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AGILE BUSINESS; AGILE FINANCE
Businesses need to be agile in the digital age and finance must transform in order to better support business agility. A new operating model for modern finance is emerging. Recent CIMA research shows that businesses which have adopted this modern finance model are more agile and out perform their competitors.
By attending this webinar you will:
• Gain an understanding of how the shape and role of finance is changing.
• Identify the skills you will need to future-proof your career.
Agile Business; Agile Finance
Peter Simons FCMA CGMA
Associate Director Research & Development - Management Accounting Unit
Association of International Certified Professional Accountants
LOGIC FLOW OF PRESENTATION
• Management Accounting
• The need for business agility
• A potential new operation model for modern finance?
• Research findings
• Conclusion
DEFINITION OF MANAGEMENT ACCOUNTING
Assembly and Analysis
of accounting & management information
Communication and Application
of accounting & management information
Preserve
valueCreate
value
DEFINITION OF MANAGEMENT ACCOUNTING (ROLES MAPPED ON)
Assembly and Analysis
of accounting & management information
Communication and Application
of accounting & management information
Preserve
valueCreate
value
AnalystReporter
Steward Partner
THE SERVICES MANAGEMENT ACCOUNTANTS PROVIDE
LOGIC FLOW OF PRESENTATION
• Management Accounting
• The need for business agility
• A potential new operation model for modern finance?
• Research findings
• Conclusion
• Disruptive digital technologies
– New Business Models
– Automation of work; jobs disappear
• Geopolitical Disruption
– Debt burden, slow growth, low inflation world
– Economic nationalism in an interconnected world
• Demographics
– Assymetric population explosion
– Five generations in the workforce
• Consumers empowered
– Commoditisation; margins squeezed
– Intangibles basis of differentiation
MEGA TRENDS (ORACLE MBX EVENT)
5 years
10 years
15 years
En
terp
ris
e
Customers
Competitors
Processes
Technology
Regulators
Suppliers
Environment
Stakeholders
CONTEXT OF THE ORGANIZATIONTHE CGMA HORIZON SCANNER:
Digitally
alliances,
Millenials
Industrie 4.0
Automation
Internet of things
Digitally
enabled,
Branded
Economic
nationalism,
Transparency
Demographics
Climate change,
Finite resources Trust?
Confidence?
CSR?
Long list!
See next slide
Digitally
empowered,
Sceptical
DISRUPTIVE TECHNOLOGIES
1) Mobile internet
2) Automation of
knowledge work
3) Internet of things
4) Cloud technology
5) Advanced robotics
6) Autonomous or near
autonomous vehicles
Source: McKinsey Global Institute
7) Next generation
genomics
8) Energy storage
9) 3D printing
10)Advanced materials
11)Advances oil & gas
exploration & recovery
12)Renewable energy
+ Blockchain (distributed ledger technology)?
Managed &
Developed
ValueProposition
Resources &
Relation-ships
Processes,Channels
&Intangibles
Costs &
Revenues
Structure &Governance
HOW ARE CHALLENGES BEING ADDRESSED
BUSINESS MODEL – BUILDING BLOCKS
Main Sources: Euro
Commission Poliocy Brief;
the need for innovation in
business models 2014
Business Model Canvas
Osterwalder 2004,2010
https://www.youtube.com/watch?v=IP0cUBWTgpY
1. Brokerage; trading or payment
2. Advertising; ‘free’ content or services for data
3. Infomediary; data or its analysis
4. Merchant; online retailer, or clicks & bricks
5. Manufacturer; direct sales / added data based services
6. Affiliate; incentives to redirect customers
7. Community; wiki and social networking
8. Subscription; content, networking or trust
9. Utility; metered services, pay per use
BUSINESS MODELS ON THE WEB
Source: Prof Michael Rappa
Managed &
Developed
ValueProposition
Resources &
Relation-ships
Processes Channels
&Intangibles
Costs &
Revenues
Structure &Governance
HOW ARE CHALLENGES BEING ADDRESSED
BUSINESS MODEL – BUILDING BLOCKS
Digital Ecosystem,
may include own
‘digital platform’
Main Sources: Euro
Commission Poliocy Brief;
the need for innovation in
business models 2014
Business Model Canvas
Osterwalder 2004,2010
Cloud
computing
enables
scale;
Automation,
Embedded
controls,
Cognitive
computing
https://www.youtube.com/watch?v=IP0cUBWTgpY
• Challenging trading conditions
– High debt, low growth, risk of contagion
– Economic nationalism but rising tide of globalisation is unstoppable
– Digitalized competition, commoditisation drives down margins
• Businesses becoming digitally enabled
– Ever more efficient
– New business models evolving
– Digital ecosystem can be the most important intangible
• Businesses need to be agile
– Fit, Alert, Flexible and Nimble
– Growth through acquisition rather than organic?
