Leading business advisors

Finance business partneringMaking the right move

Contents

About the finance business part nering study.

Snapshot of key findings 5

The role of the CFO is shifting 7

Getting started requires a solid approach 10

You want to do it right, but how do you ensure success? 11

• Define value opportunities 12

• Prioritise and spend time on value-adding activities 13

• Build an information and analytics platform 14

• Develop, attract and retain the right capabilities 16

• Ensure business alignment and capacity 18

Contacts 20

In 2014, Deloitte launched the finance business part­nering study inviting finance leadership from top Danish and multinational com panies to share their views on finance business partnering.

Snapshot of key findings

The business wants finance to step up95% do not experience lack of buy-in from the business as the #1 barrier.

But, 1 in 4 is unclear about the value that business partnering could provide.

The majority of businesses surveyed, wait for finance to make a move, but many finance organisa-tions fail to seize the opportunity, because they do not actively involve the business in how and where finance can add value. Finance wants to step out of the shadows91% seek to increase the level of business partnering over the next three years.

2 in 3 spend less than 30% of their time partnering with the business. To succeed, finance needs to reprioritise and make a serious effort to put business partnering on the agenda.

System barriers prevent success62% of the companies identify inadequate finance systems as a barrier to effective businesspartnering.

If finance cannot get the basics right, they lose credibility as a business partner, so be sure toprioritise accurate and reliable data.

Moreover, the right tools and systems can enable insight and transparency critical to the success of a business partner. However, be careful not to put off business partnering initiatives until systems are perfect (they will never be). Business partnering is mainly about people, relationships and com-petences.

Finance is lacking the talent45% state that the biggest challenge in relation to delivering finance business partnering is that they lack the talent to partner with the business.

Business partnering is a personality – not a job description. While the analytical toolbox needs to be in place, the business rate capabilities, like business acumen, influencing skills and strategic thin-king are even more important. Unfortunately, those capabilities are lacking in many finance orga-nisations.

Not a desk top exercise31% have no coordinated approach to business partnering – it is ad hoc driven by individuals.

Moreover, many business partners get tied up in operational activities, which limit their availability to the business and focus on business partnering activities. Successful organisations have freed up their business partners from the majority of operational activities by clearly aligning roles and responsibilities throughout the finance organisation.

Finance business partnering is still hot on the CFO agenda and compared to common beliefs, business wants finance to step up and act as a true business partner and hereby providing the opportunity for the CFO’s to impact the business agenda.

5

The essence of business partnering:

Acting as one with the business to create the highest financial value at an acceptable level of risk throughout the organisation.

Deloitte

The role of the CFO is shifting

The role of finance is chang-ing. Driven by shifts in internal and external factors, finance needs to be agile, lean and ready to respond to the needs of the business.

The latest trends demonstrate that the role of the CFO isshifting towards a focus on exploring new frontiers.

The ability of finance to provide the insight needed for better decision-making is rapidly becoming a compara-tive advantage. This is especially the case for many com-panies trying to achieve profitable growth in difficult mar-kets, however, in many organisations finance does not deliver the insight required to drive better performance.

The increasing demand on finance to create a high- performing business culture has encouraged CFOs around the world to look to and embrace finance busi-ness partnering.

Many organisations have already started investing in and developing finance business partnering capabilities. How-ever, it is important for CFOs to translate such capabilities into tangible strategic benefits that are meaningful to the organisation.

Making the transition from a traditional back office func-tion to a strategic business-facing front office is not always an easy task and requires commitment and effort.

Organisations that successfully build business capabilities in finance are outperforming their piers.

Succeeding as business partners will impact the bottom line, and the business leaders are turning to finance to have them step up as true business partners.

Deloitte’s view is that finance now has the opportunity to use the wealth of available data to provide insights that guide, influence and challenge decision-making in the business. However, this will remain difficult to achieve as long as business partnering continues to be an ill-defined discipline. As such, finance must clearly define the role of the business partner, the capabilities required and the performance expectations to take advantage of this op-portunity.

