By Richard Barrett, Published on May 17, 2013
While it is accepted that finance people need to stay up to date with the traditional accounting skills and increasing workload that comes with changes in reporting, taxation and disclosure – not an easy task in itself, a report, ‘New Skills Existing Talents’, just published by the Chartered Global Management Accountant (CGMA) focuses on what extra skills and expertise they need to become key advisers to their organization.
So besides being experts in tax, treasury, corporate finance, statutory reporting and planning and analysis, the report suggests finance needs to ensure that transaction processing operates in a consistent and cost effective way throughout the group within some form of central of excellence that is either offshore, in-house or outsourced – and critically needs to become a true business partner with a deeper understanding of the operational side of their businesses.
Although globalization puts pressure on companies to look for ever greater efficiencies from finance, the report points out that the cost savings from more efficient transaction processing are subject to the law of diminishing returns and are ultimately limited while the potential to extract increased value from finance is far greater. I would add that while is important to have an efficient and cost effective Global Business Services model in place – the type delivered almost out of the box with SAP Shared Services Framework for Financials – it is easily to replicate and rather than being a source of sustainable competitive advantage, is simply a ‘must have’ hygiene factor for finance today.
It is finance’s involvement in performance management that the report suggests is the priority for adding value pointing out that some finance professionals are already fulfilling the remit of providing additional management guidance, such as more incisive non-financial information about the internal and external drivers of cost (using tools such as SAP Profitability and Cost Management) and have started to undertake more rigorous analysis of the data to generate insights that can lead to performance improvements.
However finance consistently rate their ability in delivering value added information to the business ten percentage points or so above that of their non-financial colleagues suggesting there more work to do, especially when it comes to forward-looking information. The report also suggests that outside of transaction processing, efficiency in finance is still ‘work in progress’ with only small incremental improvements to date and that capacity within finance departments is constraining their wider involvement in the business. All of these findings suggest to me that investment in enterprise performance management suite such as SAP EPM is the way forward and given recent news that finance is finally loosening the reins on its cash piles, we can expect investment in this area will grow apace.
They conclude that as long as finance professionals work at providing and analyzing relevant financial information needed to inform these operational and strategic management decisions – and make a concerted effort at developing the necessary skills and business acumen themselves – they will find they have increasing access to executives and senior managers. But, we’re not there yet.