How Intel Finance Uses Business Partnerships to Supercharge Results

By Boedeker, Russell R.; Hughes, Susan B. | Strategic Finance, October 2005 | Go to article overview

How Intel Finance Uses Business Partnerships to Supercharge Results


Boedeker, Russell R., Hughes, Susan B., Strategic Finance


The roles of the finance and accounting functions have changed over the past few years. In place of the traditional scorekeepers and tabulators, both accounting and finance personnel now find themselves operating in cross-functional teams working to identify new business opportunities, streamline operations, and improve profitability. Intel describes the active involvement of finance and accounting personnel in making decisions that affect the various operating units as a business partnership between finance and operations.

The business partnership concept began at Intel during the 1980s and accelerated to its current state during the leadership of CFO Andy Bryant. In a successful partnership, finance personnel use their business influence to help operating areas deliver above-average financial and business results, thereby increasing shareholder value. Since the finance function isn't involved in the daily activities of the operations area, it stays focused on the financial impact of various decisions. Operations gains a finance partner who is well versed in the business, is skilled at data analysis, and has the ability to clearly communicate the financial returns of various decisions.

To better understand how Intel developed its finance partnerships into a best-practice approach to achieve operating and financial excellence, we interviewed senior controllers and operations managers within Intel. Their overwhelming conclusion is that when a highly competent general manager and a strong finance professional form an effective partnership, they can accomplish great things within the business unit.

THE FINANCE BUSINESS PARTNER

The Finance Vision and Charter (Table 1) emphasizes the importance of finance as a partner and identifies the potential for finance personnel to enhance profitability. Rather than working for a specific operating unit, finance personnel are employed within the finance function (see Figure 1) and partner with at least one operating area. This structure differs from that of organizations in which finance personnel work within specific operating areas and locations.

[FIGURE 1 OMITTED]

An Intel finance professional may support operating areas as small as a single department or as large as an entire factory, depending on the experience level of the finance employee. The finance charter says finance employees are to "provide effective analysis, influence, leadership, and control as business partners" to their operating areas. Using its network across the company, Intel finance is able to tap expertise from finance employees who support other operational areas. For example, other finance employees may have developed expertise at solving particular pricing or valuation issues that are currently being analyzed within other parts of the organization. By staying in a separate reporting structure, Intel finance maintains an objective view across the company and works in the overall best interests of the stockholders.

Maintaining finance as a separate function--one that's responsive to and anticipates the needs of the operations area--results in an environment in which finance guides operations to make better decisions for the company than the group would have made without finance's involvement. The final decisions, however, remain with the operations manager, either the general manager or vice president. This lack of decision-making authority for finance can lead to conflicts and requires finance personnel to use effective partnership techniques to achieve optimal decisions without needing to involve others.

In order to form and maintain effective business partnerships, the finance partner must:

* Understand the key business drivers. This knowledge allows finance personnel to identify potential solutions and provide recommendations that operations can support effectively.

* Develop and possess influencing skills. The finance partner must clearly communicate the value-added components of the solution and provide compelling reasons to adopt them. …

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