The Road to Strategic Finance: Characteristics of a Highly Effective Finance Function - SID 51781

PUBLIC
Les Smith, Centre of Excellence, Finance, SAP
The Road to Strategic Finance:
Characteristics of a Highly Effective
Finance Function

2PUBLIC© 2017 SAP SE or an SAP affiliate company. All rights reserved. ǀ
1 Drive strategic growth initiatives
2 Collaborate regularly with business units
3 Have effective core finance processes
4 Improve efficiency with automation
5 Have strong influence beyond the finance function
6 Are well equipped to handle regulatory change
Six ways
CFOs are leading the pack

Finance leaders
Win by big margins
Finance leaders are 90% more
likely than nonleaders to report
market-share growth.
Finance leaders are 30% less
likely than nonleaders to worry
about rising costs.
Finance leaders are 43% less
likely than nonleaders to struggle
with outdated systems.
Market-share growth Cutting-edge technology Control over costs
30%43%90%

How do ANZ leaders measure up against their global peers?
Only 38% of Australian and 42% of
New Zealand respondents ranked
“driving strategic growth” among their
top three priorities
Australia and New Zealand
lag 20% behind global peers
on strategically influencing
key decisions
(incl. procurement, supply
chain)
When it comes to understanding the
importance of emerging technologies,
leaders in Australia sit above the global
pack, whereas New Zealand leaders lag
dramatically

XX
Surprisingly, only 56% of Australian and
34% of New Zealand leaders say they are
collaborating effectively with procurement
X
Australia and New Zealand fall behind
their global peers on effective
collaboration with IT
X

How do ANZ leaders measure up against their global peers?
“Disruptive effects from tech
transformation” is reported as the #1
challenge to making finance more
efficient
Lack of workforce skills is the
outweighing challenge for
ANZ on becoming more
efficient
ANZ leaders see tech as less critical to
building effectiveness than global peers and
leaders
XX
ANZ leaders are lagging in collaboration
with governance, risk, and compliance
(GRC) versus global peers and leaders
X
Australian finance leaders fall behind global
peers on effective core finance processes
but are ahead on cost controls
X 
X

Achieving Strategic Success:
Finance 2020

38% of Australian and 42% of
New Zealand respondents ranked
“driving strategic growth” among their
top three priorities
01
Finance’s primary role will be
supporting and executing
business strategy
 Business model transformation
 Mergers, acquisitions, and divestitures
 Capital allocation

 Financial ledgers will be data platforms
 The ecosystem will be as important as the
platform
 Finance is connected to robust business
networks
Finance organizations
will implement finance
platforms, not ERP
systems
Finance leaders in Australia and New
Zealand see technology as less
critical to building effectiveness than
their global peers and leaders
02

 The stakes of failure are high
 Technology will enable proactive risk
management
 Requirements are increasingly driven at
the board level
Finance will own true
enterprise risk management
Australia and New Zealand are lagging
in collaboration with IT, GRC, and
procurement versus global peers and
leaders
03

The top 3 priorities of
CFOs in Australia and New
Zealand are risk, efficiency, and
working capital management
04
Finance will be a business
value creator
 Transfer pricing
 Working capital management
 Tax optimization
 Currency and commodity hedging

 Enterprise analytics and key performance
indicators (KPIs)
 Self-service robots
Finance will be the analytics
hub of the organization
The importance of real-time analytics
and predictive analytics to leaders in
ANZ is not realized today; however, they
recognize the significant role these will
play over the next 2 years
05

 Real-time working capital management
 Continuous accounting and soft close
 Dynamic planning
Core finance processes will
become dynamic and
continuous
“Disruptive effects from technology
transformation” is reported as the #1
challenge to making finance more
efficient in Australia and New Zealand
06

 Robotics and machine learning will
automate 80% of shared services
 Financial reporting, planning, and
budgeting will be highly automated
 “Lights-out finance” will be the norm
Critical financial processes
will be highly automated
When it comes to understanding the
importance of emerging technologies, leaders
in Australia sit above the global pack, where as
New Zealand leaders lag dramatically
07

 Legislation and regulations will increase
 Highly automated compliance capabilities
are needed
 Insight into business networks and
business partners is key
Compliance will be a
strategic differentiator
Only 50% of CFOs globally report that
they meet on a regular basis with the risk
committee, in fact collaborating with other
line of businesses
08