– Counter act commoditisation; Intangibles will be the drivers of success
BUSINESSES NEED TO BE AGILE
LOGIC FLOW OF PRESENTATION
• Management Accounting
• The need for business agility
• A potential new operation model for modern finance?
• Research findings
• Conclusion
Agile Business
• Fit; Efficient, Profitable, Liquid
• Alert to strategic developments
• Prompt in developing responses
• Flexible; Implements new strategies
Goes to market quickly
• Nimble in performance management
AGILE BUSINESS – HOW MIGHT FINANCE SUPPORT AGILITY?
Agile Business
• Fit; Efficient, Profitable, Liquid
• Alert to strategic developments
• Prompt in developing responses
• Flexible; Implements new strategies
Goes to market quickly
• Nimble in performance management
Agile Finance
• Efficient accounting operations
• Informs strategy; drivers of value;
• Leads on Horizon scanning
• Plans; measures to manage progress
• Enables prompt decision-making
• Identifies opportunities to innovate
• Analyses to manage risk
• Ensures efficient resource allocation
AGILE BUSINESS – HOW MIGHT FINANCE SUPPORT AGILITY?
Automation,
(RPA)
Embedded
controls,
Cognitive
computing
Self service BI,
Dimensional
analysis, Big
Data Analytics
provides new
insights
Prompt
execution,
Nimble
performance
management,
KPIs aligned
New
reporting
standards,
Artificial
Intelligence,
Robo writers
Cloud
computing
provides
scalability,
IT fully
integrated
POTENTIAL IMPACT ON MANAGEMENT ACCOUNTING SERVICES
CGMA Employability report
Trends in routine and non-routine tasks in
occupations, United States 1960-2009.
From: OECD Skills Outlook 2013
THE NATURE OF WORK HAS CHANGED AND COULD CHANGE AGAIN
LOGIC FLOW OF PRESENTATION
• Management Accounting
• The need for business agility
• A potential new operation model for modern finance?
• Research findings
• Conclusion
Accounting OperationsProcess management, Standard Reports,
Management Information & Analysis
End to end processes spanning disciplines
FP&A
Analytics
BI (self-
serve)
Decision
Support Performance
Management
Management & Development
Subject
Matter
Expertise
THE NEW OPERATING MODEL FOR MODERN FINANCE
Technology
Centralization
Data Analytics
Influential
WHAT DATA DO WE NEED TO CONSIDER?
JOINING THE DOTS; PRE FINANCIAL MEASURES
Scale & complexity
Difficulty in
accessing
and
analysing
Market Developments
Customer journey
483 all in senior finance roles
76% USA, 24% Canada
Total Revenue: Sector:
31%
23%
26%
20%
$200 million - $1 billion $1billion-$5billion
$5billion-$20 billion $20 billion+
- 50 100
Professional…
Energy and…
Technology,…
Retail
Manufacturing
Healthcare and life…
Higher Education
Financial Services
THE NEW OPERATING MODEL FOR MODERN FINANCE
data report analysis insight influence impact
THE FUTURE OF FINANCE; IMPROVING DECISION MAKING
21%
24%
22%
31%
24%
20%
24%
23%
24%
40%
40%
40%
33%
34%
32%
32%
35%
40%
33%
31%
28%
28%
39%
29%
28%
32%
31%
0% 20% 40% 60% 80% 100% 120%
Cross-functional teams support decision-makers
Finance skills development to improve influence
More Influence
Predictive analytics and artificial intelligence to generate insights
Non-financial KPIs orient capital allocation towards value
Continuous planning and driver-based forecasting
Better Information
Machine learning and robotic process automation for efficiency
Arificial intelligence or embedded controls for risk/compliance
Cloud technologies to accelerate finance modernization
Integrated business services, shared services, centers of Ex.
