Finance must change. No longer simply the controller of month-end books and transactional processes, the Finance function must transform into a genuine business partner. But what does this mean for today’s Finance function? How and where does it embark on the journey to a transformed World-Class Finance function? This paper sets out to consider the current state of today’s Finance function and what Steria believes is shaping its transformation.

1. WHITE PAPER
www.steria.co.uk/futureoffinance
The future of Finance
Leading the way to operational excellence
with a re-defined Finance function
Finance must change. No longer simply the controller of month-end
books and transactional processes, the Finance function must transform
into a genuine business partner. But what does this mean for today’s
Finance function? How and where does it embark on the journey to a
transformed World-Class Finance function?
This paper sets out to consider the current state of today’s Finance
function and what Steria believes is shaping its transformation.

2. The future of Finance www.steria.co.uk/futureoffinance
What does the future of Finance look like?
Steria is a leading provider of Finance & Accounting (F&A)
outsourcing and consulting services. As such, we stay abreast of
What are the characteristics of tomorrow’s World
organisational thinking in Finance to supplement our own
Class Finance function?
experience and ideas for the development of the function.
Our belief is that Finance must raise its game and move from
primarily tactical transactional work to become a partner at the
Ë Through the CFO, it provides the strategic advice and input to the
heart of the organisation.
Board that helps create the business strategy and action plans.
Adding value
Ë It has transformed its relationship with the business, making itself
Tomorrow’s Finance function will be focused on creating value for directly valuable across the organisation by supporting close
the corporate body. It will allow the business to answer crucial working and fostering strong relations and understanding of the
questions, such as: diverse business units.
Ë Do you understand how your business is performing – not how Ë It is an agile function, adapting to the relentless pace of business
you ‘think’ it is performing? change more quickly than its average rivals. For example, the
ability to reduce fixed costs speedily has been of vital importance in
Ë Do you know whether your processes are World Class or even
recent times as the recession led to large falls in revenue.
whether you are heading in the right direction?
Ë Is the information you get from your systems truthful and
providing just one version of the truth?
Tomorrow’s Finance function will be one in which the Chief Finance
Officer (CFO) is seen as a key driver in shaping strategic direction, by
being in the position to identify new opportunities (and business
drivers) and articulate the benefit of seizing them. The CFO will
partner with the Board while the wider Finance function will become
World Class, capable both of safeguarding the company’s assets and
of supporting and enabling the business.
Business Performance Financial Assets
Finance is a driver of operational Finance maximises strategic
performance and an identifier of future leverage of assets while
business value, opportunities and risk managing risk
Financial Reputation Financial Processes
Finance is a value-adding asset to Finance is a frictionless engine room,
the business through investor agile and dependable in its activity
The Finance Organisation and delivery model
relations, financing and talent
at the heart of the business
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3. The future of Finance www.steria.co.uk/futureoffinance
Embarking on the journey
Steria has defined a journey to the low cost, high value Finance function in which World Class characteristics prevail. We have termed this the
journey to operational excellence (see below).
Transformation
Industrialise
commercialise
Measure
(focus on service)
Good for business
Scale
Efficient
(bring resources
together)
Standardise
(do them in the
same way)
Simplify
Effective
(do things better)
Effective Efficient Transformation
Organisation Readiness
This journey has been driven by the pressures on the Finance function Yet many Finance functions are finding that a range of (remarkably
that have intensified over the last five years – not least because of similar) issues inhibit their ability to meet the challenges. Accurate
the economic situation, more stringent regulatory regimes in and timely information is still difficult to extract from the data held,
different countries and changing demand from within the business. mainly because systems are inflexible and often fragmented. This
There is an increasing need for faster information and a more agile also contributes to the fact that the Finance function is still held back
response to change, particularly with mergers, acquisitions or from innovative, forward looking strategic support to the business by
collaborative ventures, and in some cases having to address being pre-occupied with transactional and tactical issues. Often,
business divestment. the analytical tools themselves are limited in their ability to support
Finance and business needs. Business processes with financial
As such, the Finance function is expected to provide greater
underpinnings are themselves too complex, fragmented and prone
business insight, give more relevant decision support and make
to error or delay.
recommendations regarding business opportunities based on
Finance’s analyses and extrapolations. These demands must be All these barriers present a problem to the Finance function which
met whilst still meeting routine expectations of timely closing of can limit the degree of influence and leadership the CFO may exert in
the books each period. the boardroom. Small wonder that the need for strategic advice to be
given to the business is often lower on the list of urgent things to do.
“
We have evolved our service delivery model over the past years to a level
where we are now independently assessed as being a World Class provider.
