CGMA REPORT

FINANCE BUSINESS
PARTNERING

The conversations that count

The relationship between pilot fish and

manta rays is an example of a type of
symbiosis; where both organisms receive
benefits from their relationship.
Two of the worlds most prestigious accounting bodies, AICPA and CIMA, have formed
a joint venture to establish the Chartered Global Management Accountant (CGMA)
designation to elevate and build recognition of the profession of management accounting.
This international designation recognises the most talented and committed management
accountants with the discipline and skill to drive strong business performance. CGMA
designation holders are either CPAs with qualifying management accounting experience
or associate or fellow members of the Chartered Institute of Management Accountants.

2 FINANCE BUSINESS PARTNERING: The conversations that count

CONTENTS

1. Executive summary 2

2. Introduction: The need to improve decision making 3

3. How the role of finance is changing to better support decision making 6

4. How finance business partnering improves decision making 8

5. Conversations that generate insights  16

6. The skills and traits needed for effective business partnering 20

7. Conclusion  22

References and resources 23

1
1. EXECUTIVE SUMMARY
The post crisis political, economic and social environment and the pace of
change will not provide an easy era for business. The world has become
flatteri and it is becoming more volatile. This means that there will be fewer
opportunities for companies to find sources of competitive advantage and
there will be new crises ahead. Increasingly, the quality of decision making
will become the discriminator of business success.

It takes professional rigour to ensure that decisions It is questions and conversations that can lead to
are not subject to bias but are taken in the interests the insights needed to improve performance. We
of stakeholders on the basis of proper analysis of the show the important topics to be considered in
evidence available. The discipline of management such conversations: How do we really generate
accounting as applied through finance business value? What is our business model? How do we
partnering could provide the solution. need to develop our business model for the future?
What do we need to measure to manage both our
In many organisations, the accounting and performance in this period and for the future? What
finance function is being transformed to be more data do we need to consider for this purpose?
efficient. This is being enabled by developments in
information technology. This transformation can Finance people can be deployed to work closely
provide the capacity for the role of finance to be with managers and help them improve decision
extended to include finance business partnering. making and business performance in the long-term
interests of stakeholders. To compete for these roles,
Finance business partnering begins after standard accountants must complement their core technical
reports and analysis have been produced. At skills with additional analytical skills, business
this point the focus then shifts from accounting understanding and soft skills.
to management. This is when the disciplines of
management accounting are applied in the business The CGMA designation provides a strong
and insights developed to inform decisions and professional and ethical foundation for business
improve performance. partnering, on which management accountants can
build to gain effective and valuable influence over
Providing effective finance business partnering is the quality of organisations decision making and
still proving to be a challenge for many businesses.ii performance management.
There are capacity constraints and accountants may
not be recognised as having the business acumen or Finance business partnering can make an important
soft skills required. It is important that businesses contribution to improving decision making and ensuring
and accountants address this challenge. the sustainable success of business. It also widens the
career opportunities for management accountants,
This report, based on 25 interviews and roundtables providing another route to senior management.
globally with senior executives, shows the kinds of
decisions these management accountants support.
It also shows how they contribute to these decisions.
We have found that this is not only by applying their
accounting and analysis tool kit,iii their overview of
the business and their professional objectivity but,
most significantly, through relationships, participating
in conversations and asking the right questions.

2 FINANCE BUSINESS PARTNERING: The conversations that count

2. INTRODUCTION: THE NEED TO
IMPROVE DECISION MAKING

The VUCA world Many developed economies have aging

populations while developing countries are
The term VUCA was first coined almost three experiencing rapid rates of growth in population
decades ago to describe the geo-political world and urbanisation.
at the end of the Cold War: Volatile, Uncertain,
Climate change and the depletion of finite natural
Complex and Ambiguous. More recently, the term
resources pose a threat to our ways of life and the
has acquired new significance as it is being used to
sustainability of our planet.
describe the world of business. We are in a VUCA
world and it is not likely to become any less VUCA Stakeholder concerns about the ethics of business
in the foreseeable future. or its social and environmental responsibilities
Challenges of the VUCA world include: could lead to a burdensome volume of regulation
and reporting requirements.
Many economies are now in a recovery phase
and there is reason for optimism. However, there
is still a high burden of debt in many countries The challenge for business
and the world is so interconnected through global
trade that a fiscal crisis in one location can cause In a period of volatility, businesses need to be
problems elsewhere. constantly alert and ready to address new risks
and opportunities. Uncertainty means that
Political instability in any one country can lead businesses need to build their adaptability and
to a regional crisis and consequences for distant resilience. Resources should be constantly focused
countries through advanced weaponry, modern on the market segments, products or channels
terrorism or the migration of refugees. where rewards and prospects are greater. Better
Developments in technology are enabling management of risk is required to be prepared for
new business models that could threaten long potential events. Complexity requires more incisive
established incumbents in many industries and analysis and clear forward thinking. Ambiguity
bring structural changes to the world of work. demands agility in analysis and forecasting to inform
decisions and enable swift action.
The digital age and Big Data provide new
opportunities for business but keeping up to date The public sector, government funded organisations
with the pace of change is a challenge. Cyber and those in the not for profit sector face similar
security is a growing concern. challenges. In addition, as they are usually focused
Global trade provides opportunities in new markets on achieving policy objectives rather than generating
but exposes business to competition from new overseas revenues, market forces seldom provide them with the
competitors. Imbalances in global trade may cause feedback needed to ensure efficient resource allocation.
economic power to shift to emerging economies. Not only are these organisations expected to do more
for less but more transparency and accountability are
The scale and complexity of global businesses also expected to enable due governance.
and the pace of change lead to competition for the
most talented individuals. This adds to disparity Management information is central to the
due to the high levels of unemployment or under management control cycle, as illustrated in Figure 1.
employment in many countries. It informs decision making at the planning stage and
ongoing performance management. Unfortunately,
business managers do not always use the evidence

3
available to them as well as they might. The Analysis of all the evidence available seldom
potential for bias in decision making is well yields definitive answers. There is a risk that
known but not always addressed.iv findings or aspects of analysis that support a
preferred option will be given undue weight.
If there is not a culture of governance and
FIGURE 1: The management control cycle
accountability, then even trusted information,
properly analysed, might not be influential in
decision making or performance management.

