Designing a finance function to

meet tomorrow’s challenges

April campaign
Contents
1 Finance function challenges and way forward

2 Achieving finance excellence

3 EY approach and value

4 FAAS contacts
Finance function
Challenges and way forward
Finance functions across the globe are
aiming to add value
In delivering an effective support function to the organization, finance must balance its three key priorities: cost
reduction, compliance requirements and efficient operations.
Be effective in driving forward the business
Effectiveness
► Deliver an effective finance support service to business units

► Provide timely and accurate reporting and business information

► Strengthen business decision making throughout the organization

► Provide challenge to the business

► Be seen as a valued partner to the business

Promote strong governance and control in the organization

► Design an appropriate financial control framework

► Facilitate improvements in control in the business

► Promote management of financial risk to the organization

Potential balance
► Meet increasingly onerous statutory and regulatory requirements

Be efficient in the operation of the finance function

► Reduce the costs of the finance function Back-office focus
► Realize benefits of investments in finance Control Efficiency
► Integrate finance teams of acquired businesses

► Streamline commodity processes including reporting Striking a balance for the organization

The key challenge for finance is to improve in all three dimensions while retaining the appropriate balance for the organization.

Page 4 Designing a finance function to meet tomorrow’s challenges

Finance function key challenges in achieving
its objectives

Business issues Finance function challenges

► Limited time to focus on higher value-added activities (e.g., strategic planning and decision support
system)
Responsiveness
► Inadequate focus on complex business performance management
to business needs
► Need for a closer integration between finance and other areas such as risk and technology
► Silo approach leading to business inefficiencies

► Rise of outsource usage and increase of finance activities available for outsourcing
Efficiency and ► Inadequate focus on leveraging low-cost geographies for finance and shared service centers (SSCs)
cost pressures ► Need to leverage investments in technology to reduce cost
► Need for standardization and simplification of finance processes

► Lack of preparedness and foresight to adapt to increasing and more complex reporting and business
needs
Technology ► Inefficiencies in reporting − balance between speed, cost and output
► Greater need for a single source of truth for financial information
► Focus on data analytics, technology controls, cyber security and business continuity

► Greater accountability on CFO and senior executives

Governance, risk ► Need to document and prove financial controls in an ever-changing business and regulatory environment
and compliance ► Need to balance cost and control, and embed control in business processes
► Increasing regulatory, legislative, supervisory and contractual compliance pressures

Page 5 Designing a finance function to meet tomorrow’s challenges

The way forward
Finance function: current focus and future considerations

► With the enhanced scale of operations, increasing complexities and

concentration of all critical and non-critical finance activities, there is an
immediate need to have clear role definition for finance,
segregation of duties between corporate finance and BU finance
and a robust organization structure will assist the right people
focusing on the right business issues.
► Future considerations include robust planning, budgeting and
forecasting, finance function improvement initiatives at a macro
level and process level, with a solid governance and control
framework embedded.

Page 6 Designing a finance function to meet tomorrow’s challenges

The way forward

Strategic direction and decision support

► SSC strategy and managed

services operating model
2 to 4 years
People and organization
► Targetoperating model –
design and delivery
► Centers of excellence for
specialist functions

► Talent and performance

► Governance framework management processes
and change for finance
management
Process
► Process ► Furtherstandardization
► Define role of finance, and policy
transformation and and streamlining of core
6 to 24 months

reducing cost of scope of activities, transaction processes (e.g.,

finance optimal organization within shared services
model and governance environment)
► Alignment of structure
► Expand planning process
finance transformation: strategic plan;
strategy ► Establish common operational planning processes
to overall core structures for
► Standardization of management
business finance operations
objectives reporting and financial budgeting;
global processes
► Fast close of books ► Assess ERP system; Technology
► Transition to local GAAP alignment of code block
based on more and data
► Consistency of key
► Integrate solutions with consistent management
accounting
enterprise data warehouse models
policies

