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Being the best:

Inside the intelligent
nance function
Lean nance Foundation
for success
Lean nance can
dramatically boost speed,
exibility and quality across
the nance function and
enable nance teams to
deliver services of greater
range and value.
Lean nance
Foundation for success
1.






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Across the globe, the nance teams that provide the most value are those who offer
high-quality analysis and advice that contribute to better performance. Of course,
nance teams cannot expect to boost their value overnight. Effective business
support needs to spring from a strong foundation, and so nance functions need to
get the basics right. Until they do, they will not have strong enough footing to offer
credible insight and analysis at the upper end.
This is where lean nance comes in. Under these principles, nance teams focus on
improving the efciency and effectiveness of their core activities to enable reliable data
streams, uniform reporting standards, and optimized nance processes and technology
infrastructure. Finance functions can then harness the resulting gains in quality and
efciency to improve the range, timeliness and integrity of their strategic business
support. In short, lean nance involves simplifying, streamlining and harmonizing
essential nance processes to create a leaner, more efcient nance operation.
Benets go well beyond reduced costs
The 2008 nancial crisis has already caused many nance functions to embrace
lean nance principles to some extent. Indeed, companies have sought innovative
ways to re-engineer their basic business processes (including nance) since the
1980s, when Tom Peters In Search of Excellence topped bestseller lists and the term
Business Process Re-engineering (BPR) was coined.
But until recently, the worlds largest companies mostly operated as multinationals
rather than truly global companies. In pursuit of growth, they allowed their businesses
in various parts of the world to proliferate largely independently. As a result, their
nance operations and data ows became more far-ung and complex, and their
underlying processes, technologies, systems and data models lacked consistency
and coordination.
Finance operations suffered from unreliable data, information gaps and
inefciencies as a result. When the economic downturn hit, the threat to their
survival made it imperative for companies to control their costs, spurring many of
them to take on badly needed nance function improvements. Underpinning these
improvements were efforts to gain greater global control and consistency over their
nance organizations, processes and technologies.
But reduced operational cost is only one of lean nances goals. Lean nance can
dramatically boost speed, exibility and quality across the nance function and enable
nance teams to deliver services of greater range and value. While many companies
have taken initial steps to enable lean nance operations, higher-performing companies
(those with revenue and EBITDA growth over 10 percent in the past three years) are
more likely to recognize and prioritize taking lean nance to the next level.



Inside the intelligent nance function 3
Contributor
Robert Cecil (US)
Higher priority for high performers
In KPMGs 2013 survey of senior nance executives, a slight majority of companies
say they are already skilled at embedding lean nance principles and capabilities
in their day-to-day nance operations. Interestingly, a relatively high percentage
of the high performers (29 percent) believe they are very skilled/strong in this
area, compared to only 16 percent overall. High performers also are twice as likely
to put great importance on adopting lean nance principles (25 percent for high
performers versus 12 percent overall).
According to KPMGs survey, lean nance enablers that high performers consider
to be extremely important are: use of data analytics (41 percent), highly
optimized nance processes (39 percent), nance staff talent and end-to-
end process management (both at 35 percent). While we agree that use of data
analytics techniques is increasingly important, its effectiveness depends on a strong
foundationof optimized nance systems, processes and people.
How important are embracing and adopting lean nance principles and
capabilities to your organization? Percentage of high performers who
answered "extremely important"
Highly optimized Underlying nance Use of global Use of global
nance process IT system and shared services outsourcing
applications
Use of data Finance End-to-end process Global nance
analytics staff talent management operations and
functions
Source: KPMG International CFO survey 2013
High performers also
are twice as likely to put great
importance on adopting lean
nance principles
2013 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member rms of the KPMG network are afliated.
Laying the foundation
As noted earlier in our discussion of the Finance TOM, the rst step in employing
lean nance principles is to pinpoint where and how the nance function adds
value. This requires reviewing all functional areas of the nance pyramid, including
transactional processing, nancial reporting and control and decision support
activities.
Lean nance project outcomes often reect changes at the lower end of the value chain
(transaction processing and nancial reporting) that will ultimately allow resources
and effort to be re-directed to the activities with the highest value. At this initial stage,
nance functions invest in company-wide transformation projects that involve:
moving lower-end transaction processing work out of the fnance function and
concentrating these activities within shared service centers and/or outsourcing
them to third-party service providers
standardizing and automating routine procedures where possible to increase
efciency, reduce potential for error and improve quality
standardizing and streamlining fnance function roles and responsibilities,
processes and controls
standardizing and streamlining data fows and underlying IT architecture to
automate the transfer of data inputs and integrate and rationalize legacy systems;
and establishing data warehouses to ensure one global data set and enhanced
reporting.
Taking nance to the next level
Essentially, this rst step of lean nance implementation involves creating a unied,
reliable platform and structure for nance activities that involve collecting, verifying,
classifying and processing nancial data. With a robust platform in place for these
core nance activities, nance functions can condently plan how they will move
to the next level of lean by levering this platform and structure to enable nance
activities that involve data aggregation, manipulation and analysis to support
decision-making.
The next level of lean nance involves investing in data analytics, decision support
tools, and nance talent and training to develop intelligent nance skills and
capabilities. It can also involve revisiting shared service center and outsourcing
practices with an eye to implementing more strategic, mixed sourcing practices.
It is telling that fewer nance executives of high performers intend to invest in
leannances foundational elements over the next two years, compared to other
areas of the nance function. In our survey, outsourcing of transactional nance
activities is the least named area for investment (14 percent), followed by use of
shared services (22percent). This suggests that high performers have already laid
these foundations.
High performers are now looking to enable higher-end activities, as suggested by
the greater numbers of them who plan to invest in talent management (53 percent),
deployment or expansion of ERP software (43 percent), and decision support tools
(37 percent).
The next level of lean
nance involves investing in
data analytics, decision
support tools, and nance
talent and training to develop
intelligent nance skills and
capabilities.
2013 KPMG International Cooperative (KPMG International). KPMG International provides no client services and is a Swiss entity with which the independent member rms of the KPMG network are afliated.
Tilting the balance toward better business support
Notably, while nance functions expect they will continue to devote most of their
time to basic nancial reporting activities, they believe that the balance of their
efforts will tilt toward decision support activities in the next two years. In the next
ve years, 56 percent of nance executives say they expect their nance teams to
take a larger role in developing and executing business strategy.
Setting targets for adopting lean nance principles as part of a Finance TOM
can help nance teams make the transition with success. By going through the
process of streamlining, standardizing and simplifying their nancial reporting and
transaction processing processes and capabilities, they can now build a tailored
platform for the provision of timely, insightful nancial advice that inuences
business outcomes and adds maximum value.
In the next ve years,
56 percent of nance
executives say they expect
their nance teams to take a
larger role in developing
and executing business
strategy.
5 Inside the intelligent nance function

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