Plan
Objectives
The need for finance business
and KPIs Feedback partnering
Management information is what management
accounting is all about: The sourcing and analysis
Management of accounting and management information and its
Monitor Control
Information
communication and use, both to preserve and to
create value.v Management accounting can enable
rational, measured and responsible management.
Progress towards Actions
objectives required The role played by management accountants in
Review providing accounting and management information
positions them as professionals who can help
improve decision making. With their unique
combination of professional rigour and objectivity,
technical accounting and analysis skills and an
overview of the business, management accountants
Sales volumes, global expansion, prestigious projects engaged as finance business partners can cascade the
and size of business unit can be motivational for influence of a CFO throughout a business.
managers but sustainable net cash flow is what
generates value for shareholders. Academics
consider this dilemma as agency theory. In the FIGURE 2: A definition of management accounting
commercial world, management accountants
recognise this disconnect or potential conflict in
Communication and use of
interest as Vanity versus Sanity. Accounting and Management Information

The following major causes of bias in decision

making can be addressed with management
information:
Steward Influencer
If managers do not have confidence in the /Controller /Enabler
management information available to them they
will make a judgement based on their perspective Preserve Create
rather than the evidence. value value

If the relevant information is available, it must be

analysed diligently with a focus on the value to Trusted Commercial
shareholders and not swayed by self-interest or Reporter Analyst
personal preference.

Sourcing and analysis of

Accounting and Management Information

4 FINANCE BUSINESS PARTNERING: The conversations that count

 Finance transcends business disciplines. We
work with other teams. You might support that
lead but also other business unit leads, the
marketing lead, the supply chain person and
the sales person. A finance business partner
gets an overview across business units and
specialist areas so he/she can contribute a
combined insight.
Customer Finance Director,
Consumer Goods Company, South Africa

Unfortunately, the accountants in a business are not

always engaged to provide management accounting
in this influential finance business partnering sense.
This could be a missed opportunity as research has
shown that businesses where the CFO has taken on a
broader management role are in a stronger position
to seize the opportunities and meet the challenges
that lie ahead.vi

5
3. HOW THE ROLE OF FINANCE IS
CHANGING TO BETTER SUPPORT
DECISION MAKING
The term business partnering is also used by other support functions in the
business, particularly HR and IT. It usually means working with the business to
share expertise from their domain to help the business to perform tasks related
to their function. Domain business partnering means working with business
colleagues to improve the actual business performance. This is what finance
business partners do.

Finance business partnering cannot be put into management accountants to provide much of this
effect unless it is as part of a more comprehensive analysis. Accountants need to embrace the potential
finance transformation programme. Finance in technologies such as cloud, business intelligence
Transformation is a major change programme that and developments in Big Data and analytics.
can be described under the headings of efficiency,
information and influence, as illustrated in Figure 3. Influence: In order to help businesses to survive
and thrive in a VUCA world, accountants are
Efficiency: Systems standardisation and the expected to play a more influential role in supporting
automation or migration of routine processes to decision making and performance management.
shared service centres increase the efficiency of
accounting processes and can provide the capacity The impact of these three trends is such that management
for finance to take on a broader role in supporting accountings expected role in business is broadening
the business. to be about improving decision making.

Information: To increase profitability in Providing evidence in the form of financial reports,

slower growing markets, businesses need better management information and analysis has long
management information. Employers look to been the basis for accountants roles in decision

FIGURE 3: Finance transformation

Efficiency Information Influence

Data Reports Analysis Insight Influence Impact

Value

Comfort zone

6 FINANCE BUSINESS PARTNERING: The conversations that count

 As the finance function becomes more efficient, the
priority in finance transformation is shifting from
how to take cost out of an overhead function to how
Financial leaders play a key role in to get more value from finance disciplines. And as
management accounting becomes more influential,
making sure that there is a clear link it is increasingly valued for its contribution towards
between the strategy, the priorities, ensuring business success.
the operational execution and the
company resource allocation behind Theres a race against the advance in what
those priorities. At the same time, the Business Service Centre can do which is
using performance management raising the game for business partnering.

they are tracking results to influence Financial Controller, Automotive Company, UK

management decision making.
Felix Langenbach, Finance Director, A related change which can occur, especially in
Nestl Nespresso companies of sufficient scale to have shared service
centres, is the segregation of accounting and finance,
as illustrated in Figure 4.

making. Finance business partnering begins after Globalisation can allow a significant distinction and
standard reports and routine analysis have been geographic distance between the roles of those in
produced. This is when insights are developed to shared service centres, whether in-house or out-
inform decisions and improve performance. These sourced, and those closer to the business in onshore
insights might be based on further analysis but or retained finance who provide technical advice,
are more often developed in conversation with analytical decision support and business partnering.
peers. Insights gained must be communicated in
a compelling manner if they are to be considered The CFO or finance director is responsible for both
before an actual decision is taken. This is not the end areas but is often closer to business partnering as he
of the accountants role in decision making. Effective or she usually operates as a business partner to the
decisions achieve impact so they must be articulated managing director or CEO.
in terms that allow them to be implemented. This trend is raising the bar for shared service
Progress has to be measured and performance centres and for those in business partnering roles
managed through to the intended outcome. who must provide a level of support that could not
be provided by a service centre.

