Post on 13-May-2015
description
transcript
1© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
How Leaders Use Benchmarks and Best Practices to Transform Finance
2© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13Process Improvement in Finance:Transformation for Delivering Higher Value to the Business
Mary Driscoll, APQCSenior Research Fellow
©2012 APQC. ALL RIGHTS RESERVED.
3© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Welcome and Introductions…this is where you get to participate.
©2012 APQC. ALL RIGHTS RESERVED.
4© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Who is APQC……and why you should care.
©2012 APQC. ALL RIGHTS RESERVED.
5© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Who We Are
APQC is a member-based, 501(c)3 nonprofit specializing in benchmarking, knowledge management, measurement, and process improvement.
Our mission is to work with organizations around the world to improve productivity and quality by:
discovering effective methods of improvement,
broadly disseminating findings, and
connecting individuals with one another and with the knowledge they need to improve.
©2012 APQC. ALL RIGHTS RESERVED.
6© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
APQC’s Core Competencies
Frameworks and maturity models
Benchmarking and best practices
Knowledge Management
Process improvement and measurement
Metrics and measures
©2012 APQC. ALL RIGHTS RESERVED.
7© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Getting Started…Why benchmark finance? What is involved?
©2012 APQC. ALL RIGHTS RESERVED.
8© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Where Did the Word “Benchmark” Come From?
First used by cobblers to measure people's feet for shoes.
They would place someone's foot on a "bench" and mark it out to make the pattern for the shoes.
You can see how this term has evolved to be used in business today.
Source: Wikipedia
©2012 APQC. ALL RIGHTS RESERVED.
9© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Benchmarks and Benchmarking
How much to improve
Standards and/or measures
Benchmark
How to improve
Best practices and/or what
works
Benchmarking
©2012 APQC. ALL RIGHTS RESERVED.
10© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Informal Definition
Benchmarking is the practice of being humble enough to admit that others are better at something and being wise enough to learn how to match, and even surpass, them at it.
©2012 APQC. ALL RIGHTS RESERVED.
11© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Best Practice/Practice
Methods and techniques that have consistently shown results superior than those achieved with other means
Used as benchmarks to strive for, however:There is no practice that is best for everyone or in every situation
No best practice remains best for very long as people keep on finding better ways of doing things
©2012 APQC. ALL RIGHTS RESERVED.
12© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Typical Benchmarking Life Cycle
“I want to see how I compare.”
“I don’t believe it, let’s compare again.”
Wash, rinse, repeat. (for the really stubborn)
“OK, I give up, how are they able to perform that way!?!?!?!”
Practices
Metrics
©2012 APQC. ALL RIGHTS RESERVED.
13© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Discussion Point
Who has documented any, most, or all of their key finance or accounting processes?
Who uses an external process or business frameworks?
©2012 APQC. ALL RIGHTS RESERVED.
14© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Process Classification FrameworkAPQC’s Process Classification FrameworkSM (PCF) is a taxonomy of business processes that allows organizations to objectively track and compare their performance internally and externally with organizations from any industry.
Built and regularly updated through collaboration with experts, practitioners, consultants, and academicians.
Most downloaded document.
Developed in the early 1990s
Used for many purposesBenchmarking
Standardization and measurement
Governance and accountability
Managing key functions and entire organizations
©2012 APQC. ALL RIGHTS RESERVED.
15© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Easy Access: www.apqc.org
©2012 APQC. ALL RIGHTS RESERVED.
16© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
PCF Details
©2012 APQC. ALL RIGHTS RESERVED.
17© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
APER Example
What is the value in this type of inventory?
©2012 APQC. ALL RIGHTS RESERVED.
18© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Valuable!
Value Shows When You Make It Yours
REALLY VALUABLE!
©2012 APQC. ALL RIGHTS RESERVED.
19© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Selecting Measures…… Quantifying process productivity
©2012 APQC. ALL RIGHTS RESERVED.
20© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Cost Effectiveness
Provides information concerning how well operating cost are managed. Key performance indicators usually include:
Cost per unit (e.g., invoice, check, and square foot)
Cost as a percentage of revenue
Cost as a percentage of total budget (e.g., accounts payable cost as a percentage of total F&A cost)
Actual cost versus budgeted cost
Supporting indicators usually include cost components as a percentage of total.