95% of finance organisations do not experience lack of buy-in from the business as the primary barrier to succeeding in business partnering.

7

The modern finance function is an increasingly important strategic partner to the business, acting within a range of complex roles.

Finance business partnering –supporting strategy formulation

and execution

Figure 1: Deloitte's four faces of the CFO

CFOs must assess the level of opportunity to deliver more value to the business against the four key roles that their finance function has to play: steward, operator, strategist and catalyst. Each role is important. However, while the operator and steward activities are important enablers of finance business partnering, leading businesses aspire to optimise the amount of time spent on those activities in or-der to let finance focus on being effective catalysts and strategists.

The strategist and catalyst roles deliver the most value to the business, enabling better decision-making and sup-porting the delivery of business strategy and performance. CFOs must prioritise the efforts to unlock the benefits that finance business partnering can deliver. The Deloitte fi-nance business partnering survey confirmed that the main benefits identified are the ones that support finance’s strat-egist and catalyst roles, including:

• Better decision-making (76%)• Enabling strategic initiatives (60%)• Improvement of financial performance (60%)• Better sense of risk and more responsiveness to

changes in the economic environment (40%).

Achieving tangible benefits requires concentration of part-nering efforts within the areas of the business that can de-liver the most value in return. Understanding particular business areas where a finance strategist or catalyst role is most useful is essential to selecting the right focus. Howev-er, this is often where finance fails. To identify how to de-ploy efforts successfully requires a strategic approach sup-ported by sound knowledge of the business drivers and of the untapped business opportunities across the organisa-tion.

Leading edge

Threshold performance

Finance function

Strategist

Operator Steward

Catalyst

Efficiency Contro

l

Perfo

rman

ce

Execution

Catalyst• Gain business alignment

to successfully identify, evaluate and execute strategies.

Strategist • Leveraging financial

perspective to improve risk awareness.

• Strategic decision-making.• Integrating performance

management.

Steward• Ensure company

compliance with financial reporting and control requirements.

Operator• Dynamically balance

costs and service levels in delivering on the finance organisation’s responsibilities.

8

Why is business partnering becoming more important?Expectations for finance are changing, and there is a hea-vy demand from the business that finance drives perfor-mance with increased focus on strategic advice and busi-ness insight. That provides an opportunity for CFOs to help drive the strategic agenda of the organisation.

As finance is uniquely positioned by having access to all re-levant data and analytics, they can focus their effort on the problems and opportunities that are most critical to the business.

Business partners assist the business with better decision-making by focused interventions via their insight into the biggest challenges/opportunities.

A refocus of efforts towards driving business and sharehol-der value and providing the right environment to success-fully create value is a demanding task, and organisations are thus focusing on implementing strategies to provide better conditions for business partnering. The figure below illustrates the shift of business support requirements for fi-nance. While standardisation and automation result in less time spent on traditional accounting, the finance function increases time spent on supporting the business by increa-sing the information value. The shift results in an increased focus on providing strategic advice, business insights and decision support.

Figure 2: The evolving role of business partnering

Taking a strategic approach to ensure that finance business partners are focused on key areas of activity will gain trust and buy-in from the business. A consistent approach to de-fining and delivering finance business partnering activities ensures that valuable resources are aligned to the organi-sation’s goals. Acting together with the business in order to define those activities and goals results in shared expec-tations of the value that finance business partners provide.

When finance executives are asked to define the main barriers to delivering financial business part-nering, a lack of role definition and a lack of under-standing of value drivers are at the top of the list together with limitations on talent and capabilities to deliver.

While competences and capabilities are critical success fac-tors, it is Deloitte’s view that they take second place to the main challenges of having a clear picture of the organisati-on’s value drivers and well-defined roles in regard to deli-vering that value.