FIGURE 4: The segregation of accounting and finance

Accounting Finance

CFO or Finance Director

Finance business
partnering
Globalisation

Ad hoc Business service centres

analysis (of expertise)

Shared service centres

Routine Skills &
(in-house or out-sourced)
Analysis technology
enables
Standard reports

Transaction processing
Automation

7
4. HOW FINANCE BUSINESS PARTNERING
IMPROVES DECISION MAKING
Figure 5 provides an overview of the range of services being migrated to a shared services environment.
that management accountants might be engaged This can lift a burden off a business unit allowing it
to provide. In a large business these service areas to focus its resources on higher value activities.
can represent job families but it is more usual for
individuals roles to span service areas. Whichever However, as we are using the term finance business
of these services they provide, when supporting partnering to mean when a CFO or a management
business colleagues, management accountants might accountant operates as an internal consultant or
be said to be partnering with the business. business adviser, then this is closest to the service areas
shown as Management Information and, especially,
For example, when engaged in external reporting Decision and performance management support.
or other areas of subject matter expertise including
tax planning, treasury, mergers & acquisition and The management information area works closely
investor relations, accountants liaise with business with the business to provide the information and
colleagues to provide advice. They may even coach analysis that management need to assess current
them on technical accounting matters. performance and progress towards intended
outcomes. Its emphasis is forward looking and
So too, accountants engaged in areas like includes forecasting or modelling of the future.
information systems or financial accounting and This area may be stretched to analyse a wide range
operations may support the business with their of digital data while also providing management
expertise in systems or process management. They information ever more efficiently. Dashboards and
can help to identify activities which can be handled self-service analysis are priorities. Key challenges
more efficiently, at lower risk and to a higher are to ensure that the information provided is
standard more consistently by being automated or relevant to business managers and actually used.

FIGURE 5: The services management accountants might provide

Finance related
roles outside the
finance function
Business analysts,
consultants,
Department management and transformation statisticians

Management Decision and

Other
External information performance
subject matter
reporting management
expertise Financial Planning

Secretarial, tax,
Ensuring integrity of & Analysis (FP&A), support
statutory accounts, performance analysis
treasury, M&A, reports, returns and reporting, Advising and planning,
investor relations data analytics appraisal, cost, risk
and project management

Information
systems Financial Accounting and Operations
Data capture, Transaction processing and record keeping
integrity and access, (including purchase to pay, order to cash and record to report processes),
business intelligence, process improvement (Six Sigma, Lean and Kaizen), first level reporting
dashboards

8 FINANCE BUSINESS PARTNERING: The conversations that count

The Decision and performance management In the research to inform this report we found examples
support area is where management information and of finance business partnering in the sense of
analysis are applied to inform and influence decision contributing to decision making and driving business
making. This relates to big strategic planning or performance under each of the following three areas:
investment decisions as well as to the ongoing
management of performance, projects and risk. 1. Supporting decisions at group level
2. Decision support at business unit level
Business unit managers might have their own finance
professionals supporting them in finance related roles 3. Performance management
outside the finance function. This is dubbed shadow
finance or grey reporting. There can be a duplication
of effort and potential conflicts about different versions
1. S
 upporting decisions at
of the truth. Best practice to ensure objectivity and group level
rigorous analysis, whether business partners are based
The CFO and other directors share fiduciary and
in centres of excellence or embedded in the business,
stewardship responsibilities. Having responsibility
is to have a matrix reporting structure where the main
for external reporting often positions the CFO as the
reporting line is to the CFO.
lead on ensuring good governance practices.

In large organisations, the CFOs immediate team are

Driving business performance generally the only finance personnel engaged in the
In most businesses, a formal strategic planning business groups annual strategic planning process. They
cycle happens ahead of the annual planning and will often own the planning process, assembling the
budgeting period. The competitive environment external market information, accounts and management
is reviewed and a planning horizon of three to five information necessary to inform discussions and provide
years is considered. Strategic initiatives are selected analysis to assess risks and opportunities.
and priorities are set for the next period.
Important decisions about the business groups
The operational planning cycle turns much more strategic direction and how it should develop its
frequently. It is also where most finance business business model will be taken. The expectations of
partnering happens. business units will be reflected in their plans and
budgets, which are negotiated at a subsequent stage.

In a big business, the CFO cannot participate in the

planning or management of each business unit. This
is the role of the finance business partner, which is
The vast majority of business about cascading leadership, decision support and
partnering is operational. The highest enabling effective performance management.
level of finance does have a role a. Cascading leadership
in strategy but it is a very small The finance business partners job title might be
percentage. Business partnering is finance director or financial controller in a large
about driving business performance. business unit; if two or more small business units
are supported, they might be known as a finance
Anton Broers, Finance Manager, manager or business partner. The reporting line
Royal Dutch Shell will usually be to the CFO but a dual reporting
relationship with a dotted line to the managing
director and thick line to the CFO is also common.

The finance business partner is an important conduit

for management information. Information about
the business unit is filtered up to the CFO (and the
board) and the CFOs expectations are cascaded to
the business unit(s).

9
 Business development people take the lead. I filter up information about my region as do
Finance have to guide them to where the value other finance managers. This allows the CFO
is; what is expected; how to prioritise. They to take strategic decisions about where to
provide clarity. invest or divest etc. and then that strategy is
cascaded down through us. Business partners
Financial Controller, Automotive Company, UK
keep the business aligned to the strategy.
Anton Broers, Finance Manager,
b. Supporting change management Royal Dutch Shell
This reporting relationship to the CFO both
underscores the finance business partners objectivity
and provides a connection with the wider business. b. Supporting big decisions
This equips the business partner with an overview Capital expenditure
of what is happening across the business, which can
The finance business partners responsibilities will
include an appreciation of its brand and culture.
usually entail assembling the relevant accounting
The groups strategy may require some development or other management information and analysis
of the business units business model. The finance necessary to consider the matter properly.
business partner will be alert to the changes expected
Having a reporting line to the CFO, the finance
and can play an important role in ensuring personnel
business partner is expected to contribute objectivity
understand why change is needed.
to ensure that the decision taken is aligned with
the groups strategic objectives and the decision
2. D
 ecision support at business is considered with a focus on the benefit to
shareholders; increasing rather than diluting the
unit level return on capital employed. It is the finance business
The finance business partner supports the business partner who ensures the information provided is not
units managing director, just as the CFO supports furnished for information only but is understood by
the CEO. the decision makers and taken into account.

a. Planning and budgeting It is then the finance business partners responsibility

to ensure that the decision is reflected in plans and
Just as the CFO owns the planning and budgeting
budgets and that the right performance measures
process at a group level, the finance business partner
are monitored so that performance can be managed
provides the framework for developing the business
through to the intended outcome.
units budget and plans.
Mergers and Acquisitions (M&A)

Our business is part of a German group. They Research suggests that more than half of mergers and
may not be familiar with the term business acquisitions destroy shareholder value. This may be
partner but they have a strong tradition of dual why, when a publicly quoted business announces that
sign off whereby the business manager works it is about to make an acquisition, its share price will
alongside a controller. A decision has to make often fall.vii
sense to the business and when considered Businesses that grow by acquisition successfully learn
more objectively, in commercial terms too. to handle M&A activity as a process. They assemble
Commercial Manager, an M&A team, including finance business partners, to
Engineering Company, UK manage the sequence of steps which must all go well if
the transaction is to generate value for shareholders.