 Though still in early stages, blockchain will
mature quickly over the next 3 to 5 years
 It will bring a two-fold increase in
transparency and accuracy in commercial
activities between entities
Blockchain will reduce
transaction costs and increase
compliance and transparency
09
Only 33% of global finance
leaders realize the importance
of blockchain to the future
success of the finance function

 Cloud applications will provide business
users the same experience as in private
life
 Purchasing apps will feel like Amazon,
travel and entertainment (T&E) systems
like Travelocity, budgeting tools like Mint
Finance will offer internal
users a consumer-grade
experience
10

1. Formulate your plan
2. Work at two speeds
3. Choose your partners
Steps to the future

Achieving Strategic Success with SAP

Value scenarios across the entire finance value chain
Value scenarios across the entire finance value chain
 Mergers and
acquisitions
 Dynamic planning and
analysis
 Real-time customer
and product
profitability
 Continuous
accounting
 Continuous
consolidation
 Real-time line
manager insights
 Revenue
recognition and lease
accounting (IFRS
15/16)
 Real-time plan to
actual cash cycle
 Bank counter-party
risk management
 Foreign exchange
risks
 Real-time receivables
management
 Automated cash
application processes
 Buyer-supplier
integration
 Corporate real estate
management
 Three lines of defense
 Fraud management
and screening
 Access governance
and cybersecurity
 International trade
management
Financial planning and
analysis
Accounting and
financial close
Treasury management
Financial
operations
Governance, risk, and
compliance for finance
VP of finance Head of corporate
reporting
Corporate
treasurer
Head of finance
operations
Chief compliance
officer

The end-to-end SAP solution
Business performance
 A high-profile CFO can boost
revenues.
 “Siloed” finance hurts
performance.
 Growing companies leverage
technology.
 Core finance is key to profitability.
Risk management and compliance
 Finance remains tightly tied to
GRC.
 Macro forces present the biggest
medium-term business risks.
 Finance execs are sanguine about
regulatory challenges…
 …Yet some think GRC could do
better.
Efficiency
 Automation enables a strategic
finance function.
 Daily chores impede adoption of
better tools…
 …Yet upgrades would help.
 Many expect technology’s role to
grow.
Boost your organization’s performance by
ensuring all parts of the business benefit from the
finance function’s insight and influence.
Maximize efficiency by automating core
transactional processes, giving finance
executives more bandwidth for value-added
tasks.
Optimize risk management and compliance by
encouraging closer collaboration between
finance and your organization’s third line of
defense.
Use analytics and other digital tools to decrease data complexity, and explore emerging
technologies to give your finance function a competitive advantage.

Business performance
Reduced
Month-end closing time
75%
Faster key business processes
<1 second
For real-time insight into years of data
Decreased
Sales reporting from 2 hours to 20 minutes
“The journey we are on will allow us to connect
our employees, suppliers, customers, and
networks to our digital core. With SAP
S/4HANA at the center, we are designing and
building solutions that are mobile, intuitive,
robust, and valuable, enabling our customers to
be more autonomous and productive and to
easily do business with us.”
David Scullin, CIO, Ballance Agri-Nutrients

Maximize efficiency
Automated
Credit limit checks, PO processing, job
orders, production orders, and railway
freight calculation
Faster
Closing of books
Better
Visibility of raw-material consumption and
goods-in-transit stocks
“With SAP S/4HANA Enterprise Management
as our preferred digital core to manage day-to-
day business operations and future growth
strategy, we look forward to efficiency,
productivity and market-share gains.”
Yaswant Mishra, President (Corporate) and CFO,
Mangalam Cement Limited

60%
Reduction in segregation of duties
(SoD) violations for each role
50%
Decrease in access management
cycle time
30%
Fewer composite and single roles
“We have a more transparent environment
thanks to SAP governance, risk, and
compliance solutions, and we are better
informed about SoD violations. It is easier to
identify, categorize, mitigate, monitor, control,
and report risks in our business processes.”
V.R. Indarsarath, Vice President – IT, Wheels India
Limited
Optimize risk management and compliance

Take the step to building a prize-winning finance function with SAP
Leverage financial
expertise in strategic
decision making
Envision finance as an
organization-wide
service
Consider next-gen technology
to automate routine tasks
Use analytics to
enhance agility and
drive strategic growth
Encourage collaboration
between finance and
business units

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Les Smith, Centre of Excellence, Finance, SAP
Les.smith@sap.com
Thank you

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The Road to Strategic Finance: Characteristics of a Highly Effective Finance Function - SID 51781