Figure 3: Finance influence on shareholder value

Before investing in finance business partnering, be sure to have the foundation in place.

76% of the organisations identified better decision-making as the key benefit of investing in business partnering.

Decisionsupport

Financereporting

and planning

Transactionalactivities

Transactionalactivities

Traditional view Emerging view

BIinvestments

ERP, SSC andoutsourcing

Businesspartnering

DataManagement

PerformanceManagement

FinanceAnalytics

Businessinsight and

decision support

Strategy advice

Financereporting and planning

Getting the basics right

• Foundation for your continued journey

• Your permission to speak

• You will free-up time!

Value-adding reporting and direction-setting finance

• Clear visibility to your internal customers

• Often measured indirectly in terms of managerial effectiveness

Partner with the business

• Define your strategic business partner focus areas

• Create the business case • Measure the shareholder

value from your activities

9

DELIVERY OF STRATEGY

Fo

cused interventions

Trust and common langu

age

FINANCE BUSINESS PARTNERING ENABLE

RS

Operatingmargin

Revenuegrowth

Marketexpectations

Informationand

analytics

Business alignmentand

capacity

Talentand

capability

Assetefficiency

VALUE CHAINValuecreation

Getting started requires a solid approach

Deloitte has a proven methodology to help clients identi-fy value drivers, define the finance business partnering role and recognise the operational enablers required to deliver value to the business. The finance business part-nering framework identifies the key activities that finance may deploy to deliver value and the operational enablers required to deliver that value.

It is essential to apply a consistent approach across the business when implementing finance business partner-ing. This ensures that priority areas and activities are iden-tified, and that the financial return on any partnering in-vestment is justified.

Figure 4: Deloitte's finance business partnering framework

Delivery on strategyThe finance business partnering framework identifies areas through which business partners can add value. Each value driver can be associated with finance business partner activities that can add significant value to an or-ganisation and help unlock opportunities.

EnablersThe underlying enablers required to effectively deliver the desired business partnering activities are identified in the diagram below. Aspects such as organisational structure, people, data, process and technology are key to empow-ering the finance function with the tools to deliver those value-adding activities.

31% of respondents stated that an uncoordinated approach to business partnering represents the big-gest challenge to achieving finance business partner-ing buy -in within the organisation.

Deloitte's finance business partnering framework provides a structured approach that enables the finance function to unlock their business partner potential.

10

Finance finds it challenging to deliver on the business requirements, but most of the challenges lie within finance.

Moving finance to the foreThe increasing demand on finance to create a high-per-forming business culture has encouraged CFOs around the world to look into and embrace finance business part-nering. The expectations of finance to add more value to the business are growing, and the opportunity for finance to support business success has never been better.

If the business wants finance to step up, why do so many finance organisations fail to seize the opportunity and de-liver according to expectations? In many cases, it is the transition from the traditionally known finance factu-al-based work to the more non-factual relationship-based work and the inability to visualise how to get to the desi-red end state that prohibits them to step up.

To succeed as finance business partners, the enablers need to be in place, but what should organisations start with - getting the systems and data platforms in place, recruiting finance business partners or ensuring alignment with the business on the understanding of the value drivers?

Deloitte has identified the key drivers and the sequence to implement to ensure sucess.

You want to do it right, but how do you ensure success?

Define value opportunities Understand the key value drivers and work closely

with the business to identify and prioritise the big-gest value opportunities.

Prioritise and spend time on value- adding activities

Define success measures with the business based on the identified value drivers to ensure that time and focus are spent on the value -adding activities.

Build an information and analytics platform

Equip business partners and the business with in-sightful information and ensure that you have a back office function that provides the analytics platform and ensures data integrity.

Develop, attract and retain the right capabilities

Define the capability and competence require-ments for successful business partnering. Match against the current organisation and develop a plan to close the competence gap.