The logic of the deal must make sense to investors;

the scale of the deal might add additional financial
or operational risk so there has to be a clear strategic
fit; the deal must enhance return on capital so a

10 FINANCE BUSINESS PARTNERING: The conversations that count

favourable price and transaction structure has to New product or new market initiatives
be negotiated; the due diligence exercise has to be If investing in a new product or the development
thorough; talented personnel must be assigned to the of a new market, future revenues are unknown but
implementation project as flexibility may be needed decision making can still be very rational. The level
to address the technical problems and cultural issues of investment might be kept within a guideline level
that can arise when integrating. relative to the business turnover or profit in line
with its appetite for risk. A stage gate approach may
When it comes to mergers and acquisitions, be taken to ensure expenditure is limited until there
a panel of four or five directors meet with our are grounds for confidence in investing further.
managing director for the UK and Ireland.
When a media business considers a proposal
They will consider the logic of the proposed
to invest in developing the first series of a new
acquisition, for example, how does it fit with
television programme, they know the level of
our business? Is it big enough to be worth the
revenue cannot be forecast. The concept for the
effort? Is it making enough profit? At the price,
program will usually have been developed because
is there a satisfactory return, over our hurdle
of anecdotal evidence of a gap in the market. They
rate?
might expect the programme to be successful
Commercial Manager, and run for several series on TV channels across
Human Resources Consultancy, UK the globe, yet the level of demand is still a risk.
The business will have confidence in its ability to
produce the first series to a high standard within
c. Supporting regular ad hoc decisions budget. These risks might be shared by co-producing
In most business units there will be significant with a joint venture partner. The second series
decisions related to the operational nature of the might not get the go ahead until the first series has
business that need to be taken regularly. achieved sufficient sales.

Promotion and advertising expenditure New project appraisal

Promotion and advertising (P&A) campaigns are In major engineering manufacturers, preparing the
conducted regularly by Fast Moving Consumer business case for the development of a new big ticket
Goods (FMCG) businesses. Business partners in product (e.g. an aircraft or a submarine) can itself
FMCG companies appreciate that advertising to be managed as a project. If so, the finance business
promote brands is necessary to ensure that customers partner will work closely with the engineers on that
see them as premium products that represent better project first to prepare the proposal.
value than competing cheaper products. So alongside
promotional activity associated directly with sales
The engineers would love to gold plate
campaigns there will be ongoing advertising to invest
everything. Finance can question to determine
in the brand.
what is actually needed.
Ensuring the effectiveness of P&A spending Finance Director, Engineering Company, UK
used to be notoriously difficult.viii Nowadays, the
financial analysts or finance business partners
in leading FMCG businesses have proprietary Buy or build decisions
models for assessing this mix of promotional A business might be able to make custom designed
expenditure. Developments in Big Data provide new components in-house or buy them in. This makes
opportunities to track the impact of campaigns and it important to be able to weigh up the cost of
inform decision making. production against the cost of buying in. Having
Business partners in this sector work closely with an estimate of the production cost is useful when
marketing colleagues and data scientists to ensure negotiating a purchase. Other considerations might
that decisions about promotional expenditure are be capacity, the opportunity cost or the quality of the
properly considered and provide good value. suppliers products.

11
 need to become more focused to succeed in a less
We try to get the best price for what we go forgiving, post-crisis era of slow growth. Processes
out to buy but we have to make a lot in-house must be efficient. Projects must be managed tightly.
too. So we make buy or build decisions. Resources must be focused where returns or
prospects are better.
Business Partner Operations Support,
Automotive Company, UK
As a low cost airline, we obviously pride
ourselves on being efficient in everything we do.
Pricing products or contracts
But were not perfect, so there will always be
In business to consumer sales, the markets price pockets of opportunity. Knowing how, and when,
points may be the starting point. Products might to tackle these opportunities is a key skill.
have to be produced at a cost which will allow a
Paul Cullen, Managing Director Financial
profit to be made at the price they can command.
Planning & Analysis, Southwest Airlines

Where we make or lose money is in the

design process and the cost of the product. Budgetary control
We use target costing as the products are sold The shared service centre or automated paperless
at price points. Designers engage finance from systems will take care of the purchase to pay process
the outset to ensure the product can be sold at for most items purchased so that a senior finance
a profit. business partner will not ordinarily be engaged in
Helen Carey, Head of Group Finance, routine cost controls.
Petland Brands PLC Similarly, finance business partners will seldom be
expected to produce reports analysing performance
against budget. Business partnering starts after the
In business to business sales, it is prudent to have
reports and analysis have been produced.
finance professionals support salespeople when
negotiating the price of big ticket items or service Management accountants are alert to how budgets
contracts. Salespeople tend to be overly focused on can be inflexible, leading to short-term thinking
the top line and sometimes do not have an informed and false economies. Rolling forecasts have
appreciation of the costs. advantages but budgets are still regarded as a very
useful management tool. They provide a means of
measuring performance against what was expected
Landing new contracts and increasing
so that variances can be identified and discussed.
revenues can look great but it is not
necessarily a good idea if you are simply
adding more people, increasing your fixed Our business partners crawl all over the
costs and reducing margins. Ultimately, such numbers. They consider everything, not just
pricing decisions could limit your ability to financial data. They are looking for the key
invest in the future. drivers and root causes. They track what is
making money for us, looking from every
Jerry Bird, Finance Director, Accenture
angle; by our people, by customer, by unit
prices, by mix and margin.
3. Performance management Commercial Manager,
Human Resources Consultancy, UK
a. Cost leadership
In good times, a business can inadvertently put on
cost and tolerate some sub-optimal performance.
Costs have a tendency to escalate to the level of
the budget available. However, companies will