► Deploy single global platform ► Deploy single global

for financial planning platform for reporting

Current scope Future phases

Page 7 Designing a finance function to meet tomorrow’s challenges

Achieving finance excellence
Achieving the right balance
Strategic direction
and decision support
► Sharper cost focus
Focus and objective
► Elimination of operating silos
► Continuous improvement of
support services
► Appropriate operating model
► Alignment of finance strategy to
overall business objectives
► SSC strategy and vision
EY can help you with:
► Target operating model –
design and delivery (outsource,
offshore, BOT, captive, etc.)
► Governance framework and
change management
► Analytics, reporting and insights
Integrated by:
► Robust project and change
management
Page 9
People and organization
► Appropriate or lean
organization structure, roles
and responsibilities
► Training, development and
upskilling
► Defined career path
► Organization design
► Improvement in structure, roles
and identification of
responsibilities
► Training and knowledge
transfer
► Business case development
► Benefits realization
► Migration strategy
Designing a finance function to meet tomorrow’s challenges
Process and policy
► Process simplification and
standardization
► Leverage technology and
achieve automation
► Robust controls to mitigate
risks
► Harmonize accounting policies
and reduce GAAP differences
► Process reviews,
documentation and
standardization
► Policies and procedures
► Process risk and controls
► Improvement in statutory
reporting
► Legal entity rationalization
► Local compliance and reporting
requirements
► Internal and external reporting
► Readiness assessment
► Acceptance criteria
► Sign-off and approval
Technology and data
► IT strategy aligned with broader
business objectives
► Act as a business supporter
► Automation and integration
resulting in increased efficiency
and effectiveness
► Review of IT strategy and its
impact on finance organization
and SSC strategy
► Review of IT operations as a
critical supporter to the finance
function
► Project planning
► Transition planning
Strategic direction – overview and focus

Focus and rationale

The strategic direction for shared or managed services is shaped and influenced by a number of change drivers:
► Sharper cost focus: Many finance leaders are driving strategic change and cost management in the finance
function due to cost pressures and the overall need to align finance strategy to business objectives.
► Elimination of operating silos: Some organizations sustained regional and functional silos during the past decade
of mergers, allowing systems and processes to proliferate. An SSC or managed service environment focuses
attention on standards and end to end process excellence, eliminating silos and reducing costs.
► Continuous improvement of support services: Finance, IT, HR and other support services are under pressure to
make tangible contributions to earnings.
Work stream scope Points to consider Key supporters and options
► Business and finance ► How many SSCs should there be? ► Global SSC operating models
strategy ► What is the underlying SSC strategy (back office transaction ► Emerging hybrid models
Strategic direction assessment

► SSC strategy and vision
► SSC governance
► Voice of the customer
► Service management
framework
► Service level agreements
► Charging strategy
► Business continuity
processing, Centers of Excellence, hybrid)? ► Three-tiered operating model
► What does the business want to achieve through shared services? ► Expert centers
► How does the SSC align with the business strategy and ► Centers of Excellence
objectives?
► Finance maturity profiles
► What do the customers and stakeholders need?
► Captive managed services
► How should the SSC be funded?
► How should the SSC be governed?
► How do we build in future scalability?
► Who will the SSC report to?
► Will the SSC be a cost or profit center?

Page 10 Designing a finance function to meet tomorrow’s challenges

People and organizational change – overview
and focus
Focus and rationale
► Focus on recruiting and training staff with the appropriate processing skills, finance knowledge and language
capability
► Reward and recognition frameworks that incentivize high performance and continuous improvement

► To facilitate migration up the shared service value chain, there is a need for greater levels of skills in:
► Business understanding – understanding the context, complexity, dynamics, key issues and drivers of their customer’s business
► Business analytics – the ability to analyze and interpret financial and non-financial data to provide insight
► Business decision-making and problem answering – understanding how information impacts the business and to use this understanding
to advise decision makers

Work stream scope Points to consider Key supporters and options

► Organization design and ► How should the shared services operation be organized (process, ► Competency frameworks for
sizing customer, etc.)? finance
► Organization readiness ► What are the key roles? ► Opportunities to improve
People and organization

► Staff management ► What does the shared service culture need to be? organization and governance
change assessment

► HR transition
► Knowledge transfer
► Competency framework
► Job profile and descriptions
structures
► How will we train staff?
► Talent management strategies
► Is the business and organization ready, are the roles and
responsibilities clear? ► Finance academy
► How will we incentivize people?

► Talent management ► What will the requirement be for language skills?

► Cultural blueprint design

► Recruitment strategy

Page 11 Designing a finance function to meet tomorrow’s challenges

Process – overview and focus

Focus and rationale

► When designing the SSC there is a need to review current leading practices in process design to determine how
these link to the challenges that the business is facing.
► Process design should leverage integrated business applications, automation and workflow while reducing the
manual intervention.
► Process, policy and data structures need to be standardized.

