Finance teams are planning to invest more time and resources into business partnering despite the barriers that hinder its effectiveness, such as inadequate systems and skills.
These are the key findings of a recent Deloitte report, Changing the Focus: Finance Business Partnering, based on 134 interviews with senior finance professionals from organisations in the UK.
“Companies in different regions (of the world) face the same challenges, such as developing finance talent to be effective business partners,” said Malcolm Wilkinson, a partner at Deloitte.
A growing trend among international companies is the pooling of finance talent across several regions to provide more effective finance business partnering services. “In a traditional structure, the divisional or regional FD (financial director) of a small team can’t cover all of the business partnering agenda with the skills they’ve got at their disposal, which is why you find global centres of excellence emerging,” Wilkinson said.
Contributing to other functions
Finance business partnering involves finance professionals using their expertise to support the strategic and tactical priorities of business functions within an organisation. This includes providing financial leadership when businesses develop strategy and ensuring projects are more cost-effective. Other terms that are often used to describe business partnering are finance, planning and analysis agenda, and commercial finance agenda. According to the Deloitte survey:
- Thirty-four per cent of respondents said they are investing more than 30% of their time in delivering business partnering activities.
- A large majority (83%) want to increase these activities over the next three years.
- Seventy-six per cent of the finance leaders surveyed said business partners add value by helping other functions make better decisions.
- Other ways in which they are perceived to add value includes enabling strategic initiatives (noted by 58% of respondents) and improving financial performance (56%).
“Done well, finance becomes an integrated contributor to key business processes, such as target-setting, forecasting, capital investments, risk management and governance,” Wilkinson said.
At the US athletic apparel clothing company Under Armour Inc., for instance, such a shift can be seen in the seating chart, as professionals are moving out of finance and directly into the business units.
“Collaboration is key,” the company’s CFO, Brad Dickerson, said during a panel last year. “The days of accountants or financial people sitting at a computer and sitting at their desk all day are long, long gone.”
Although organisations are investing more in business partnering, the Deloitte study says that significant barriers are hindering finance’s ability to be effective partners.
Without the right internal and external data, finance teams have struggled to make informed decisions. The study found that 57% of respondents believe their finance systems were a barrier to partnering because they did not provide the necessary data.
Taking on a business partnering role requires finance professionals to adopt a new set of skills, such as commercial acumen, the ability to challenge, negotiate, influence and communicate, and manage relationships. More than half (52%) of finance teams believe that they do not have the capabilities required to be effective partners.
In addition, four in ten finance leaders said there was a lack of buy-in, or mandate, from the business for finance to play a business-partnering role. This is because some organisations fail to recognise the value that finance business partnering can add.
The key to establishing a mandate, said Wilkinson, is for the head of finance to set a value agenda. This means that the CFO or financial director should identify up to six areas in which finance should become partners during the next year.
“It helps finance people feel they have permission from the top and reduces barriers to information from other departments. I’ve never known a business partner to fail to get the information they require from other areas once they know what they are pushing for,” Wilkinson said.
Sky’s the limit
Some of the UK’s largest companies already embrace business partnering. The nation’s largest commercial TV operator and official Premier League football broadcaster, British Sky Broadcasting Group (BSkyB), has a track record of involving finance in decision-making throughout its 20-year existence.
Rob Collie, BSkyB Group’s director of finance delivery and performance, said that the benefits of business partnering are better, faster decision-making.
“The role of finance has to be upfront in the decision-making process,” he said. “If we are going to make a decision, whether that is about moving Sky News to high definition or doing a deal with Formula 1, we are trying to make these decisions very quickly, and you need finance to be involved in it. [Finance] can’t be a policeman after the event.
“Because finance is like the glue across different business areas, it allows us to support trade-offs between teams,” he added. “Finance is involved in all decisions, so we are better able to weigh up all the options and support cross-business decisions.”
To get business partnering right, Collie recommends, finance leaders must be clear about the role that business partners assume. This means pulling them out of transactional work, if required, and making it clear that their time should be spent partnering.
“Managing [your team] as a pool of people – rather than individuals – who you are going to move on to different decisions, is important,” he said. “You need to align resource against where decisions need to be made.”
Collie said there needs to be a commitment from the CEO downwards to involve finance, otherwise finance teams will not have the mandate to provide support.
He said it is important that staff members are given the opportunity to develop communication and interpersonal skills in a decision-support environment.
A top priority
Respondents to a global survey conducted by the Chartered Institute of Management Accountants (CIMA) rated the need to increase cross-functional collaboration and business partnering as a top priority. The research indicated that better integration of finance with other functions will be needed in the future to enhance the performance of finance in driving the organisation to meet its goals. That could include broadening the role of the finance function so that it has greater responsibility for the outcome of strategic decisions, rather than being merely an internal consultant in the process.
“For most global companies that started off with big group finance centres, one challenge has been to really question whether that structure is able to meet today’s needs. What is the role of the group centre, and what value does it add?” Paul Venables, group finance director at global recruiting firm Hays, said in the CGMA report Inside Track: Partnering for Value.
“In my view, finance should be pushed as close as possible to the decision-making part of the business even when that is across an international network and the company is based in a lot of different countries,” he added. “Fundamentally, the better skills and people you can have right at the coalface, the better chance you have of better decisions and success in what is a very fast-paced world.”
Related CGMA Magazine content:
“Are You an Accountant or a Problem-Solver?”: The corporate finance professionals who climb the value chain will be interpreters and collaborators able to leverage data as a strategic asset while working across functional areas to solve problems and innovate, according to executives speaking at the American Institute of CPAs’ Council meeting in Washington.