12 FINANCE BUSINESS PARTNERING: The conversations that count

It is important that finance business partners ask b. Performance appraisal
probing questions in these discussions to identify
Performance management requires insightful
root causes because it is through this engagement
management information that enables the analysis
with peers in the business that opportunities to
of performance across dimensions (by segment,
improve performance can be identified.
product, channel or activity) to inform not only
Process management occasional big decisions but also the ongoing
performance management that can lead to
Process management disciplines improve the
incremental innovation. Finance has to embrace
efficiency of regular tasks by enabling the
developments in information systems to provide
industrialisation of processes so they can be
this information in self-service formats such as
automated or handled by lower-cost staff on a rules-
dashboards that can be interrogated.
based basis. In most big businesses these disciplines
have been applied to accounting operations; many Tackling sub-optimal performance
accounting processes have already been automated
When times are hard and opportunities to save costs
or migrated to shared service centres where scale
or improve performance can be found, this suggests
improves efficiency, standardisation improves
that the business was performing sub-optimally
consistency (reducing risk) and where concentrated
in the good times. If a business is managed in the
expertise enables quality to be improved.
interests of its stakeholders, it should be running at
These disciplines include process simplification and optimum performance at all times.
systems standardisation; the elimination of wasted
effort; quality controls to reduce error rates and the We are making information as transparent as
expense of reworking errors; and the development of possible so that conversations will come about
a culture of continuous improvement. that will drive out sub-optimal practices and
performance.
Finance business partners should be familiar with
these disciplines and alert to opportunities to apply Alastair Connell, Section Head Finance
them. They can help to improve processes or migrate Operations, UK Department of Health
them to a shared service centre as appropriate.

Resource allocation Expectations as to what can be achieved are often

Resource allocation is about ensuring that anchored by past performance. The budget for next
resources are invested where the value generated year will look remarkably like what was achieved
for stakeholders can be optimised. In a challenging last year. This may seem acceptable but, ideally,
business environment, it is important to be alert to business managers should be challenged to achieve
the returns being achieved and agile in redeploying the business true potential.
resources to ensure better returns or outcomes.
Satisfactory or deeply average
Cost leadership? Id prefer the term efficiency underperformance is always an issue.
manager. As a business partner, you dont OK is not really good enough.
want to come across as cost cutting. If you Commercial Manager,
can grow your revenue, we can give you Human Resources Consultancy, UK
more resource. Take action when the unit is
not growing revenue or when cost is growing
faster than revenue. The idea is to grow revenue
faster than costs. Its about optimising resource
management to achieve the strategic ambition
which is growth (both revenue and margin).
Customer Finance Director,
Consumer Goods Company, South Africa

13
Addressing gaming
Most business managers will agree that there can be Workers used to be rewarded on a
an element of gaming in the negotiation of budgets piecemeal basis, meaning pay was linked to
or the claiming of performance measures. Business an individuals output but this leads to working
partners have to Itread capital being tied up in Work In Progress,
Everywhere have carefully.
been, there have always
potential for stock-outs as people work at
been elements of that [gaming]. Some people
different paces and a risk to quality. We
really squeeze their budget submissions, but
now display KPIs on the shop floor. These
yes, others like to leave a cushion in there.
include safety, the number of bikes produced
Thats why its important to know your internal
and quality.
customers, and their respective styles.
Lorne Vary, Finance Director, Brompton Cycles
Paul Cullen, Managing Director Financial
Planning & Analysis, Southwest Airlines
Balancing short-term versus long-term
When budgets are tight, there is a risk that it is
Ensuring alignment of Key Performance easier to make false economies than invest to
Indicators (KPIs) improve operational efficiency. Expenditure on
Management measures can have unintended projects to develop differentiating competencies that
consequences, such as a focus on achieving the may be needed in the future can look the easiest
measures themselves rather than the outcomes, to cut. Soft targets include training, marketing,
particularly when used to set targets or reward brand development, product design, research and
behaviour. Targets or personal objectives might be innovation. These are, however, the sources of
achieved, but the intended outcomes missed. Even intangibles that may be needed to ensure long-term
incentives intended to align with shareholders success.
interests can lead to dysfunctional behaviour
that destroys value, as seen in recent high-profile Balancing the short-term and long-term is
corporate failures and the banking crisis. always a challenge. There is not enough
conversation in the business about next year.
They are inclined to focus on the short-term.
KPIs and measures in isolation quite often
We have a role to play in helping the business
lead to the wrong behaviours, for example
to understand that it is all about incremental
hitting sales targets but not margins.
profitability. We have a scorecard. Half of
Richard Watson, Finance Director, the measures are financial and half are non-
BT Global Services CIO financial. The non-financial measures are
essentially about growing the earning base.

Selected measures must be kept under review Commercial Manager,

and improved iteratively through an ongoing Human Resources Company, UK
dialogue. Top-line sales measures might have to
be complemented by measures of contribution;
quantitative measures by qualitative measures;
Balancing current and future performance?
individual targets by team targets; and short-term
This is entrenched in our culture and ways of
measures by longer-term measures.
working. That is embedded in our business.
Customer Finance Director,
Consumer Goods Company, South Africa

14 FINANCE BUSINESS PARTNERING: The conversations that count

Managing intangibles Potential risks are first identified in dialogue with
A CGMA survey of more than 300 executives business managers, then assessed. A heat mapx
found that intangibles such as customer relationships, showing probability by potential impact helps
knowledge and human capital, strategic vision and prioritise the risks for which the business should
intellectual property are an organisations most plan (e.g. how the risk should be avoided, accepted,
important assets in determining its value.ix In most hedged, mitigated or how the business should be
businesses, measuring or monitoring intangibles future-proofed against it). Contingency plans should
so that they can be managed effectively remains a be prepared to enable a prompt response if a risk
challenge. event or scenario occurs.

c. Project management Business partners maintain their units risk plans and
ensure that the level of risk is monitored so risks can
Some business partners tell us their business is very be controlled and necessary action taken. They may
process driven, while others say that their business also be responsible for internal audit and limiting
is managed as a portfolio of projects. Generally, risk by ensuring compliance with business processes.
current operations are managed as processes, while
longer-term initiatives to generate revenues in future The business partner brings objectivity and
periods are managed as projects. a concern for the business as a whole and its
shareholders interests to conversations about risk.
When reviewing project performance, assessing Much of business partnering is about conversations.
the value earned to date involves considering
the amount spent and progress achieved to date,
alongside the likely cost to complete the project.

