Finance Olympians: Aubrey Joachim Says It Is Not Enough for the Finance Professionals of Today to Just Count the Numbers, the New Economic Climate Means That They Need to Take on a Wider, More Strategic Brief
Joachim, Aubrey, Financial Management (UK)
As the Olympics approach it's worth asking the question: What do management accountants have to do to become tomorrow's finance Olympians? In a recent presentation to Accenture UK's finance team I looked at how the role of tomorrow's finance professional must change from scorekeeper to that of value-adding business partner. Business analytics must be seen as an enabling plat form in this transformation.
I started by asking: What is the "new normal" in the world of business? The areas of modern communications, globalisation, an explosion of data, social media, new business models, volatile business conditions and sustainability are all features of this new paradigm.
But what do business leaders expect from their finance teams? Contributing to strategy and good decision-making is vital, according to research from one of the big four accounting firms.
We are currently seeing huge pressures on the CFO and the finance function coming from two directions. First, changes in the external environment, such as new competitive success factors, the regulatory environment and shareholder demands, are having an effect. Second, it is coming from managers within the business demanding better information and support to cope with the challenges of a more competitive marketplace and changing customer needs. If finance professionals are not faced with those challenges, then it is cause for concern. But the question is: Are they prepared?
There has been a required shift in recent years. The roles of finance and accounting have changed, and will continue to change. In place of the traditional scorekeepers and tabulators, both accounting and finance personnel now find themselves operating in cross-functional teams working to identify a number of issues. They include new business opportunities, streamlining operations, contributing to decision-making and improving profitability.
This change in the finance space is described as a partnership between finance and operations. In other words, the emerging role shift is from financial controller to financial business partner. The strategic role of the finance professional is being enhanced because finance has a greater role in driving and influencing organisational strategy.
One of the core capabilities that finance professionals should acquire in order to move towards world-class performance is developing skills and competencies to provide strategic insights to the organisation. Business leaders are expecting this and the finance professional must move into this space.
Finance's role in strategic management and corporate strategy can take many forms. As well as getting the numbers and controls right, finance should help to develop strategies for managing value and growth. Strategic involvement includes developing robust strategic processes, advising on major investments, product developments, asset and infrastructure investments and working with operational and business managers. Advising on Issues, such as current and expected business mix and capital structure, should also be considered, as should the use of risk return profiles and analytics.
There are, however, strategic questions that must be answered. They include: Which parts of the business are creating value? What are the real drivers of our performance? Which customers and products are profitable? These questions should be posed alongside those of: How are we performing relative to the competition? Which customers are delivering the bulk of our profit? What is driving cash generation?
What organisational decision-makers are looking for is no easy question to answer. Often, it can be information to assess risk and uncertainty, better market analysis, better competitor analysis, or more accurate customer profitability analysis. In my experience, improved understanding of cost behaviour and drivers, improved cost control and management, and more accurate cost information for product costing/pricing, also feature as leading requests. …