Work stream scope Points to consider Key supporters and

► Process transformation
► Controls framework
► Tax models
► User Acceptance Testing (UAT)
Process assessment
options
► What processes and activities should be included in the SSC and ► Leading practices
what is the criteria for inclusion? ► Industry comparisons
► How do we make the transaction processing more streamlined? ► Process diagnostic
► How do we make management information more accurate and

usable?
► KPIs and performance metrics
► When do I reengineer business processes?
► Document management
► What level of efficiency is expected from the SSC?
► Data cleanse
► How do we meet the legal and statutory requirements of each
► Legal and statutory assessment
country in scope?
► Operational review and status
► What tax efficient models could we adopt?
► Leading practices
► What standards do we need to adopt?
► Policies and procedures
► How is non compliance addressed?
► Business calendar
► Is risk management and control an integrated part of business
► Help desk activity?

Page 12 Designing a finance function to meet tomorrow’s challenges

Technology – overview and focus

Focus and rationale

► Advances in web-based technologies and workflow-supporting technologies have been fundamental building blocks
for SSC implementations.
► Web-based interaction with third parties enables efficiency savings through both greater automation and self-service.

► Data and data management tools are increasingly important – particularly as organizations seek to improve returns
on their investments.
► Smarter application of technological knowledge revolutionize working practices which can be achieved through
intelligent analysis of to-be stage and generating efficiency savings through the automation of current processes.

Work stream scope Points to consider Key supporters and

► Vendor management
► Applications
► System integration
Technology assessment
options
► What technology do I need? ► ERP (localized)
► How can I leverage the existing IT infrastructure? ► Imaging and document
► How do we link shared services to our IT strategy? archiving and retrieval

► Information management
► Technical Infrastructure
technology
► Will a vanilla software configuration be mandated?
► Electronic data interface
► Will we have a single instance, single configuration, common data
structures? ► Electronic funds transfer
► Should we adopt process improvement tools to be used to ► Middleware
automate routine transactions? ► Employee self service
► What does technology make possible? ► Data warehouse
► What functionality can really transform the way we work? ► Modelling tools
► Spread sheets and end
user tools

Page 13 Designing a finance function to meet tomorrow’s challenges

Shared services or managed services?
Operating model considerations
Support function activities are allocated to different service delivery models with the aim of improving cost efficiency and
raising quality or service levels.
Local and HQ
service provision
Decision criteria
► Service cannot be shared
► Service required regularly
► Local knowledge required
► Systems and processes
unique to location
► Not economic to
consolidate to SSC
Benefits
► Service level controlled
directly by customer
► Highly responsive
Page 14
Business
partnering
► High degree of expertise
► Service required frequently
► Proximity to customers and
decision makers essential
► People providing service
are an integral part of the
management of the
enterprise
► Highly responsive
► Focused on value creation
► Experts used as experts not
administrators
Designing a finance function to meet tomorrow’s challenges
Centers or
Communities of
Excellence
► Service can be shared
► Process only used
periodically or occasionally
► High levels of expertise
required
► No critical mass of staff
► Knowledge can be easily
transferred
► Pools scarce expertise
► Improves cost efficiency
► Service available to all
regardless of size
► Environment designed to
create and share
knowledge
► Experts used as experts not
administrators
Self-service or
virtual shared
services
► Service can be shared
► High degree of automation
► Process can be web
enabled
► Customers have access to
tools
► Customer are able to make
cultural shift in service
provision
► Very low cost
► Flexible and scalable
► Customers control service
levels
Physical shared
services
► Service can be shared
► Process and systems
commonality
► Critical mass exists to
enable economies of scale
► Manually intensive work
► Service can be remote from
customer
► Low cost
► Flexible and scalable
► Accountable
► Service levels and quality
can be controlled
► Allow consistency of
service
► Continuous improvement
EY approach and value
EY finance excellence methodology

EY can provide support as the company fulfills the following steps:

Identify Diagnose Design Deliver Sustain

Validate requirements ► Understand the ► Agree approach and ► Develop ► Confirm operational
and perform current state refine requirements implementation and effectiveness
engagement specific ► Evaluate the current ► Develop detailed deployment plans ► Support continuous
planning state design ► Build and validate improvement
► Generate and ► Finalize design and improvements ► Expand benefits
prioritize gain approval ► Execute deployment across the extended
recommendations plan enterprise
and next steps