Projects span from design, develop and

manufacture to support phases. Project
accounting is important for earned value
management, especially long-term design and
build projects. Finance business partners need
to measure and manage performance against
plan both for schedule and for budget.
Matt Miller, Finance Director, BAE Systems

d. Risk management
The board should provide governance of risk,
determining risk appetite and regularly reviewing
the risk register. While the CFO or CRO maintains
the risk register, it usually falls to business partners
to take responsibility for risk management at
business-unit level.

The risk management and control cycle is similar

to the planning and control cycle. It has five stages:
review, assess, plan, monitor and control.

15
5. CONVERSATIONS THAT GENERATE
INSIGHTS

Stimulating conversations
Anecdotes of success in business partnering often
start with mention of an insight gained and go on to An effective business partner is the
tell how people worked together to solve a problem one who makes connections between
or make something happen. Sometimes, a business
partner can contribute an insight into how to reduce
people and between issues. They will
cost, improve revenues, mitigate risk or improve have the courage to speak up, to
cash flow. Finance business partners dont always challenge, to hold up the mirror
come up with a definitive right answer, but they do to the business and ask questions.
engage with others in conversations that provide
viable options. The insights needed to improve
They will be sitting in the middle of
performance are usually generated in collaboration the table brokering and linking up
and conversation with peers in the business. points, adding an overview and the
These conversations might be initiated by having financial angle.
the courage to ask basic questions or opened by Anton Broers, Finance Manager,
holding a mirror to the business. This might be a
Royal Dutch Shell
matter of discussing issues such as an unexplained
escalation in a cost or an unintended consequence of
a performance metric. Professor Paolo Quattrone and others suggest that
rather than trying to provide answers, management
Strong business partnering begins with accountants should focus on asking questions to
providing transparency into what is going stimulate conversations; Management accountants
on or what will or could happen and should design and then drive a maieutic machine.
translating this into the financial impact. We propose that this machine is characterised
That starts the discussion where, jointly, the by four key features: visualise, define, mediate
solutions can be found. and ritualise. Mastering these features will make
management accountants gain a central role in the
Anton Broers, Finance Manager, orchestration of decision making processes. xi
Royal Dutch Shell
A sequence of important topics of conversation can
help to make connections and provide insights about
Finance business partners bring accounting and how to improve performance:
analysis skills and professional objectivity to these
1. The business model
conversations. This includes providing a commercial
perspective, in the proper sense of being concerned 2. Horizon scanning
that actions are taken in the long-term interests of 3. Performance measures
the business, its shareholders and its stakeholders.
4. Data sources.

16 FINANCE BUSINESS PARTNERING: The conversations that count

1. The business model What do we need to measure and manage?

Essentially, a business model tells the story about What data do we need to manage our
how a business generates value.xii performance?

This story starts with the value proposition that the These are important questions because they can
business has to offer target customers; products or improve understanding of the business position,
services with features and intangible benefits. It performance and prospects, helping us to focus our
identifies the resources and relationships the business resources on how we actually generate value.
needs to deliver its value proposition to these Understanding business models may not be easy but
customers, and the key processes, competencies and the management accountants understanding of the
intangibles that enable it to meet customers needs business financials, especially its sources of income,
competitively. How the business is structured and where costs are incurred and what cross subsidises
governed are also part of the story. This leads to what, gives a strong foundation. Value chains and
an understanding of the business cost base, how the balanced score card are familiar tools which are
it monetises its offer and how value is generated also useful. Integrated Reporting <IR> is a new
for investors, customers, employees and other approach which should be considered too.
stakeholders, as illustrated in Figure 6.
An integrated report is a concise communication
Considering the business model helps us to begin to about how an organisations strategy, governance,
address a series of important questions: performance and prospects, in the context of its
How do we generate value? external environment, lead to the creation of value
in the short-, medium- and long-term.xiii The AICPA
What are the causal links between inputs, and CIMA are championing integrated reporting
activities, intangibles, outputs and outcomes? as it can improve management by lifting focus
from short-term financial results and encouraging
What are our non-financial success factors and
integrated thinking. This improves understanding
intangibles?
of the strategic context and how value is generated,
How do we develop our business model to leading to improved performance management in
ensure long-term success? the long-term interests of its stakeholders.

FIGURE 6: Business model

Value
propositions
for target
customers

Processes
Resources and
competencies
Inputs relationships Outcomes
and intangibles

Structure and Costs and Management and

governance revenues development

17
2. Horizon scanning next three to five years. Nevertheless, as long-term
strategies may be needed to address them, these
The number one reason why businesses fail is risks must be considered sooner.
because they fail to address a risk that was long
known about but not tackled.xiv A long-term risk
might be expected to have little impact over the 3. Performance measures
next year. Although business leaders might consider Research shows that the organisations with the best
the next three to five years, operating plans and prospects of emerging successfully from a recession
budgets are usually set for just the next year. There balance cutting costs to improve operating efficiency
is a need to consider potential future scenarios and while investing in their competitive position.xv
what actions should be taken to build the resilience
needed to safeguard the business future. Long-term value creation is a far greater challenge
than meeting this years budget. Achieving both at
This CGMA horizon scanner diagram (Figure 7) the same time requires more advanced performance
can frame conversations about the future business management than can be achieved using financial
environment, adding a time dimension and measures alone. It involves managing both how the
integrated view. business is performing and how it is transforming to
ensure its sustainability (Figure 8).