©2012 APQC. ALL RIGHTS RESERVED.
21© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Staff Productivity
Provides insights into how much output each full-time equivalent (FTE) employee has produced. Key performance indicators usually include:
Units of output (e.g., invoices and purchase orders) per FTE
Workload (e.g., customers and general ledger accounts) per FTE
Supporting indicators usually focus on factors that influence staff productivity such as hours of training per FTE and employee tenure.
©2012 APQC. ALL RIGHTS RESERVED.
22© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Process Efficiency
Provides insights into how well procedures and systems support operations. Key performance indicators usually include:
Error rate (i.e., rework rate)
Forecast accuracy rate (e.g., actual vs. forecast and non-cost measures)
Supporting indicators usually focus on factors that influence process efficiency such as system downtime rate and the degree of process automation.
©2012 APQC. ALL RIGHTS RESERVED.
23© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Cycle Time
Indicates the duration to complete a task. These Key performance indicators are measured in units of time (e.g., hours, days, and months) and usually include:
Processing time
Time to resolve customer inquiry
Supporting indicators usually focus on factors that influence cycle time such as the frequency of system breakdowns.
©2012 APQC. ALL RIGHTS RESERVED.
24© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Examples of Top vs. Median Performance
Source: APQC.
AP Efficiency Indicators:% of invoice line items received electronically (23) 50.0% 20.0% % of invoice line items matched the first time (21) 74.8% 60.0% Number of disbursements per FTE (24) 11,299 7,478 Number of invoice line items per FTE (24) 47,825 28,936 Number of invoices per FTE (25) 12,593 8,125
AP Costs:Personnel cost per process FTE (22) $47,532 $63,916Total cost as a % of revenue (20) $0.010 $0.015 Total cost per $1,000 revenue (21) $0.10 $0.14
Total cost per disbursement/payment (21) $9.64 $12.61
Number of peers providing data Top Median
Insurance Industry
©2012 APQC. ALL RIGHTS RESERVED.
25© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Data Reporting
Synthesizes analysis into concise and relevant findings.
Display findings using graphs, tables, and narration.
Measurement reporting should be clear, concise, and most of all visual.
©2012 APQC. ALL RIGHTS RESERVED.
26© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Benchmarking Peer Groupings
©2012 APQC. ALL RIGHTS RESERVED.
27© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Applying Judgment and Experience
©2012 APQC. ALL RIGHTS RESERVED.
28© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Financial Management Excellence
©2012 APQC. ALL RIGHTS RESERVED.
29© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Most Important Goal for a Major Process Improvement Initiative
72.41%
15.86%
11.03%0.69%
Both efficiency and effectivenessEfficiency (improve finance cost/produc-tivity profile, accelerate cycle speed, reduce error rates)Effectiveness (deliver more effective analytical support to the business)Don’t know
N = 145
©2012 APQC. ALL RIGHTS RESERVED.
30© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Most Popular Targets for Finance Process Improvement
78% Plan, budget, forecast/analyze, re-plan
72% Close/consolidate/report
70% General accounting (any sub-process)
50% Accounts payable transaction management
46% Working capital management
©2012 APQC. ALL RIGHTS RESERVED.
31© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Look at Correlations
Think through how performance in one area relates to performance elsewhere
Give the information context and a gut check.
©2012 APQC. ALL RIGHTS RESERVED.
32© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
AP Performance Gap: Best vs. Worst
29 firms 29 firms
29 firms 29 firms
Percentage of invoice line items matched the first time
36%
85%--99%
116 companies with > $1 billion in revenues
©2012 APQC. ALL RIGHTS RESERVED.
33© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Total Cost of AP per Number of Invoices Processed Annually
Bucket 1 Bucket 4$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00 $5.43
$2.84
Median Figures
Median
Source: APQC Open Standards Benchmarking
©2012 APQC. ALL RIGHTS RESERVED.
34© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Cycle Time in Days Between Completion of Quarterly Consolidated Financial Statements and the Release of Earnings
Cycle Time in Days between Completion of Quarterly Consolidated Financial Statements and the Release of Earnings
Figure 12
6.0
15.0
20.6
10.0
15.0
23.5
12.0
20.0
30.0
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
Top Performers Median Bottom Performers
SSCN = 25
HQN = 64
BUN = 107
©2012 APQC. ALL RIGHTS RESERVED.
35© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Percentage of Business Entity’s Inter-Company Transactions Processed by Automated Systems
SSC HQ BU0
10
20
30
40
50
60
70
80
90
100
65%
30%23%
95%
50%
60%
MedianTop
Source: APQC Open Standards Benchmarking
©2012 APQC. ALL RIGHTS RESERVED.
36© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Total Cost of Financial Reporting Per $1,000 in Revenue
Top Performers Median Bottom Performers$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
$0.60
$0.11
$0.23
$0.57
All Industries, Revenue greater than $1 Billion N = 148
©2012 APQC. ALL RIGHTS RESERVED.
37© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
The Faster Close Costs Less
The Fastest: Quarterly Cycle TimeN = 49
The Slowest: Quarterly Cycle TimeN = 42
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
Bottom QuartileSource: APQC
©2012 APQC. ALL RIGHTS RESERVED.
38© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Part 3: Discover Best Practices……the “how” is just as important as the “how much.”
©2012 APQC. ALL RIGHTS RESERVED.
39© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Qualitative Information
Tells the “how” story
Focuses on the critical success factorsWhat allows companies to perform in a stellar manner?
People?
Process?
Technology?
Culture/Leadership?
How companies close thegap in performance
©2012 APQC. ALL RIGHTS RESERVED.
40© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13The idea is to isolate and analyze operating metrics and patterns that drive financial outcomes. This case study explains how the CFO works with business managers to understand and influence interactions between financial and non-financial variables, all with the intention of generating best-possible financial results for the enterprise.
http://www.apqc.org/knowledge-base/documents/new-cfo-turbocharges-revenue-modeling-using-bi-tools-and-techniques-aapa-ca
©2012 APQC. ALL RIGHTS RESERVED.
CFO Turbocharges Revenue Modeling Using BI Tools and Techniques: AAPA Case Study
41© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Gap Assessments to Light the Path to Financial Management Excellence
Manpower Group
©2012 APQC. ALL RIGHTS RESERVED.
42© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Manpower’s Approach to Finance Transformation
©2012 APQC. ALL RIGHTS RESERVED.
43© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
The Effective Finance Charter: Intel
Link finance actions to the enterprise’s goals and needs
1. Keep Intel legal worldwide and maintain the highest standard of integrity
2. Maximize and grow profits by exercising business expertise,
independence, influence and leadership
3. Provide efficient world-class services
4. Protect shareholder value through effective risk management and control
5. Develop world-class finance professionals
©2012 APQC. ALL RIGHTS RESERVED.
44© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
The Effective Finance Charter: OCC
Strategic Goals Come to Life with Annual Action Plans
1. Embrace accountability for the success of the business strategy
2. Anticipate customer needs through a better understanding of
their business
3. Ensure processes are operationally excellent
4. Be recognized as leaders in effective program and project
management
5. Optimize costs in delivering products and services
©2012 APQC. ALL RIGHTS RESERVED.
45© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Summary: Critical Success Factors
Alignment of financial management to overarching corporate objectives
Move to a more IT-savvy financial employee base who can manipulate/analyze large amounts of data
Formal training regimen to embed “business influencing” skills: analysis, negotiation, collaboration, etc.
Standardized and clearly communicated financial close process with associated due dates and gates
Process management principles and techniques
What else? Discussion?
©2012 APQC. ALL RIGHTS RESERVED.
46© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
http://www.apqc.org/knowledge-base
©2012 APQC. ALL RIGHTS RESERVED.
47© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13Thank You!Process Improvement in Finance:Transformation for Delivering Higher Value to the Business
48© 2013 Ask, Share, Learn
www.proformative.com
#CFOD13
Thank You Sponsors!
PLATINUM
GOLD
SILVER
DIAMOND