Diagnosing the current state Designing and implementing the transformation Initiatives

► Define scope and ► Collect data ► Develop ► Build ► Operate

opportunity specifications
► Define vision and ► Validate ► Improve
strategy ► Develop detailed implementation
► Extend
design
► Analyze and develop ► Implementation
options ► Confirm approach
► Stabilize
and benefits
► Develop business
case

1–2 weeks 7–8 weeks 16–20 weeks 12+ months 4 weeks – 6+

months
* The above approach reflects very indicative timings. Actual timings could be different and would depend upon client context, project scope , complexity etc.

Page 16 Designing a finance function to meet tomorrow’s challenges

EY value

► Our depth of global experience, including extensive

Industry and research and analysis, provides strong subject matter
subject matter resources and insights to our clients.
Delivering results with
knowledge and ► Our team integrates advisory capabilities across our
multidisciplinary service lines to deliver the full range of
independence and
team
recommendations to address your needs. objectivity
► We harness leading edge project management techniques
and tracked benefits delivery, supported by a clear change ► Clear action plan
Methodical management principles.
execution and ► Measurable benefits
► Our integrated service delivery approach includes benefits
delivery management starting with an individual project and ending ► Fast and efficient delivery
with financial statement impact. ► Proven approach
► We are able to help identify and deploy rapid savings ► Industry knowledge
initiatives that may fund the assessment, rationalization,
Rapid and review and realization phases of the improvement program. ► Leading practices
efficient ► Risk management
► We work closely with client leadership to agree on a
approach
common vision of success and shape a program that is
commercially compelling and realizable.
► Sustainable execution

► We understand the psychology of cost – sustainability is the

key focus from the outset, considering cost effectiveness in
Drive recommendations.
sustainability ► We frame cost improvement opportunities in terms of a
desirable end-state encouraging clear motivation to “take
the pain of change” out of the process.

Page 17 Designing a finance function to meet tomorrow’s challenges

Case study
Finance excellence

Service: Finance excellence

Industry: Diversified industrial products

Business drivers
► Standardize and streamline the client’s finance
processes across various regions
► Strong emphasis on reducing the overall costs and
reshaping the finance function
► Improving finance operations to meet company’s overall
plan and business strategy
► Strong focus on streamlining and simplifying finance
function to reduce manual intervention
► Leveraging technology to reduce manual intervention
and to enhance control over the processes.
► Assisted in the development of a transformation road map
► Provided project management, change management and process improvement services
► Developed a customized tool – Financial Statement Automation Tool (FSAT), to assist in the
production of statutory financial statements in accordance with local GAAP
► Centralized the project by developing a multifunctional platform – ePlaybook, a live version
of the EY step plan, with access to the client and its auditors
► Established teams across various regions to leverage the localized GAAP knowledge for
preparation of the statutory reports
► Helped enable a round the clock work culture, thereby reduced the turnaround time by
having a global footprint of the team
► Supported corporate secretarial services – assisting in timely preparation and submission of
regulatory filings

Value delivered to client

► Helped in making the finance process cost efficient through increased automation
► Helped streamline controls by leveraging technology and reducing manual intervention
► Helped change finance focus from back-office “bookkeeper” to “trusted business advisor” to the business
► Helped to develop the approach, architecture, roadmap and business case to support the transformation
► Brought leading practices and lessons learned to help this client quickly and efficiently meet their objectives
* The above approach reflects very indicative timings. Actual timings could be different and would depend upon client context, project scope, complexity etc.

Certain of our services for an audit client and its affiliates may be more limited in order to comply with applicable independence standards. Please reach out to
your EY contact for further information.

Page 18 Designing a finance function to meet tomorrow’s challenges

FAAS contacts
Financial Accounting Advisory Services
Contacts

Pankaj Chadha Myles Corson

Finance excellence Finance excellence

pankaj.chadha@in.ey.com myles.corson@ey.com
+91 124 671 4150 +1 212 773 3232

Vish Dhingra Ken Akaishi

Finance excellence Japan FAAS

vish.dhingra@in.ey.com akaishi-kn@shinnihon.or.jp
+91 124 443 5020 +81 3 3503 1100

Page 20 Designing a finance function to meet tomorrow’s challenges

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