FIGURE 7: CGMA horizon scanner Financial accounts report outcomes, not current
performance, risks along the value chain, leading
nomic & Soc
ket (Eco ial) indicators of future performance nor how well the
Mar

Co
business is transforming.
s m
or p
at
Outcomes can seldom be used as timely measures of
et
l
gu

ito
Re

rs

recent performance. Potential leading indicators and

non-financial (or pre-financial) measures are needed
15 to measure performance that will lead to future outcomes.
rs
10 ye a
rs Comparable descriptors may have to suffice for what
5 ye a
Enterprise

Processes

cannot be readily quantified. Determining these measures

Suppliers

rs
ye a
requires an ongoing dialogue to continually refine a
shared understanding of how the business creates value.
Causality is seldom linear, and the measures selected
are unlikely to be the only relevant variables. New
sources of non-financial data should be considered.
Te
t
en

ch
nm

ol
o og
vir
4. Data sources
y
En

Stakeholders
The use of Big Data is becoming a way for leading
companies to outperform their peers.xvi Big Data
can be described as the huge volume of digital data
Risks and opportunities may be interconnected in generated by digital technologies that is too vast and
ways that mean they have a more immediate impact. complex to be accessed or analysed by conventional
For example, customers might be concerned about the means of data processing.xvii
issues; regulators might respond sooner and investors
From the perspective of a management accountant,
or stakeholders might need assurance that the business
Big Data can be viewed as financial data plus the digital
is prepared; and competitors might respond faster,
data captured on the business systems; these can include
perhaps taking advantage of new technologies.
external data feeds and machine-generated data, plus
Climate change, the eventual depletion of natural the huge volume of new forms of digital data that might
resources or changes in demographics may seem be relevant, such as data from mobile phones, social
unlikely to have any significant impact over the media, voice recordings, photographs, music and video.

18 FINANCE BUSINESS PARTNERING: The conversations that count

FIGURE 8: Performance measures to balance performance for today and the futurexviii

Source Promote, convert

Strategic Brand, Innovation and Customer
resources, prospects to
direction, values and transformation satisfaction
produce and sales and
customer needs intangibles and retention
package deliver

Process management;
Operating efficiency
Project management;
Competitive position and future earnings

FIGURE 9: Big Data

High
Market Its not our job to go down to the
New forms of digital data lowest level of data, but to know how
to aggregate outcomes so it can be
Expertise
needed for
Enterprise data converted into an insightful report.
analysis

Financial data
James Miln, Senior Finance Director,
Global Operations Finance, Yahoo! xix
Low

Low Scale and complexity of data High

There is much hype about new data-based business

To benefit from data and its analysis, businesses models, and the potential to explore new forms
need to develop new competencies. The advanced of Big Data to derive new insights or unknown
analytical techniques necessary to mine data, unknowns about customer behaviour. For most
identify correlations and develop algorithms to businesses however, the higher priority is to get
predict behaviours are in the domain of data better at interrogating the enterprise data on their
scientists. However, few companies have the systems to help them manage performance.
complementary skills required to translate these
Big Data could provide new ways of measuring or
analytical insights into commercial impact.
assessing leading indicators of performance. For
Management accountants have the potential to example, customer sentiment can be gauged by linking
make an essential contribution. First, they must the analysis of comments on social media to operational
develop an understanding of the data sources in the product data and then to financial sales figures.
business and work closely with colleagues in IT to
At Unilever, the finance function has created a data
capture and extract data from the organisations
dashboard that pulls in a diverse set of sources, from
IT systems. Second, they should engage with data
social media through to market-research agencies,
scientists to help ask the right questions of the data
to provide a set of globally relevant, consistent
and interpret insights and patterns arising from the
and tangible KPIs that can be linked back to P&L
analytical process. Finally, they must work closely
reporting and cash flows.xx
with managers across the business to help ensure
that data is gathered and interpreted properly to
help inform business decisions.

19
6. THE SKILLS AND TRAITS NEEDED FOR
EFFECTIVE BUSINESS PARTNERING

FIGURE 10: Skills and traits needed for effective business partnering

Influential and effective business partnering relationships

Empathy with Compelling Preparedness to

colleagues communication challenge

Contribute insights into drivers of cost, risk and value

Continuous
Passion for Commercial Professional Professional
business curiosity objectivity Development
(CPD)

Ability to integrate, apply and communicate

Business Analysis Accounting

understanding skills skills

In essence, management accounting is about the people with the credibility to cascade the influence
combination of accounting and analysis skills with of a strong CFO through the business and challenge
business understanding to provide management senior managers to improve business performance in
information that is used to improve a business the long-term interests of its stakeholders.
performance. The CGMA designation provides a
firm foundation; business partnering requires the To become an effective business partner, management
development of each of these skill sets. accountants must develop an understanding of how
their business works and business specific analysis
Major organisations have clear role specifications skills to complement their core accounting and
and competency frameworks for the range of roles analysis skills. When management accountants apply
through which accounting and finance people serve these technical skills in the business context they can
the business. This helps them identify gaps in skills gain professional credibility and a seat at the decision-
and behaviours and enables them to put appropriate making table. Their accounts and management
development programmes in place. The CIMA information are trusted and can be used to improve
syllabus and examinations have been designed to business performance.
ensure that CGMA designation holders possess
the essential accounting, analysis and business Yet, providing credible accounts and management
competencies that an employer expects of qualified information is not enough. Management accountants
accountants in the finance function. need to develop a keen interest in, or even a passion
for, the business. When this is combined with the
The term business partnering can mean the commercial curiosity to explore how things actually
interface between the finance function and the people work and the professional objectivity to ensure
in the business whom they help with accounting that opinions are supported by evidence, then
processes. However in competency frameworks management accountants can contribute insights
finance business partnering usually refers to finance about the drivers of cost, risk and value.