Its been a long hard journey with an ongoing agenda of continuous
improvement that, in truth, never ends as we constantly have to look for
new ways to add value to the businesses we serve and support "
Mike Wood, Chief Operating Officer, NHS Shared Business Services
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4. The future of Finance www.steria.co.uk/futureoffinance
Transactional engine
The journey to World Class Finance lies in overcoming these barriers This engine room ensures that Finance is agile and dependable in
and building a new organisation capable of strategic support and its activity and delivery model. It features:
agility. Firstly, however, a more strategic Finance function mustn’t
Ë Simplified, standard processes
forget the nuts and bolts of its activity: the transactional F&A
processes that keep the wheels of business turning. Ë Full automation and web/e-enablement
In order for Finance to move higher up the value chain, its Ë High value-added services in shared service centre (eg Treasury)
transactional and reporting services must be put in order. They
Ë Fast month-end close
should be so slick that everyone takes them for granted. Information
provision should be painless, pervasive and useable. It is the snags Ë Real time use of dashboards
and errors and inefficient actions that taint the credibility of Finance
Ë World Class cost (c0.5% of revenue – depending on industry,
and hold back the business’s trust. A frictionless, well-oiled
company size etc)
transactional engine is essential to Finance’s reputation.
These are the attributes of World Class transactional processing.
Many organisations have adopted an outsourcing model to deliver
this engine room with its potential to free up Finance to assume
the role of partner to the business.
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5. The future of Finance www.steria.co.uk/futureoffinance
Gaining control
Interestingly, World Class organisations tend to be more ambitious in But can outsourcing really be relied on to maintain quality levels in
their approach to outsourcing and a shared service outsourcing transactional processing and reporting? This is an often-asked
model is increasingly being viewed as an opportunity to achieve both question by those Finance organisations anxious that outsourcing
economies of scale and operational excellence. For example, at might be counter intuitive to the idea of control. Steria’s belief is that
Steria’s joint venture with the Department of Health, NHS Shared far from losing control, an outsource business partnership instils
Business Services, around 30% of NHS organisations are procuring a control. Any outsource relationship has to be built on formalised
range of services, including Finance & Accounting, and benefiting agreements with documented control frameworks and agreed service
from huge economies of scale in a shared service model targeted at levels. Processes will be defined and codified and your outsource
delivering around £250 million savings over a 10-year period. partner will be expected to give the business information that, more
often than not, your Finance function previously struggled to provide.
“
Our vision for the Future of Finance, as a key force in driving value creation,
is closely aligned with our approach to Intelligent Cost Management.
Working with our clients to focus at the strategic, not purely the tactical,
level. Developing ways to improve decision making. Helping them build the
skills and attributes of a World Class Finance function. Helping them make
the transition from a focus primarily on accounting, to a focus on creating
value, and generating sustainable improvements in business performance.”
Davinder Ahluwalia, Steria UK & India CFO
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6. The future of Finance www.steria.co.uk/futureoffinance
Five steps to operational excellence
1. Strategy: Finance is uniquely placed to see across the entire 4. Business assurance: the Finance remit of protecting assets and
business with a clear, factual understanding based on numbers. being a guardian of financial probity means that its controlling
It will take this financial data alongside a broader vision of functions may act against its need to support the business and
economic trends, extrapolating and advising the Board as to provide acknowledged business value. Internal controls may be
where the future opportunities may lie. It will indicate how the strong and embedded in the business processes but the World
business model or financial structure may need to change to take Class difference is that the controls are designed not simply to
advantage of the business opportunities, or respond to changing prevent untoward events but also, most importantly, to avoid
markets. impeding value creation in the business. Controls are designed by
careful evaluation of the scale, risk, reward and frequency of the
2. Business performance: the Finance function can have a direct
exposure. The right level and efficiency of internal controls will
impact on business performance, using analytics tools to provide
meet the fundamental Finance remit without impeding relations
a single version of the truth, with self service reporting, drill down
with the business for decision support, performance improvement
analysis to inform the future. With an insightful review of past
and value added working
performance the Finance function can carry out modelling and
forecasting and provide business case development and advice. 5. Business process management: Finance’s strategic role can only
It will have access to lead indicators for group strategy and will be enabled by agile business processes – see illustration, below.
share information on profitability, shareholder value and more. A World Class Finance function will simplify, standardise and
automate those business processes that give rise to risk or
3. Organisation & people: the Finance challenge in the journey to
financial action to ensure that they are less labour intensive,
operational excellence is to re-shape the skills, experience and
have lower associated risk, are easier to use and understand,
breadth of business knowledge of its Finance staff in order to meet
are flexible to differing situations and are fast and accurate.
the call for value-adding Finance services. This is achieved by a
Getting to this position will invariably require considerable
Finance organisation constructed in a manner that provides and
IT technology change following careful business analysis
nurtures the necessary close relationships between it and its
and design.
business customers. This might involve co-locating Finance staff
within business units. It might involve expanding the range of
Finance staff skills to become more rounded – perhaps by acquiring
MBA qualifications. It should involve a low cost, commodity shared
service doing the transaction processing and freeing up the Finance
staff to concentrate on partnering the business.
