CGMA: Elevating the Finance Function
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CGMA Presentation at AICPA 2013 CFO Conference
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CGMA: Elevating the Finance Function
- 1. CGMA: Elevating the Finance Function Game CFO 2013: The Essential CFO Maximizing opportunities in a rapidly changing environment Session 202 - Friday May 17, 2013 Kenneth Witt, CPA, CGMA AICPA #AICPA_CFO
- 2. American Institute of CPAs Kenneth W. Witt - Bio Kenneth W. Witt, CPA, CGMA, serves as Technical Manager in the Business Industry and Government team at the American Institute of Certified Public. Ken is the staff liaison to the Business & Industry Executive Committee which provides insight and guidance on professional issues and trends relevant to AICPA’s members working in business and industry. Ken also created and manages the AICPA Business & Industry Economic Outlook survey, and is involved in a variety of thought leadership and professional development activities for AICPA members and the CGMA designation. Ken received his BBA in accounting from the University of Iowa and started his career with Touche Ross & Co. He has held management positions in audit and control for both public and privately held companies. He has also consulted to businesses in a wide range of industries including manufacturing, distribution, technology, financial services, insurance and real estate, as well as not-for-profit profit and public institutions. 2
- 3. American Institute of CPAs
- 4. American Institute of CPAs Objectives Todays session will help participants better understand: • The evolving role of the finance function • What successful finance functions are doing to achieve greater efficiency and increase effectiveness • Barriers to improvement • How CGMA resources can help to “elevate the game” of your own finance function 4
- 5. Rate your finance function On a scale of 1-5 How would you rate your finance function in terms of… #AICPA_CFO
- 6. American Institute of CPAs Rate your finance function #1 Data and Systems • Data standards, quality, consistency of data • Standardized chart of accounts and processes • Integrated systems Transaction Processing • Cost efficient • Quality, continuous improvement 6
- 7. American Institute of CPAs Rate your finance function #2 Reporting • Timely, efficient • Management information as well as external reporting Internal Control • Financial Reporting • Compliance • Operations 7
- 8. American Institute of CPAs Rate your finance function #3 Staff Capabilities and Development • Technical Skills • Analytical skills and business understanding • Communication, management, leadership skills Operational Analysis • Across all areas of business model – revenues, expenses, operations, HR, supply chain • Financial and non-financial drivers – market share, customer value, etc 8
- 9. American Institute of CPAs Rate your finance function #4 Decision Support • Forecasting – revenues, cash, operating costs etc. • Capital, other investment appraisal, new business, M&A, etc. Planning • Involvement and utilization of data analysis in processes - Strategic planning - Activity planning – strategic initiatives, performance targets - Financial planning – budgets, forecasts - Capital - Scenario planning and modeling 9
- 10. American Institute of CPAs Rate your finance function #5 Leadership and Change • Strategy and performance management • Major decisions • Risk management • New business development • Change management Reputation • Reputation of CFO and senior management • Reputation of finance function as a whole 10
- 11. American Institute of CPAs Rate your finance function - scoring Area Score Data and Systems Transaction Processing Reporting Internal Control Staff Capabilities and Development Operational Analysis Decision Support Planning Leadership and Change Reputation Total 11
- 12. American Institute of CPAs Rate your finance function - barriers To what extent do the following serve as barriers to finance function improvement in your organization? (scale of 1-5) Barriers Score Technology Limitations Capacity / Bandwidth Skills and Capabilities Organization Mandate Other Total 12
- 13. Discussion
- 14. The changing role of finance
- 15. American Institute of CPAs Technology drives disruption The position of a ‘Navigator’ is now redundant 15
- 16. American Institute of CPAs The Navigator…. 16
- 17. American Institute of CPAs …………………………………is redundant today 17
- 18. American Institute of CPAs …replaced by technology 18
- 19. American Institute of CPAs Finance function has delivered scale benefits Shared Service Centers Technology SCALE BENEFITS Focus on Process and Technology 19
- 20. #AICPA_Banks There is potential to deliver greater business benefits INCREASED ANALYSIS BUSINESS SUPPORT REAL BUSINESS BENEFITS Focus on People and Organization 20
- 21. American Institute of CPAs In business, analytics many times provide a rear view image Dashboards are backward looking and obstruct a clear view of the road ahead 21
- 22. American Institute of CPAs How a management accountant delivers 22
- 24. American Institute of CPAs New Skills and Fast Track Reports 24
- 25. American Institute of CPAs Bath Research CIMA Centre of Excellence at the University of Bath School of Management More than 2,000 professionals surveyed • Broad range of industries • 1354 in finance function • 871 senior executives – non-finance Business demands and finance function responsibilities Comparative analysis • Finance perceptions as providers vs. perceptions of internal customers Supplemental interviews 25
- 26. American Institute of CPAs Top findings Business needs for basic accounting information being well met. However, there is an unmet need for better information Mandate exists for greater contribution from finance However, workloads limit capacity, and higher level skills are needed 26
- 27. American Institute of CPAs Performance 27
