and
key results
▪ Describe planned initiatives
to achieve each ‘OKR’
Each squad translates this into
their top OKRs to achieve
Each squad has a backlog of
prioritised ideas, which can be
actioned to achieve OKRs, and
delivered for the next reporting
period
GOALS
GOALS
GOALS
GOOD
IDEAS
GOOD
IDEAS
GOOD
IDEAS
About the presenter
Expertise
Tanbir Jasimuddin | Finance, Operations & Analytics Expert
I am an experienced business transformation consultant, with over 19 years’ experience in disrupting and digitising organisational processes,
through a knowledge of strategy, operations and digital technologies. I bring deep knowledge of corporate finance, management information
strategy, finance/ERP systems and analytics
I bring a collaborative/ facilitative style, working with stakeholders across all levels of the organisation. I am passionate about improving performance
through data analytics, and I am considered an innovative problem solver and delivery manager
Strategy and functional management: Strategic planning, data driven decisions, financial modelling, information strategy, governance
Transformation: Business value case, programme initiation, roadmap design, project planning and execution, Agile methodology
Digital Expertise: Data visualisation (including Qlik, Tableau, Power BI), CPM applications (including Anaplan), Finance systems (Oracle, SAP), Data strategy, Data
governance, RPA, Certified scrum master/ product owner
Photos sourced from Unsplash
Slide 2: Wesley Tingey
Slide 3: Craig Whitehead
Slide 4: Hafidh Satyanto
Slide 5: Kamila Maciejewska
Slide 6: Adeolu Elutu
Slide 9: Josh Appel
Slide 11: Lou Levit
Slide 15: Sebastien Pichler
Slide 18: Alex Knight
Slide 20: Josh Calabrese
Slide 21: Aaron Burden
Slide 23: Markus Spiske
Slide 24: Irfan Simsar
Vector icons designed by Freepik and distributed by Flaticon
Acknowledgements and credits
Additional contributions and research from Chris Argent, Generation CFO

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Future of finance, in the law firm

  • 1. CFO’s view – how do we evolve, to drive value in the law firm of the future? 8TH OCTOBER 2019 LONDON LAW EXPO
  • 2. A large number of disruptors in the legal sector How can the CFO rise to the challenge?
  • 3. CFO’s roles are changing? “65% of CFOs believe that there will be fewer jobs as a result of digital advancement; and 38% believe their roles will become very different…” SOURCE: SAP CFO survey
  • 4. Cost reductions? The traditional approach has been to analyse and initiate spend reduction programmes
  • 5. But… the business requires “… 92% of business are driven by positive goals: agility, transformation, competition. Only 5% are driven by cost reduction…” “… 48% of companies are competing on data and analytics, this is up from 5% of companies in 2006…” SOURCE: NVP Data Innovation Research, 2019 customer centricity
  • 6. CxO’s agree that finance …but, research shows there is a gap between finance chiefs’ current leadership on the executive team, and what others expect… Should spend more time LEADING SOURCE: Why CFOs need a bigger role in business transformations, McKinsey, 2017
  • 7. According to BCG, only 24% of transformations generate ‘above market’ value – the CFO’s role is to identify value creation sources
  • 8. How does a CFO create value? Invest in growth Transform operations Balance sheet
  • 9. Understand your business “… where do you create value? Where do you leak value?…” model 1.
