CFO

EXECUTIVE SUMMARY

Shaping the Finance Function of Tomorrow

A CFO Roundtable Event

CFO
EXECUTIVE SUMMARY

Due to both internal and external forces, finance teams today are facing
a great deal of pressure. Unfortunately, persistent uncertainty and
volatility have led to ad-hoc reporting, intense pressure and scrutiny on
forecasting, and an urgent need for decision support and analysis within
the finance function. In addition to these obstacles, intense regulatory
pressure adds further difficulty for finance, explains Celina Rogers, vice
president at CFO Publishing. Ms. Rogers presented during Shaping the
Finance Function of Tomorrow, a CFO Roundtable Event in Chicago,
sponsored by SAP, Intel, and TruQua.
Ms. Rogers explained that increased internal complexitywhether from
international expansion, organic expansion of business and product lines,
inorganic expansion (e.g., business combinations, joint venture, mergers,
and acquisitions), or urgent needscoincided with the aforementioned
external forces to create a complex set of moving targets for the finance
function. To further complicate matters, the do more with less
mentality persists post-recession. This means that finance is tasked to
consistently reduce costs, despite the pressures they face.
Amidst all of this chaos, finance departments have an opportunity
to transform themselves in a meaningful way. Finance departments
should pride themselves on their ability to ensure that their reporting,
compliance, and transaction-processing requirements are executed with
maximum efficiency. They should strive to utilize technology and human
capital to provide the high-value analysis and decision-making support
that businesses increasingly require.
This, of course, is no easy task. A transition of this magnitude will be
difficult, but perhaps more importantly, businesses should understand
that the need for this transformation is more pronounced than ever. The
finance function has an opportunity to become an integral part of an
organizations value creation, and technology will play a pivotal role in
bringing finances opportunities, requirements, and aspirations together
for the benefit of the enterprise.
CFO, in partnership with SAP, recently initiated a research program
exploring finances evolving role and how technology, in particular,
can help finance organizations continue to move away from their
more transactional and administrative roles of the pasttransforming
themselves into the responsive analysis and decision support function
that finance aspires to become in the future.

SHAPING THE FINANCE FUNCTION OF TOMORROW

CFO
EXECUTIVE SUMMARY

When surveyed, senior executives reported consistent dissatisfaction

with the time and effort necessary to consolidate and close financial
statements. Similarly, finance expressed concern over the lack of
standardization and integration among IT systems, as well as an unmet
need for scalability and flexibility.
Finance functions expressed the desire to allot more time to analytical
activities, but, in reality, many reported that their time was often spent on
transactional activities. Despite these challenges, 76% of senior finance
executives surveyed said that the finance function in their company will
need to be more involved in with working with the lines of business.
The changing needs and pressures of the business encourage finance
to make much greater use of big-data analytics and cloud computing.
Unfortunately, the vast majority of respondents reported they did not
understand these technologies in depth.
CareFusion Case Study
Following Ms. Rogerss opening remarks, Michael DeLeo, director of cost
accounting at CareFusion, presented a case study on how his company
transformed their budgeting and forecasting process using BPC 10 on
HANA, SAPs in-memory database. CareFusion is a global corporation
providing the healthcare industry with products and services that help
hospitals measurably improve the safety and quality of care.
When evaluating an overhaul of their budgeting and forecasting
processes, CareFusion realized there were problems with offline
Excel models. These models were often overleveragedmaking reports
difficult to compile and consolidate in a timely manner. Likewise, offline
models created resource dependencies and transferability restraints, and
they were more susceptible to hardware or software failures. Because
of these limitations, finance often ended up acting as an intermediary
with business partners to translate inputs and projectionscreating
inefficiencies for the entire organization.
After transitioning to a driver in BPC 10 on HANA, CareFusion found
that the elimination of Excel models led to a system-driven consolidation
of plan detail. This not only increased consistency in use for inputs and
reports but also improved data integrity and safety. BPC 10 on HANA
allowed non-finance users to input data into the systems directly and
visualize the impacts of potential actions. As a result, the time to compile
results became much less than the time spent analyzing them.

SHAPING THE FINANCE FUNCTION OF TOMORROW

CFO
EXECUTIVE SUMMARY

Mr. DeLeo explained that using a budgeting and forecasting baseline

brings focus to the highest expense items. In the budget baseline, the
future is based on known operational plans and becomes populated
automatically from respective data sources. In this situation, the inputs
focus on what changed from the prior year or what changes need to be
made to meet a target. For example, if leadership wanted to understand
the impact of a 401(k) assumption change, without BPC it would take
1.5 weeks, involve multiple teams, and have a high likelihood of data
inaccuracy. With a BPC model, the same query would take a day, involve
2-3 individuals, and have a low probability of data inaccuracy.
After implementing BPC10 HANA, CareFusion saw improvements in
agility and the financial planning process, allowing the company to
analyze more options in less time with real-time integration. This led to
improved efficiency, plan accuracy, transparency, and accountability and
established a platform for future enhancements.
When it comes to choosing the right solution, Mr. DeLeo advises CFOs
to look for opportunities to utilize drivers in your planning solution.
CareFusion was able to cut a 1.5 week what-if analysis to under a day.
Creating a baseline for a new forecast enables users to focus on analysis
instead of inputs. When evaluating systems, CFOs should shop around in
order to find the right solution and partner for a successful driver-based
planning journey.

SHAPING THE FINANCE FUNCTION OF TOMORROW