Ensure business alignment and capacity

Ensure that clear roles and governance are in place to ensure that the environment supports the busi-ness partners’ focus on value creation. Business partnering is not a desktop exercise.

There are significant opportunities for finance functions to explore when partnering with the business. By trying to manage all opportunities at once, finance will find it hard to convince the business of the benefits that a finan-ce business partnering environment can deliver. However, through identification of a small number of value-adding opportunities, a pilot approach can be deployed to evalu-ate the merit of investing in business partnering.

Challenges:• Spends a lot of the time on getting numbers right

• Backward-looking, not forward-looking

• Inadequate skill set

• Fragmented system support

• Risk-based financial controls

11

Value-creating opportunitiesBusiness partner strategy and activities should always take a starting point in the business strategy.

Developing a successful partnering organisation requires finance to be clear about its role in value creation in the business.

Effective business partnering should therefore focus on the key drivers of value in the organisation.

In the process of building a business case and measuring the value of business partnering, it is important to focus on the activities and interventions that deliver the most value for the given resources and thus pick the low-han-ging fruits.

Figure 5: Finance's influence on shareholder value

Define value opportunities

If the strategy delivers real value to the business, it can act as a springboard for finance to take on further business partnering activities.

It is Deloitte’s view that in order to maximise the effects, the first step to succeed is to engage the business and in collaboration perform a value-mapping session to identify the areas in which the finance function can contribute to value creation in the business.

By engaging the business at this stage, organisations maximise the likelihood of getting buy-in and acceptance of the business partner initiative.

Once the value opportunities have been defined, organi-sations will have a commitment from the business and can better determine the kind of analytical data they need access to and the kind of competences that are re-quired to succeed. That approach will ensure a faster, more efficient and less expensive deployment of business partnering and will ensure that success can be demonstrated faster. While business partnering requires a mandate to succeed on a broader scale with the busi-ness, these smaller scale successes will ensure increased credibility and buy-in on the operational business level and increase the demand for business partnering ser-vices.

Shareholder value

Revenue growth Operating margin Asset efficiency Expectations

Volume Price

realisation

Selling, general and

administrative

Cost of goods Sold Income taxes

Property, plant and equipment Inventory

Receivables and payables

Company strengths

External factors

Productand service innovation

Marketing and sales

Productand service innovation

Retention

Account management

Cross-sell/ up-sell

Cash/asset management

Demand andsupply

management

Price management

IT, Telecom

and networking

Real estate

Human resources

Procurement

Business management

Financial management

Finished goods

Work in process and

raw materials

Operational excellence

Partnership and

collaboration

Relationship strength

Strategic assets

Accounts, notes

and interest receivable

Accounts, notes

and interest payable

Equipment and systems

Real estate infrastructure

Agility and flexibility

Business planning

Governance

Program delivery

Business performance management

Logisticsand

distribution

Merchandising

Service delivery

Improve development

and production efficiency

Product development

Materials

Production

Income tax management

Improve corporate/

shared service efficiency

Marketing and

advertising

Sales

Customer service and

support

Order fulfillment and billing

Retain and grow current customers

Strengthen pricing

Leverage income-

generating assets

Improve inventory efficiency

Improve execution capabilities

Improve income tax Efficiency

Improve managerial and

governance effectiveness

Improve PP&E

efficiency

Improve logistics and

service provision efficiency

Improve receivables and

payables efficiency

Improve customer interaction efficiency

Acquire new customers

12

Once the value opportunities have been defined, it is necessary to ensure that organisations prioritise the activi ties that create the most significant value to the business and deselect the others.

Are business partners freed up from operational activities? Business partnering is performed whenever the request and opportunity presents itself.

In order to be positioned and able to act as a true busi-ness partner, the CFO's strive towards freeing up business partners from operational activities, as business partner-ing takes place all week.

Figure 6: Example of prioritised business partner value map

21% of business partnering time is spent on true business partnering activities.

