The Future of Finance: In the Second of Two Articles, Stathis Gould and Martin Fahy Examine the Many Challenges That an Effective Finance Business Partnering Approach Should Address

By Gould, Stathis; Fahy, Martin | Financial Management (UK), December 2005 | Go to article overview

The Future of Finance: In the Second of Two Articles, Stathis Gould and Martin Fahy Examine the Many Challenges That an Effective Finance Business Partnering Approach Should Address


Gould, Stathis, Fahy, Martin, Financial Management (UK)


Successful organisations are pursuing a three-legged approach to finance. They have moved routine transaction accounting and information processing to shared-service centres (or outsourcing providers) and have established centralised expert services--eg, tax, treasury and internal audit. But most have struggled to refocus their remaining finance resources on finance business partnering (FBP). This is partly because of increased regulatory and compliance requirements, but the complexities of the FBP role require finance directors to recognise the obstacles to change and to focus on several key success factors.

A study by CFO Research Services and Booz Allen Hamilton suggests that there are several obstacles to effective business partnering:

* Outmoded or missing business intelligence and planning capabilities.

* Multiple, fragmented IT systems preventing seamless integration.

* Inadequate resource firepower, unsophisticated processes for resource/capital prioritisation.

* Highly customised or unreliable financial processes supported by underdeveloped analytical tools.

* Uneven quality of leadership and consulting skills in finance.

* An inability to change a decades-old corporate culture.

* Strongly autonomous business units and a corporate centre that manages at arm's length.

* A finance function that is bogged down in transaction processing and crisis management.

* A lack of stature and influence among senior financial managers.

Our work with the CIMA network forum of organisations, comprising 13 multinationals and large UK public-sector bodies, confirms the seriousness of these obstacles. It has also given insights into the initiatives needed to transform the finance function. The structure, process and priorities of each organisation's approach varies, but all are focused on tackling the complexities and challenges of FBP.

Our investigations highlight a trio of often neglected challenges that must address in order to deliver FBP: talent, teamwork and tools. If you want finance people to participate fully in the decision-making process, these three areas are vital.

In a three-legged model of finance that's based on delivering expert services, there is a pressing need to find and cultivate finance professionals who can understand work business requirements and deliver strategic insight. Our study suggests that many finance departments struggle to recruit and retain talented people using the coaching, analytical, consulting and facilitation skills that partnering requires. Every organisation in the study stressed the importance of offering appropriate career paths for emerging finance business partners. This involves changing recruitment and development practices.

Effective finance business partners are expected to be:

* Managers for value--ie, those who understand that delivering sustained shareholder value is the main goal when assessing alternative options.

* Keepers of the business model, who ensure that the whole organisation grasps the key performance drivers.

* Relentless pursuers of efficiency from the investment base, particularly in areas such as capital expenditure, working capital, brands and R&D.

* Executors as well as strategists, who understand that flawless execution is as important as strategy. As the Economist (January 27, 2005) argued, winners "focus on patient execution of sensible, but ambitious, plans ... There are no takeovers, dramas or miracle cures--just relentless, grinding professionalism."

Finance will find it hard to develop these skills without specific programmes to foster them. A key need, therefore, is to put in place the mechanisms and resources, including CPD activities and communication tools, that support good practice and improve the skills of finance business analysts.

Establishing career paths and succession planning for key finance roles will help firms to tackle the challenges created by new finance structures.

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