20 FINANCE BUSINESS PARTNERING: The conversations that count

These insights may be based on financial analysis
but, as we have reported, they are more likely to be The traits needed for effective finance
developed in conversation with peers in the business. business partnering are behavioural:
The ability to contribute insights is an important 1. T he courage to speak up, to challenge
enabler, but effective business partnering relationships managers, to hold up the mirror to the
require a further layer of skills. Insights have to be business.
communicated in a compelling format as appropriate
2. Influencing, building relationships and
to the audience. This is less likely to be in the form of
communication skills, being able to get the
the underlying analysis but by way of storytelling.
message across and get a discussion going.
3. P
 ersistence, the message might not get
Challenging is important. Sometimes I raise
through on the first attempt.
a matter but I might find that I have to drop it.
You have to pick and choose your fights. 4. B
 usiness knowledge, business partners
must understand the business.
Finance Business Partner, SME, UK
5. T he ability to translate the numbers into a
business story.
When necessary, a management accountant
may have to challenge business colleagues to Anton Broers, Finance Manager,
improve performance in the long-term interests of Royal Dutch Shell
stakeholders. If his or her analysis and insights are
to be applied in decision making or performance
management, a management accountant has to have
good working relations with business peers, based on
mutual respect and shared objectives.

21
7. CONCLUSION
In a period of volatility, businesses need to be constantly alert and ready to
address new risks and opportunities. This requires more incisive analysis and
clear forward thinking. Ambiguity demands agility in analysis and forecasting
to inform decisions and enable swift action.

The CFO cannot participate in every decision made Finance business partners cannot exercise influence
across the business. Developing and deploying without the business having confidence in the
finance business partners to work alongside the relevant information, the diligence of the analysis
managers of business units can ensure that financial and a culture of governance. This is consistent with
disciplines and the influence of the CFO permeate the Global Management Accounting Principles xxi
the business. As businesses adjust to a new post- developed and promoted by the AICPA and CIMA.
crisis reality, management accountants have an
ever more important role to play in ensuring that Accountants produce accounts and financial reports
the information decision makers need is filtered up which provide a fair presentation of the business
to them, and that the CFOs influence is cascaded financial position and past performance. Their
through the business. professional expertise is respected. The disciplines
and rigour applied in producing historic financial
Finance business partnering is where accounting accounts can also be applied to give confidence
disciplines and business understanding are in analysis of performance and forward looking
combined to provide analysis or insights to inform management information. Their analysis and
and influence decision making and performance projections can be reconciled to financial truth and
management, preserving or improving value grounded in commercial reality.
generation in the interests of a business stakeholders.
Accountants bring ethics, integrity and professional
objectivity to their fiduciary and stewardship duties.
They help foster a culture of accountability and trust
FIGURE 11: Influence is part of a bigger picture where decisions are taken on the basis of relevant
information and diligent analysis and performance is
managed in the long-term interests of stakeholders.
Communication and use of
Accounting and Management Information Combining accounting skills with business
understanding enables accountants in Financial
Planning and Analysis roles to ensure diligent
analysis is conducted with a focus on the value
generated for shareholders. They can inform bigger
Governance Influence
decisions and contribute to understanding the
drivers of cost, performance, risk and cash flow
Preserve Create needed to enable performance management.
value value
As finance business partners, influential finance
professionals can support decision making and
Confidence Diligence enable this effective performance management.
Achieving this requires a transformation of the
finance function to support better decision making.
It also requires accountants to develop their core
Sourcing and analysis of skill sets so they can take on a broader role and be
Accounting and Management Information recognised for their wider potential in management.

22 FINANCE BUSINESS PARTNERING: The conversations that count

REFERENCES
i. The World Is Flat: A Brief History of the reinventing reporting, Paolo Quattrone,
Twenty-First Century, Thomas L. Friedman, Cristiano Busco, Elena Giovannoni, Robert W.
2005 Scapens, CIMA, 2015
ii. New skills, existing talents The new mandate xii. Building resilience: an introduction to business
for finance professionals in supporting long-term models, CGMA, 2013
business success, CGMA, 2012
xiii. International Integrated Reporting <IR>
iii. Essential Tools for Management Accountants, Framework, International Integrated Reporting
CGMA, 2013 Council (IIRC), 2013
iv. Before you make that big decision, Daniel xiv. Why Companies Fail, Gregory P. Hackett, John
Kahneman, Dan Lovallo, Olivier Sibony, Evans, Kalido White Paper, 2007
Harvard Business Review, 2011
xv. Improving decision making in organisations:
v. Global Management Accounting Principles, Unlocking business intelligence, CGMA, 2012
CGMA, 2014
xvi. From insight to impact unlocking the potential
vi. The CFO as an Architect of Business Value, in Big Data, CGMA, 2013
High Performance Finance Study, Accenture,
xvii. Strength in numbers: How does data-driven
2014
decision making affect firm performance, Erik
vii. Successful Dealmaking, M&A Research Centre Brynjolfsson, Lorin Hitt, Heekyung Kim, 2011
(MARC), Cass Business School, City University
xviii. Roaring out of Recession, Ranjay Gulati, Nitin
London, 2014
Nohria, Franz Wohlgezogen, Harvard Business
viii. Half the money I spend on advertising is Review, 2010
wasted; the trouble is I dont know which half
xix. From insight to impact unlocking the potential
is a well-known adage that is attributed to John
in Big Data, CGMA, 2013
Wanamaker, 1838-1922
xx. Jean-Marc Hut, CFO, Unilever, Financial
ix. Rebooting business: Valuing the human
Management, 2013
dimension, CGMA, 2012
xxi. Global Management Accounting Principles,
x. How to communicate risks using a heat map,
CGMA, 2014
CGMA, 2012
xi. Designed to Happen: How management
accountants can lead innovation through

Key CGMA resources to support finance business partnering:

Global Management Accounting Principles, CGMA
CGMA competency framework, CGMA
Essential tools for management accountants, CGMA
The inside track: partnering for value, CGMA
Global state of enterprise risk oversight, CGMA
What does it take to be a risk leader, CGMA
Key performance indicators, CGMA

23
ACKNOWLEDGEMENTS
We would like to thank the interviewees and roundtable
participants who contributed to this report.

24 FINANCE BUSINESS PARTNERING: The conversations that count

NOTES

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25
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