Greater Efficiency (and consistency)
3 Some Implementation 4 5 Full Implementation
PROGRESS IN TRANSFORMATION TOWARDS
THE NEW OPERATING MODEL FOR MODERN FINANCE
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Finance is not recognized as having the business skills needed
We need more multi-disciplinary skills
We need more analytic skills in order to deliver forward-lookinganalysis
Skills
Our processes are too customized and/or complex
Our technology systems are too outdated or complex
Systems
Finance is unable to get the information it needs in the formatrequired in a timely fashion
Our organizational structure is too complex
Structure
OBSTACLES TO FINANCE TRANSFORMATION
0% 10% 20% 30% 40% 50% 60%
Implemented robotic process automation for routine processes
Standardized our accounting and related processes on cloud ERP
Implemented cloud-based enterprise performance management (EPM)to perform continuous planning and forecasting
Systems / Technology
Migrated our end-to-end accounting processes to SSCs
Centralized finance-related subject matter expertise in global centers
Structure
Agile Finance Leaders Others
‘AGILE FINANCE LEADERS’; FURTHER AHEAD ON THE JOURNEY
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Finance is not recognized as having the business skills needed
We need more multi-disciplinary skills
We need more analytic skills in order to deliver forward-looking analysis
Skills
Our processes are too customized and/or complex
Our technology systems are too outdated or complex
Systems
Finance is unable to get the information it needs in the format required ina timely fashion
Our organizational structure is too complex
Structure
Agile Finance Leaders Others
‘AGILE FINANCE LEADERS’; SAME CHALLENGES, MORE AMBITION
0% 10% 20% 30% 40% 50% 60%
Improving resource allocation
Analysing opportunities to mitigate risks or reduce costs
Analysing opportunities to innovate or grow
Informs Agile Performance Management
Enabling going to market rapidly
Planning and measures of strategic progress
Supports Agile Implementation
Leads on horizon scanning
Leads on intangible drivers of value
Informs Strategy
Agile Finance Leaders Others
HOW FINANCE SUPPORTS BUSINESS AGILITY
0% 10% 20% 30% 40% 50% 60%
Acquired another business
Rolled out a new business unit
Transformed the business model
Launched a new digital initiative
Entered a new market
Identified change and took action
Saw opportunity; launched new product
Agile Finance leaders Others
AGILE BUSINESS; EVIDENCE OVER RECENT YEARS?
AGILE FINANCE LEADERS BETTER SUPPORT BUSINESS AGILITY
• Revenues
95%
5%
0%
70%
25%
5%
P O S I T I V E G R O W T H S T A Y E D F L A T D E C L I N E D
Agile Finance Leaders Other
89%
11%
0
63%
33%
4%
P O S I T I V E G R O W T H S T A Y E D F L A T D E C L I N E D
Agile Finance Leaders EBITDA Other
• EBITDA
LOGIC FLOW OF PRESENTATION
• Management Accounting
• The need for business agility
• A potential new operation model for modern finance?
• Research findings
• Conclusion
• Modern Finance must support business agility
– Efficient,
• Digitally and cloud – enabled
• Integrated, centralized teams
• Automated processes and Management Information
– Better Information
• More transparency and self-service in reporting
• Big picture: scan horizon, identify opportunities
• Small picture: dimensional analysis
• Data analytics provides insights
– More influential
• Professional objectivity, questioning, collaborative conversations
• Champion evidence based decision making
• Ensure focus is on value (preserving & creating)
CONCLUSION 1/3
Accounting OperationsProcess management, Standard Reports,
Management Information & Analysis
End to end processes spanning disciplines
FP&A
Analytics
BI (self-
serve)
Decision
Support Performance
Management
Management & Development
Subject
Matter
ExpertiseCore basic
accounting +
Information
systems,
“Curator”,
Process
management
and Team
building
Critical thinking,
Relationship
building,
Business
knowledge,
Commercial
acumen,
Communication,
Management
and Leadership
Data management,
Data visualisation,
Data analytics,
Dimensional analysis
CONCLUSION 2/3 NEW SKILLS ARE NEEDED
CPD/CP
E
CONCLUSION 3/3 NEW SKILLS THROUGH CPE
