Finance Transformation Overview

Finance as a Strategic Business Partner

Experience-on-Demand.com

The Case For Finance Transformation

FP&A

Risk Management(Controls)

TransactionProcessing

11/30/2016 2

HighPerformer

Median Performer

<1% of Revenue

1-2+% of Revenue

High performance Finance organizations deliver greater business value at lower cost

• Process efficiency, competent staff and effective management practices drive down processing cost and cycle time while improving quality

• Transactional process excellence and effective use of technology enable more reliable controls with less manual effort

• Significantly more time dedicated to FP&A with greater focus on predictive analytics and strategic support to enhance decision making

Strategic Business Partner Role

11/30/2016 3

Moving beyond observer and score keeper to support the business in achieving commercial and strategic objectives

• Initiating and leading cost reduction and other business performance improvement efforts

• Leverage data from outside the accounting system to enhance value of analytics

• Support assessment and management of operational risks

• Spends more time forecasting results and developing options for optimization than reporting and explaining historical performance

• Delivers information and insight rather than just data

• Ensures business decisions are based on sound financial analysis with proper risk consideration

• Facilitates transparency and accountability for financial performance

• Supports investment and portfolio decision-making with an emphasis on effective resource allocation and capital efficiency

Finance Organization Challenges

11/30/2016 4

CFOs are wrestling with a variety of questions as they try to move up the value curve.

GrowthRiskControlsCost

How can we build finance acumen in the business and business

acumen in Finance?

How can we improve governance,

teamwork and leadership?

How do we get involved in business

decisions at an earlier stage?

How can we bring challenge and rigor to

decision-making?

What are the levers that drive business success?

How can we integrate and align the function with

the business?

How can we build trust & credibility as well as communicate

& engage more effectively with the

business?

What are our strengths, weaknesses, opportunities

and threats?

People

Management

• Improving employee engagement, retention and competencies

• Increasing collaboration within the finance organization and with the business

Process

Management

•Reducing errors and cycle time

•Eliminating waste and value-destroying complexity

• Improving control effectiveness through process standardization

•Leveraging automation for repetitive tasks

Technology & Data

Management

•Resolving data issues resulting in multiple versions of the truth

•Reducing dependency on Excel to plug core technology gaps

• Improving data accuracy and accessibility for 24/7 business support

FP&A and

Specialized Services

•Enhancing the value and reducing the pain of budgeting and forecasting

•Addressing excessive working capital and poor capital efficiency

• Improving target setting and risk management to achieve higher ROI

• Improving effectiveness of cash forecasting and tax planning

In moving towards high-performance most organizations define a set of objectives that address every dimension of their operation.

Typical Transformation Objectives

11/30/2016 5

Designing an Effective Transformation Program

11/30/2016 6

Additional information is usually required to determine scope, targets, actions and pace

Data

Technology

Manage-mentSystems

Workforce

Processes

Simultaneously working every issue is usually impossible given resource limitations and risk implications.

Interdependencies and competing business priorities must be considered

The program must deliver early wins without jeopardizing long-term sustainability

EOD Finance Maturity Model

11/30/2016 7

Organization Management

ProcessManagement

Technology & Data Management

FP&A and Specialist Services

• Role of Finance• Functional Plan• Leadership• Teamwork• Org Structure• Talent Management• Competencies• Cost Management

• Methodology & Governance

• Continuous Improvement

• Controls• Order to Cash• Procure to Pay• Record to Report

• Data Management• Transaction

Processing Systems• Reporting &

Analytics Tools

• Strategic Planning• Reporting &

Analytics• Planning, Budgeting

& Forecasting• Target Setting• Capital Project

Support• Risk Management• Treasury• Tax• Capital Stewardship• M&A

A qualitative assessment tool covering 27 elements of Finance organization management and functional scope used to identify specific performance gaps and improvement opportunities.

Simple Finance Maturity Assessment

11/30/2016 8

Fourth Quartile First Quartile

Controls Redundant and/or manual controls;significant control gaps

Heavy reliance on detective controls

Controls tightly integrated into routineprocess operations

Heavy use of automated, preventative controls

Order to Cash

Excessive DSO and bad debt Recurring order processing and billing

errors Excessive ship-to-bill cycle time

Excellent cycle time, error rate, DSO, bad debt

Rare customer complaints about order processing and billing

Procure to Pay

Frequent late payments Limited early payment discounts Excessive use of checks; limited use of

payment cards Highly manual processing

Heavy use of electronic payments and payment cards

Payment processing in shared services using robotic process automation

Discounts and float optimized

Record to Report

Closing and reporting cycle times slower than peers

Excessive top-side entries Routine reconciliation issues Significant overtime during close Data not easily accessible Heavy reliance on Excel

Cycle times materially faster than peers without overtime

Infrequent top-side entries and audit adjustments

High confidence in numbers; one version of the truth

Effective use of dashboards

How does your Finance organization compare?

Preparing for Launch

11/30/2016 9

• Do we have a compelling case for action?

• What might happen if we do nothing or defer the start?

• What risks must we be prepared for?

• Do we have adequate leadership support?

• How do we involve our next generation of finance leaders?

• What kind of help will we need?

• How much will the program cost? How much can we afford?

• How will we manage prioritization?

• How will we manage the impact on our people?

Knowledge Domains

I Know I Don’t Know

I Know I Know

I Have No Clue

I ThinkI Know

There are a number of key questions to address before launching a transformation program.

Expand Knowledge to Reduce Risk

Critical Success Factors

The soft stuff is the hard stuff

• Clear business case for action

• Broad executive support

• Sustained leadership engagement

• Proper program management

• Address cultural issues

• Communicate, communicate, communicate

11/30/2016 10

The Payoff

11/30/2016 11

• Shift from transactional to analytical / strategic

• Optimize resource allocation

• Greater flexibility

• Maximize value generation

• Enhanced competitiveness

Initial Payoff (Quick Hits):

Major Results:

Institutionalization:

Completion:

1 – 6 months

1 - 2 years

3 - 4 years

Never –Continuous

Improvement

Set Ambitious Targets with Realistic Timelines

For More Information

11/30/2016 12

Steve FinkelsteinSenior Partner314-409-6869

Doug GrovesFinance Practice Lead

832-523-9570

To learn more about Experience on Demand, Finance Transformation or the EOD Finance Maturity Assessment please contact: