Building your Finance function’s powerhouse

The time is now

Historically, organisations have been sceptical about the feasibility of centralising business finance. The common perception has been that physical business proximity was essential. However, over the course of the COVID-19 lockdown, remote working has become a commonly accepted practice in nearly all organisations. When supported by the right technology, remote teams in various geographies can collaborate seamlessly. This has accelerated many organisations’ plans to start building Centres of Excellence (CoE) for Business Finance.

Optimise your Finance organisation

A cost-based business case is usually one of the main drivers for establishing a CoE for Business Finance. From our experience, the immediate labour arbitrage benefits associated with low cost locations are usually only a fraction of the cost savings that CoE can bring. The main share of benefits often arise from greater efficiency and standardisation. Implementation of CoE gives a unique chance to rationalise the size of the business finance organisation as a careful review of activities performed by the local organisation can reveal inefficiencies, duplications of effort and non-Finance activities performed by Finance employees. When done correctly, the cost-saving benefits will materialise in the early stages of the CoE set-up. Firstly, roles and responsibilities should be adjusted to ensure that only Finance personnel is reported in the Finance cost centre, and that any activities related to another function or business are transferred out. Secondly, business-wide KPIs should be introduced to determine the optimal size of the finance organisation, such as the number of business controllers per revenue.

Drive efficiency and standardisation

As your CoE organisation becomes more mature, you can benefit from a second wave of benefits. Process standardisation and automation are one of the key drivers for cost savings – even in business Finance (or FP&A). In order to achieve them, proper process governance must be set up, with Global Process Owners (GPO) with responsibilities within the CoE to drive the standardisation efforts across the (business) Finance function.

It is important to note that CoE needs to be staffed with more than just a bare-bones crew to execute daily routine activities. Building internal project capabilities, such as change management and business transformation, facilitates the standardisation process which is a prerequisite for effective process automation.

A great way to kick-start automation within CoE is to set up a dedicated team for data visualisation, process automation and robotics. In some cases, up-front standardisation efficiencies are material, i.e. those teams can be set up within the CoE without increasing the total headcount or costs.

Improve service quality and insights

Centralising knowledge-based activities in a single organisation brings benefits beyond pure cost savings. One of the main benefits of setting up a CoE is actually improved service quality for the business. Typically, decentralised organisations do not have common standards for service levels and perfect access to specialist know-how, which in turn results in varied performance levels across the organisation. Setting up a CoE helps to identify best practices and to share them across the whole organisation.

Service level agreements

Service level agreements and service catalogues are further tools to improve service quality across the whole organisation. You should define them right at the start when setting up the CoE. In order to avoid unnecessary overheads from tracking the service levels, we suggest simply measuring the degree of satisfaction of the Finance customers with the services via brief, standardised and recurring snapshot surveys.

Finance analytics capabilities

When setting up a CoE, it is important that you also integrate Finance analytics capabilities. Advanced analytical capabilities in Finance are becoming more and more important in today’s world. These capabilities go beyond the traditional skill set of Finance analyst or business partner. Data scientists, visualisation experts and automation engineers are starting to become an essential part of the Finance function talent pool.

Decentralised Finance teams usually cannot afford to have full-time data scientists or other technical experts. But a CoE has the scale to have full-time advanced analytical support for finance knowledge-based activities. This brings considerable benefits to the Finance organisation. As an example, a single interactive dashboard can eliminate the need to create many customised reports for each of the business units. This also improves the customer experience for the business, as interactive reporting means that turnaround times decrease.

Enable finance digitalisation

In many Finance organisations, the challenge when embarking on the digital journey starts with the problem of identifying the processes in scope for automation and digital technology.

In order to address the challenge of identifying opportunities, all CoE employees should receive digital training, covering the basics of automation, analytics and visualisation. This enables the CoE organisation to identify bottom-up automation/digitisation opportunities that will help in their day-to-day work. It also addresses the technology adoption challenge, as previously standardised CoE processes allow the scalability of developed solutions.

The next challenge often relates to identifying resources with combined finance and digital skills to implement the solutions. Once implemented, the solutions often have low adoption rates or do not bring the promised benefits due to a lack of scale or competing solutions.

A CoE team of digital experts with finance knowledge can be used as a powerful tool to deal with these challenges. This team is usually set up as a digital lab applying a start-up mindset and agile development methodology. In our experience, we found that teams with such set-ups are far more effective than teams with a “big corporate IT” mindset using waterfall methodologies.

As the lab delivers solutions to opportunities identified within the CoE, it develops internal recognition and becomes the go-to place for digitisation within the wider Finance organisation. Thus, the CoE becomes the catalyst and the platform to drive the digital transformation of the wider Finance function.

The time to act is now

State of the art business analytics provide not just an efficiency gain but also a competitive advantage. We recommend its adoption as soon as possible.

Recent events have demonstrated that remote teams can be just as effective as local ones. However, such transformations must be carried out correctly or the benefits will be difficult to realise. Clear strategy and careful planning are of paramount importance; building a Business Finance CoE is not the same as expanding a Shared Service Centre. As with all transformations, we see change management and clear, targeted communication as a key element for success.

We hope you found this short article thought-provoking. If you want to dig deeper do not hesitate to contact us.

Authors

David Reiner
Senior Manager, Finance & Performance

David is a Senior Manager in Deloitte’s Finance Transformation team with 10+ years’ experience, helping clients to prepare for the future of Finance, using technology to automate, and make better decisions. David has led complex Finance business transformations with a strong emphasis on Finance strategy, end-to-end solution & process design and the implementation of digital Finance.

Jan Jemiolo
Manager, Finance & Performance

Jan is a Manager in Deloitte’s Finance Transformation team with 7 years of consulting experience, focused on helping clients execute complex Finance transformation and digitisation projects. Jan has supported multi-national clients in establishing Finance CoEs, designing operating models, standardising and digitising processes. He has deep expertise in programme management, including defining business cases and tracking programme benefits.