Deloitte's studies show that the business controllers spend 75% of their time preparing reports, which only 25% of the audience find useful when managing the business.

Prioritise and spend time on value-adding activities

Shareholders value

Volume Selling, general and administrative

Revenue growth Operating margin

Acquire new customers

Cash/asset management Sales

Customerservice and

support

Orderfulfillment and

billing

Value opportunity low Value opportunity medium Value opportunity high

13

Build an information and analytics platform

With the opportunities defined and prioritised, it is essen-tial that the required data become easily accessible.

Figure 7: Current level of system support of FBP activities)

Internal and external data need to be high quality, timely and easy to analyse in order to fully equip finance busi-ness partners with the tools to perform their role. Many organisations have invested in new ERP platforms and have optimised business processes. The question is – have organisations sold themselves short by not broaden-ing their transformation investments to incorporate the

reporting and analytical tools required to enable finance business partnering activities?

Some of the key questions to help defining the data re-quirements are:• What information is required to support realisation of

value opportunities?• To what extent does management reporting include

operational, external and forward-looking measures?

A practical approachFinance business partnering requires a combination of financial and operational data supported by robust finance systems. In addition, finance has a tendency to fo-cus on what is comfortable – historical backward-looking data. With support from finance, organisations must fur-ther embrace looking to the future through the use of leading performance indicators. Finance should drive the organisation to consider future indicators and outcomes and should source the data and information that will sup-port finance business partners with forward-looking pro-active data enablement .

62% of respondents believe that their finance systems are a barrier to effective finance business partnering.

Reporting and predictive tools, allowing informative analytics 5%

Mainly spreadsheets 14%

Reporting and predictive tools widely available, minimal use of spreadsheets 17%

Basic reporting tools supported by offline spreadsheets 64%

14

Finance business partners are a valuable resource, yet they often spend a significant amount of time on data manipulation, reconciliations and reports that are of no direct value to the business.

Typically, that is caused by poor systems and proces-ses. Fundamentally, there is a lack of understanding of the activities that will add value to the business, and until that is resolved, they will be unable to drive the required change and unlock the potential.

Develop, attract and retain the right capabilities

With the value opportunities defined and prioritised, the core competences required from the business partner can be defined.

A personality not a job descriptionA simple one size fits all approach to finance business partnering does not work, and blindly sourcing more technical accounting skills is not the answer. Defining the skills, knowledge and behaviours necessary for effective finance business partnering requires a prescriptive ap-proach. Developing those competences requires a clear talent strategy.

Figure 8: Defining the #1 challenge to delivering finance business partnering

Higher performance through functional and personal ex-cellence leads to bigger organisational value. Successful finance business partners are seen as leaders who can in-fluence the decisions that a business makes beyond the numbers. Traditionally, finance development programmes have focused on honing technical proficiency and not on commercial leadership or influencing behaviours.

The combination of the identified top competences sug-gests that finance business partners should be business leaders and strategic advisers. That is a move towards a more commercial skill set than has traditionally existed in finance.

With this list of necessary competences comes a challen-ge of how to recruit, train, develop and retain talent that meets the criteria. Organisations need to look at their existing talent agenda and ensure that focus in relation to the changing role of finance is correct.

Lack of talent with the

appropriate skills

Lack of defined organisatorial

structure and roles

Lack of understanding

of value drivers andaccessibility

of information

Technology limitations

Inefficient processes

Weak existing relationship

with the business

0%

10%

20%

30%

40%

34%

22%

15%12% 12%

5%

Commercial acumen was ranked #1 competency required by a finance business partner.

16

A practical approachManaging employee performance when there are com-plex reporting lines and responsibilities to both the busi-ness and finance requires a strong definition of those re-sponsibilities and accountabilities and a set of clearly described performance outcomes.