- 28. American Institute of CPAs And Reward Those who undertake management support activities are: • 67.1% better remunerated • 66.8% promoted faster • 53.3% more difficult to retain 28
- 30. American Institute of CPAs Getting a seat at the table Providing reliable management information is the basis for accountant’s place at the table when it comes to performance management and strategic decisions. CGMA Report -New Skills, Existing Talents 30
- 31. American Institute of CPAs Step 1 - Increasing Efficiencies Leverage technology to reduce costs and free up resources Standardize systems and automate processes Shared services – in-house or outsource • 49% of companies > 250 employees use shared services • Don’t outsource bad processes • Look for opportunities to task shared service centers with higher value work Focus on quality and process improvement • Lean / Kaizen • Six Sigma 31
- 32. American Institute of CPAs Step 2 – Focus on Non-financial value 68% of business value is non- financial 51% of CEOs said their organizations measured non- financial value well Focus on drivers of: Cost Risk Value 32
- 33. American Institute of CPAs Step 3 – Provide support for operations The results do show, however*, that higher performing organizations, on average place more responsibility on finance to support these decisions. CGMA Report -New Skills, Existing Talents * Correlation evidence - causality is not clear from available data 33
- 34. American Institute of CPAs Operational activities / decisions Supporting risk and complexity management Contributing actively to operational / performance management decisions Offering advice and support to decision-making throughout the organization Actively developing financial awareness and expertise where needed in the organization Contributing actively to business portfolio decisions 34
- 35. Be proactive Provide forward-looking information Harness the potential of business intelligence (BI) Embrace greater responsibilities in “big data” Step 4 – Provide Insight and Foresight 35
- 36. Step 5 – Influencing Strategy and Operations As organizations become bigger and more complex, management capabilities need to improve in stride to ensure performance standards are maintained and managed in the best interests of the company. CGMA Report -New Skills, Existing Talents 36
- 37. Driving cost reduction strategies within finance and throughout the organization Setting challenging objectives to ensure the business is run in the long-term interests of its owners Developing and implementing strategy Initiating and leading innovation and change Helping to ensure remuneration policy supports long-term value creation Leading the identification and assessment of new business opportunities Six Key Strategic Activities 37
- 38. American Institute of CPAs Facing constraints, finding solutions Main constraints to finance function and finance professionals taking on a broader role: Capacity – current workload Mandate – sometimes not clear Skills Needed • Commercial awareness • Analysis tools • Management skills • Influencing skills 38
- 39. American Institute of CPAs How accountants say they should spend their time 39
- 40. American Institute of CPAs Action Plan 40
- 42. 424242
- 43. Thank you
Notas del editor
- The CGMA recognizes the work you do that goes beyond financial accounting. The CGMA showcases valuable skills and expertise that management accountants do for businesses worldwide. It tells employers that you, the designee, have the competencies, ethics and determination to help businesses succeed.Your CPA tells the world you have the mastery of financial reporting, an understanding of regulations, laws and standards and the technical and analytical skills to do outstanding work. The CGMA, on top of your CPA, further recognizes the work you do that doesn’t fall under the CPA umbrella.With the CGMA, the AICPA and CIMA have created an enormous global community of 180,000+ CGMA colleagues to meet, share challenges and solutions and network, virtually and in-person. The AICPA and CIMA are providing tools, webinars, publications, research—and more—to keep CGMAs at the forefront of the profession.
- Let’s look at an analogy. Many years ago, a navigator was an important member of the flight crew. The crew now consists of a pilot and copilot.
- The role of the navigator was to advise the captain, understand the position of the aircraft and avoid hazards. Without a navigator, the captain was flying blind.
- Technology ultimately made the role of navigator redundant.
- Over the last several years, finance leadership has driven efficiency and cost reductions in transaction services.
- Forward looking analysis and business support will help finance drive value for the organization.
- For most businesses, technology is critical and an enabler. However, analytics many times is backward looking. The finance professional can help the business look forward.
- Our research shows that currently, the provision of management and operational support services – such as exposing poor performance, actively supporting decision making in the business and supporting product development – absorbs a relatively minor part of the finance function’s resources. The bulk is still dedicated to producing and reporting information. Going forward however, there is a shift with clear evidence that both organisations and finance professionals themselves see the need for an increased allocation of resources and focus on management support and partnering services.This is driven by the strong perception that such activities add value by helping the organisation to perform better through improved decision making.
- Furthermore, finance professionals also see further incentives in the shift in focus on partnering services. They perceive management support roles as providing better rewards and also a faster careeradvancement route to leadership. CIMA’s globalsurvey has found a high level of agreement tosupport this trend: