As CFO, you would like your team to provide you and the business with correct and timely information that will allow your organization to make timely and profitable business decisions. You would also like your finance team to be lean and cost as little as possible.
It may seem that being able to deliver on both of these goals is counterintuitive.
However, recent research by APQC (summarized in the The True Measure of Finance Function Excellence: Deliver Value Efficiently) shows that top performing finance teams cost less than mediocre or poorly functioning Finance Teams.
So how does a CFO build an Excellent Finance Function that costs less?
APQC’s report identifies two areas that lead towards this excellence:
1) Efficiency: The Report states that “given that approximately 60 percent of the cost of finance can be traced to labor cost, the argument can be made that what’s holding some organizations back is the over-allocation of talent to low-value adding tasks.”
2) Effectiveness: According the APQC, effectiveness comes from “providing strong analytical support to decision-makers.” APQC has identified that Talent Development is a key investment that organizations need to make to provide effective business support. (Read: 5 Reasons why Talent Development is a Challenge for CFOs).
This Summary Report by APQC is an excellent short read for CFOs that want to improve their Finance Team.
According Mary Driscoll, Senior Research Fellow at APQC, “the topic of finance transformation is not new, but it is back on the front burner. Why? It has to do with the economics of competition these days. Strong and profitable growth is harder to come by in many sectors. There’s little room for error when deciding what actions to take or investments to make to grow market share, retain valuable customers, etc. That’s why more CFOs today are asking: ‘how can finance help the enterprise compete more effectively and achieve the desired financial results?’ At the same time, they are asking: ‘how can we efficiently perform the core work that is necessary, such as getting bills paid and doing basic accounting work?’ The answers often involve major process streamlining and automation.”
CFOs: What are you doing to improve the performance of your Finance Function?
I would like to thank Mary Driscoll from APQC for bringing this report to my attention. I would also like to thank SAP and Chris Herbert for running the CFO Intellectual Exchange Network (IXN) that allows me to network with Leading Thinkers and Bloggers on the topic of the Chief Financial Officer.