Transforming the Finance Function

"By the year 2005, the finance function as we know it will have changed almost beyond recognition. Transaction processing will be simplified, standardised, routine streamlined and automated. That’s 60% of finance’s current responsibilities about to disappear."

Gregory Hackett, Co-Founder of the US-based Hackett Group

The days of the traditional number-crunching finance department are numbered. Increasingly, world class companies are demanding that their finance function add positive value instead of draining revenue. Transaction processing and control account for 84% of their total activities. The function is not only spending little time on value-creating activities such as decision support and future planning, but it is also consuming a significant proportion of company’s revenues.To rise to the challenge, finance departments must completely transform their activities. But how?

Essential reading for all Finance Directors, this bestselling briefing – now fully revised in a new edition – provides you with a complete toolkit to shift the role of the finance function from corporate scorekeeper to value generator. You will gain a thorough understanding of the extensive range of new techniques needed to fulfil this role and ensure that your finance department is central to your company’s future success.

New to this edition:

• new analysis of IT, shared service centres and outsourcing, balanced scorecard, shareholder value, beyond budgeting, best value
• new case studies

Contents:

• Introduction

PART 1 THE TWENTY-FIRST-CENTURY FINANCE FUNCTION

• Finance in the twenty-first-century organization
• The process of transforming the finance function

PART 2 THE TECHNOLOGY-DRIVEN FINANCE FUNCTION

• Shared service centres
• Outsourcing
• Information management delivering business intelligence

PART 3 VALUE-BASED MANAGEMENT

• Delivering shareholder value/best value
• Valuing intangible assets/intellectual capital

PART 4 BEYOND TRADITIONAL BUDGETING

• Scenario planning, forecasting and resource allocation
• The balanced scorecard
• Benchmarking

PART 5 EXECUTIVE SUMMARY

List of figures

Foreword

Introduction

Acknowledgements

PART 1 THE TWENTY-FIRST-CENTURY FINANCE FUNCTION

1 Finance in the twenty-first-century organization

Development of technology-driven finance from manual to 'lights out'

The challenges of the changing business environment

Changing roles of the twenty-first-century finance professionals

The finance function as facilitator of change, adding company-wide value

Case studies - Leading twenty-first-century organizations

2 The process of transforming the finance function

Introduction

Establishing the transformation project

Analyze the present finance function activities/processes

Develop the vision for the future of the finance function

Create the change strategy

Aligh staff skills and competencies

Implement the transformation

Monitor the success and results of implementation

Case studies - Worldwide excellence in finance

PART 2 THE TECHNOLOGY-DRIVEN FINANCE FUNCTION

3 Shared service centres

Introduction

Which processes are best suited to an SSC?

Checklist of technical considerations in establishing an SSC

Phases in the implementation of an SSC

Benefits of the SSC approach

Case study - SSCs at Ciba Speciality Chemicals

4 Outsourcing

Introduction

IT outsourcing - risks, problems and lessons learnt

Outsourcing the finance function

Application service providers

Outsourcing partnerships

Case study - Outsourced shared services at the BBC

5 Information management delivering business intelligence

Introduction

Defining the business requirements

Technological developments

Formulating a company-wide information strategy

Knowledge management

Decision support and business intelligence tools

Case study - Data warehousing at Nationwide

PART 3 VALUE-BASED MANAGEMENT

6 Delivering shareholder value/best value

Introduction

Rappaport's theory

Shareholder value calculation models

EVA exercise

EVA example

SVA options matrix

Best Value

Embedded value-based management

Characteristics of VBM organizations

Inter-business unit charging and service level agreements

Case study - Creating corporate value at Wienerberger

Case study - Value-based management at British Aerospace

7 Valuing intangible assets/intellectual capital

Introduction

Customer (relational) capital

Organizational (structural) capital

Human capital

Corporate reputation

Enterprise risk managememt (ERM)

Ethical, environmental and social reporting

Case studies - Managing intangibles

PART 4 BEYOND TRADITIONAL BUDGETING

8 Scenario planning, forecasting and resource allocation

Resource allocation

Empowered organizational culture

Beyond traditional budgeting

Scenario planning

Forecasting

Case studies - Beyond traditional budgeting

9 The balanced scorecard

Introduction

Measures that drive performance

The strategy-focused organization

Weighting the balanced scorecard

The ten commandments of implementation

Links to quality frameworks

Case studies - e-BSC

Case study - Manchester Housing's information strategy

10 Benchmarking

Introduction

Types of benchmarking

Data-gathering methods

Phases of the benchmarking process

The Benchmarking Code of Conduct

Benefits of benchmarking

Case study - Tower Hamlets benchmarking project

PART 5 EXECUTIVE SUMMARY

References

Index