The Deloitte approach to help clients identify their indivi-dual partnering competences and develop finance busi-ness partnering talent follows a structured path, and con-sideration is given to tangible outcomes that individuals can describe, recognise and deliver. These outcomes – we call them value events – are again focused on identifying priority activities that help finance’s business counterparts create additional value.

Commercial acumen/decision-

making: 90%

Customer focus: 55%

Outcome focus26%

Strategic thinking:

43%

Analytical capability: 88%

Challenge, negotiation and influence: 52%

Relationship management: 19%

Ability to reprioritise when strategy and/or

environment changes 36%

Project management: 31%

Figure 9: The number one competences to prioritise when developing finance business partners

30% of organisations believe that they do not have adequate resource capacity in finance to successfully deliver business partnering.

17

Ensure business alignment and capacity

With the value opportunities defined and prioritised, the CFO needs to ensure that the organisation is ready to de-liver on these opportunities.

Are the roles clearly defined?To ensure success as a business partner, the finance oper-ating model needs to be aligned with the business part-nering vision, and the internal KPI’s and compensation models need to be structured accordingly.

A clearly defined finance operating model will ensure a cost efficient finance function, as duplication and poor al-location of tasks and resources will be eliminated.

Figure 10: Finance operating model

Are business partners freed up from operational activities?Once the finance operating model is defined and opera-tional, the roles and responsibilities within the finance function are clear, and hence the business partners will be fully dedicated to their partnering activities.

Do you have visible buy-in from top management?To succeed with business partnering, top management needs to lead by example.

The board sets the operational standards of the finance function by the level of details they require from the CFO.

A focus on the minute details will direct the focus of the finance function to the operator/steward activities and hence reduce the likelihood of the finance function evolv-ing into business partners.

What activities does the business partner perform?The business partner will operationalise the value oppor-tunities by creating supporting initiatives and ensuring that necessary data and analytics are available to track and illustrate progress.

The business partner will participate in the scheduled business meetings and get an understanding of the stra-tegic and operational challenges. From this insight, the business partner will create transparency for the business decision-makers of the impact of the decision options.

From this insight, the business partner will create transparancy of the impact of the decision options for the descision-makers. The business partner will spend a lot of time with his busi-ness counterparts and less time in front of the PC, as most of the insight and impact are generated from the engagement with the business counterparts.

The business partner will ensure that the decision-makers have the necessary KPIs, data and analyses available to share insight and enable informed decision-making.

Are you ready to harvest the results of business partnering?Successful business partnering has bottom line impact, and can play an active role in outperforming peers in the industry. It is essential to visualise the value they bring to the business – and to the table where decisions are made. Make sure to communicate and celebrate successes, and continuously strive towards contributing to the success of your colleagues.

Business area Business area

Transactional Finance

Centre ofExcellence

Management reporting

Decision Support

Financial controlling

RtR, P2P, O2C

Controlling

Decision Support

Business partnering

Finance operating model Supply chain

Business partnering

Sales and marketing Supply chain

What's the point? 1 in 4 is unsure about the value that business partnering can provide.

18

“Finance business partnering is not just a job description. It requires that you see beyond the numbers to create value for the business.”

“It is no longer enough to approach the business with challenging questions. Direction is needed.”

“Next generation business partnering requires flexible analytics tools to deliver data-driven business insight.”

Claus Thorne Madsen, Partner

Dorthe Harding Keilberg, Partner

Alan Jespersen, Partner

Contacts

For more information on the Deloitte business partnering survey please contact:

Claus Thorne Madsen

Partner | CFO Services+45 30 94 41 32cmadsen@deloitte.dk

Dorthe Harding KeilbergPartner | CFO Services+45 30 93 54 93dokeilberg@deloitte.dk

Alan JespersenPartner | CFO Services+45 22 49 44 66ajespersen@deloitte.dk

Copenhagen, DenmarkWeidekampsgade 62300 København STlf. +45 36 10 20 30koebenhavn@deloitte.dkwww.deloitte.dk

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