Best Practices in Creating a Strategic Finance Function

SAP INSIGHT
BEST PRACTICES IN
CREATING A STRATEGIC
FINANCE FUNCTION
An SAP/APQC CollaborationTable of Contents
Executive Notes 1Introduction 2Is Cost All That Matters? 3Whether to Outsource or Share Services 5Conclusion: A Checklist for a Strategic Finance Function 11BEST PRACTICES IN
CREATING A STRATEGIC
FINANCE FUNCTION
An SAP/APQC Collaboration
by Katharina Muellers-Patel© 2006 by SAP AG. All rights reserved. SAP, R/3, mySAP, mySAP.com, xApps, xApp, SAP NetWeaver, and other SAP products and servicesmentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several othercountries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Data con-tained in this document serves informational purposes only. National product specifications may vary.
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In the wake of recent accounting scandals and in the approaches to streamline and automate financeincreasingly competitive business environment, functions while ensuring that they keep cus-many CFOs and the finance organizations they lead tomers happy (in the case of shared-serviceshave started to take on new strategic roles within the arrangements). enterprise. They are aiming at enforcing stricter con- 2. With the efficiency of the transaction and controltrol processes to ensure legal and regulatory compli- functions assured, these companies can turn toance, offering strategic insights into the internal and devising a more strategic approach for finance -external business environment, and connecting the giving finance not only more of a decision-business strategy with daily operations through per- making responsibility in risk management andformance tracking. compliance but also a proactive role in managingThe trend toward a more strategic role is echoed by the daily cash position and thus increase resourcesthe responses of participants in recent research con- for quick strategic moves. ducted by APQC, an internationally recognized non- One global consumer products company took a two-profit organization that provides best-practice step approach to a more strategic path for finance. Inresearch, metrics, and measures. The participants the first step, the company developed a more effi-indicated that, three years down the road, they antic- cient cash management, accounts payable, andipate spending 30% more time on decision support accounts receivable group of functions in its world-and management (see Figure 3). According to the wide operations, based on greater transparency ofsame research, however, in spite of their aspirations, information. In the second step, the company devel-participants have not made much progress toward a oped "straight-through processing" along every levelgreater strategic role. Finance organizations, no mat- of the finance function, leveraging its global reach toter what their size, report to APQC that they still maximize cash management efficiency, foreign-spend almost two-thirds of their time on transaction exchange exposure, and the global supply chain toprocessing and controls and only one-third on deci- help fund growth, participate in new marketing andsion support and management. distribution arrangements, and comply with world-The difficulty in evolving the finance role lies in wide regulations.bridging the current gap between the finance func- Given the current state of the finance function intion that emphasizes greater efficiency and the U.S. companies, the challenges to that function, andfinance function that becomes a partner in manag- the road map to increasing its strategic capabilities,ing the business. The best companies have found that the following article will share the results of SAPreaching the goal of a more strategic finance func- research as well as APQC's Open Standardstion warra... [download for more]