  • 10. The value leakage view of the law firm1 MAXRATE,ACTUALUTILISATION CONTRACTRATE,ACTUAL UTILISATION INVOICEDRATE COLLECTEDRATE CONTRIBUTION NET MARGIN £280m Improve negotiation skills Improve delivery efficiency Improve working capital Improve leverage Reduce overheads PROFIT PER PARTNER £100m £75m MAXRATE,MAXUTILISATION £350m Improve sales £225m £200m £190m
  • 11. Build your analytics strategy 2. “… analytics leaders outperform their rivals by 3% on revenue & costs…” SOURCE: McKinsey
  • 12. How do you get insights from your data?2 We can replicate a spreadsheet in a digital tool – faster refresh cycle and automated delivery We can tweak a bit around the edges to improve user experience and provide greater depth of information Initial deployment focussed on extracting data from multiple source systems into profitability reports. These replicated existing reports, with added interactivity
  • 13. The data needs to be presented in a way that drives actions2 Represent as a scatter chart – we can focus on areas of under performance Diagnostic reporting shows where action needs to be taken In phase 2, we migrated away from ‘traditional’ reporting and provided a ‘diagnostic’ view of where to target performance improvement initiatives £40m £25m £8m £1m £55m PRIORYEARGM CHANGE–EFFECTIVERATE CHANGE-HOURS CHANGE-LEVERAGE CHANGE-PAYROLL £4m £6m CHANGE-OTHER CURRENTPERIOD
  • 14. Consider three components of your analytics strategy 2 Data strategyInformation strategy Data governance and data quality strategy 3 4
  • 15. What does your team do? “…70% of time is spent organising data and managing the process…” 5. SOURCE: AFP Research, SSON
  • 16. Finance teams need to change the balance of activities in favour of decision support, rather than transactional tasks5 Decisions Decisions Transaction Processing Transaction Processing Accounting & Analytics Accounting & Analytics Value Value % of finance time % of finance time TODAY TOMORROW
  • 17. In the future operating model, the transactional resources shrink to just 10% of the total finance team5 The core (~ 10% of finance staff) Stable, lean, highly automated transactional backbone shared across the entire business for transaction processing (journal entries, accounts payable, tax provisioning etc) Supports CoEs, finance analysts and finance value leaders through the provision of accurate information Finance value leader Finance value leader CFO BU 1 BU 2 Finance value leader Finance value leader BU 3 BU 4 Finance value leader BU 5 Finance value leader Finance value leader BU 6 BU 7 Finance value leader BU 8 Dedicated to business unit Shared across units as needed via temporary project assignments Shared across all units in fixed shared services or CoE teams The problem solvers (~ 60% of finance staff) Generalist finance staff aligned to one or more specific communities of interest and deployed on finance projects across the business as needed, through a robust staffing system The specialists: CoE’s with deep capabilities (~ 20% of finance staff) ▪ Centralised reporting and control: Group and business unit level reporting, technical accounting and policies ▪ Revenue analytics: Composition of revenue, revenue sharing, forecasting and budgeting ▪ Client and competitive analytics: Pricing, client and service profitability, competitive positioning ▪ Expense management: Composition of expense, allocation drivers, forecasting and budgeting ▪ Balance sheet: balance sheet and cash/ working capital management, forecasting and budgeting ▪ Tax: Tax planning, tax compliance, tax-audit response ▪ Data engineering: Data modelling, advanced analytics support SOURCE: New technology, new rules, reimagining the modern finance workforce, McKinsey 2018 The core finance shrinks to just 10% of the finance function A team of specialists look after e.g. statutory reporting and FP&A 60% of the team is now a flexible group, who are allocated to the current priorities Remaining 10% ‘value leaders, interface with the business functions
  • 18. Can you automate? 6. “… 54% of finance activities are either fully or partially automatable…” SOURCE: Bots, algorithms and the future of the finance function, McKinsey 2018
  • 19. 6 Automation technologies have already yielded benefits within finance, in many organisations Accounting ▪ Automating complex journal entries ▪ Performing and documenting accounting reconciliations ▪ Calculating and applying allocations Accounts payable ▪ Entering non-EDI invoices ▪ Performing 2-way invoice matching ▪ Processing expense approval requests ▪ Completing audits (e.g. duplicate supplier payments) Account receivable ▪ Generating and validating invoices ▪ Applying cash to outstanding balances ▪ Analysing and processing disputes ▪ Creating reports (e.g. AR aging) Financial planning and analysis ▪ Building standard management reports ▪ Consolidating and validating budget and forecast inputs ▪ Gathering and cleaning data for analysis Payroll ▪ Flagging time-sheet errors and omissions ▪ Auditing reported hours ▪ Harmonising data across multiple time keeping systems ▪ Generate GL postings & allocations Other ▪ Preparing external reporting templates ▪ Conducting transaction audits of high risk areas ▪ Preparing funding transfer requests Finance activities automation potential Finance automation use cases SOURCE: Bots, algorithms and the future of the finance function, McKinsey 2018
  • 20. Invest in your team 7. “…Your team’s skills need to adapt to the evolving requirements, finance of tomorrow need greater data science and influencing skills…”
  • 21. Do you understand your 8. “… CFOs are motivated to change culture, but don’t always know how…” “… middle managers are often blockers to achieving culture change…” teams’ culture?