Minimum touch, Agile technology
straight through (eg Service Oriented
processing E-enablement with policy change Architecture)
will reduce manual intervention
and improve speed and accuracy
Automation will enforce new business rules
and standard poloicy
Self service Right sourcing
Right Sourcing will give certainty
to cost base and agility to vary
volume related costs
Chart of accounts Common systems
agile mapping for for transfer of
acquisitions Real time reporting acquisitions
and management
information
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7. The future of Finance www.steria.co.uk/futureoffinance
Tomorrow’s Finance function is efficient and effective.
It is an agile organisation, hiring and retaining top
talent and responding quickly to changing business
needs and acquisitions.
Should accountants also be MBAs? Tomorrow’s Finance function
Of course moving from a heavily transactional-focused environment Finally, Finance has to start building closer relationships with the
to one more closely aligned with the business will demand a cultural business; it has to establish itself as a credible provider of
shift; one in which Finance staff will need a certain amount of quantitative and qualitative information that adds genuine strategic
business acumen. They must have the personal characteristics to deal value based on a complete, single view of the enterprise. Finance
both with the clever analytics and with their internal business should be in the position where it is able to identify opportunities,
‘clients’. They will need to achieve a peer-to-peer relation with tact, spot pressure points, predict and forecast where business
discretion and authority. There may be numerate, well trained MBAs performance is heading and provide recommendations as to possible
among their internal clients, so they must be able to operate with the courses of action.
same breadth of vision and facility.
Tomorrow’s Finance function is efficient and effective. It is an agile
Taken together, these personal characteristics may represent a shift organisation, hiring and retaining top talent and responding quickly
in recruitment, training and career path in order to develop the to changing business needs and acquisitions. It will help to create
rounded skill set needed for the Finance function to become a partner business strategy and action plans. It will understand the business
to the Board. and provide visible assistance to business units in pursuit of their
objectives. Smart and timely decision support analytics along with
Thus the transformation required to move Finance from, in many
greater speed and transparency of information flows will enable a
cases, the book keepers of today to the World Class business
rapid and effective response to today’s challenges. The future of
partners of tomorrow has multiple levels. There is the transition to a
Finance is firmly at the heart of the business.
fully automated, industrialised transactional model, with outsourcing
and shared services highly likely to feature in the delivery of a
frictionless back office engine room. Then there is the cultural shift
Your own journey to operational excellence:
that will demand careful change management and potentially the
How do you currently fare?
involvement of HR to understand the new requirements and
team structure. Is Finance driving your business? Is your Finance operation world
class? Do your systems provide ‘one version of the truth’?
Take Steria’s five minute online Finance Operations assessment with
its report back facility:
Ë Benchmark your Finance Operations
Ë Evaluate your Finance function’s impact on business performance
Ë Understand the characteristics of operational excellence
Ë Pinpoint areas for F&A improvement
Please complete Steria’s assessment at:
www.steria.co.uk/futureoffinance
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8. About Steria
Steria delivers IT enabled business services which help Your own journey to operational excellence:
organisations in the public and private sectors benchmark your current position
operate more efficiently and profitably. By combining in Is Finance driving your business? Is your Finance
depth understanding of our clients’ businesses with operation world class? Do your systems provide
expertise in IT and business process outsourcing, we ‘one version of the truth’?
take on our clients’ challenges and develop innovative
Take Steria’s five minute online Finance Operations
solutions to address them. Through our highly
assessment for an immediate benchmark of your
collaborative consulting style, we work with our clients
F&A position:
to transform their business, enabling them to focus on
what they do best. Our 18,300 people, working across www.steria.co.uk/futureoffinance
16 countries, support the systems, services and
processes that make today’s world turn, touching the
lives of millions around the globe each day.
Founded in 1969, Steria has offices in Europe, India, This white paper forms part of Steria’s Intelligent
North Africa and SE Asia and a 2009 revenue of Cost Management proposition, providing clients with
€1.63 billion. 19.3% of Steria’s capital is owned by its new thinking and new (yet pragmatic) approaches to
employees. Headquartered in Paris, Steria is listed on achieving deep cost reductions without hampering
the Euronext Paris market. future performance.
contact
Steria Limited, Three Cherry Trees Lane, Hemel Hempstead,
Hertfordshire, HP2 7AH
Tel. +44 (0)845 601 8877
www.steria.co.uk/futureoffinance
For more information email:
information@steria.co.uk
or tel: +44 (0)118 984 7047
© Steria st054uk / May 2010