  • 22. 8 A number of cultural models are available to achieve tangible performance outcomes Understand culture and correlate with performance Culture models help define where we are now, and where we need to make shifts National coffee chain used the analysis change their finance teams approach from competing with each other to collaboration SOURCE: The culture factor by Spencer Stuart, Harvard Business Review, 2018
  • 23. Learn how to engage with IT 9. A. Don’t leave it all to IT B. Choose the right PM C. Ensure you have programme delivery governance D. Choose the right partner E. Choose the right applications SOURCE: When finance meets IT: the top 5 pitfalls, Generation CFO, 2019
  • 24. Agile is not just a buzzword 10. “… build in small iterations, using cross functional teams to deliver ‘products’ which are more relevant to the user requirements…”
  • 25. 10 Agile methodology ensures benefits are realised faster, and is more likely to meet user expectations SOURCE: https://medium.com/idealo-tech-blog/what-is-minimum-viable-data-product-49269e338d85
  • 26. 10 Many organisations have adopted the ‘Spotify’ model to deliver change, which better aligns changing strategic priorities LEADERSHIP TRIBE SQUAD Current strategic priorities are defined, along with performance targets in each area that need to be achieved These priorities are cascaded down the organisation, iterative loop is used to determine the effectiveness and ensure 2-way communications Current strategic priorities Business reviews + objectives and key results definition Squad OKR Squad ideas backlog Tribes reflect on results then: ▪ Set 3-5 top objectives and key results ▪ Describe planned initiatives to achieve each ‘OKR’ Each squad translates this into their top OKRs to achieve Each squad has a backlog of prioritised ideas, which can be actioned to achieve OKRs, and delivered for the next reporting period GOALS GOALS GOALS GOOD IDEAS GOOD IDEAS GOOD IDEAS
  • 27. About the presenter Expertise Tanbir Jasimuddin | Finance, Operations & Analytics Expert I am an experienced business transformation consultant, with over 19 years’ experience in disrupting and digitising organisational processes, through a knowledge of strategy, operations and digital technologies. I bring deep knowledge of corporate finance, management information strategy, finance/ERP systems and analytics I bring a collaborative/ facilitative style, working with stakeholders across all levels of the organisation. I am passionate about improving performance through data analytics, and I am considered an innovative problem solver and delivery manager Strategy and functional management: Strategic planning, data driven decisions, financial modelling, information strategy, governance Transformation: Business value case, programme initiation, roadmap design, project planning and execution, Agile methodology Digital Expertise: Data visualisation (including Qlik, Tableau, Power BI), CPM applications (including Anaplan), Finance systems (Oracle, SAP), Data strategy, Data governance, RPA, Certified scrum master/ product owner
  • 28. Photos sourced from Unsplash Slide 2: Wesley Tingey Slide 3: Craig Whitehead Slide 4: Hafidh Satyanto Slide 5: Kamila Maciejewska Slide 6: Adeolu Elutu Slide 9: Josh Appel Slide 11: Lou Levit Slide 15: Sebastien Pichler Slide 18: Alex Knight Slide 20: Josh Calabrese Slide 21: Aaron Burden Slide 23: Markus Spiske Slide 24: Irfan Simsar Vector icons designed by Freepik and distributed by Flaticon Acknowledgements and credits Additional contributions and research from Chris Argent, Generation CFO