August 28, 2009

This month's "metric of the month" from Hackett Finance represents the percentage of business/finance analysts in finance who are perceived by the broader enterprise's stakeholders to have the skills and acumen needed to partner with operations management.

Metric Definition

The percent of finance analysts who have the skill set and business acumen to be able to act as advisors to business management (Fig. 1) is a direct reflection of finance's ability to drive enterprise-wide performance through effectiveness in controlling and FP&A-related activities. The metric represents the percentage of business/finance analysts in finance who are perceived by the broader enterprise's stakeholders to have the skills and acumen needed to partner with operations management.

Why It's Important In today's uncertain economic environment, what exactly does business partnering mean for the finance organization? Planning and performance management and business analysis organizations are operating as business partners when they not only facilitate, lead and participate in the most important dialogues taking place in the organization, but also provide insight, analysis and value that enables enterprise-wide performance. Insight and analysis can address such things as M&A decisions, business growth opportunities, strategic planning, product portfolio analysis, price, and productivity and efficiency improvements. An important component of business partnering is achieving effectiveness across core controlling and FP&A processes, which include activities in planning and performance management and business analysis. It is difficult to contribute meaningfully to key business decisions when the underlying processes that drive those decisions are weak, lack timeliness and/or are not based on the key drivers of business performance. To lead effectiveness in core controlling and FP&A, Hackett has identified some of the practices and questions that world-class finance organization consider when determining their levels of effectiveness (Fig. 2). FIG. 2 Increasing the effectiveness of core controlling and FP&A activities Source: The Hackett Group

Increasing Effectiveness of ...
Core controlling and FP&A activities
	Planning and Budgeting	Forecasting	Business performance reporting and analysis
Process objective	Strategic planning, business planning, annual planning and budgeting are fully integrated and provide clear direction to the business on the strategy and how the company will operate. Plans, budgets and initiatives comprise both financial and non-financial objectives that drive future value for the organization and are responsive to emerging events/conditions.	Accurate forecasts can be produced quickly and enable the impact of changes in internal and external business conditions to be readily determined. Forecasting supports an agile enterprise that can implement course corrections or take advantage of opportunities proactively.	Performance against the business objectives and strategy is tracked and provides actionable insight. Reporting focuses management attention on key performance drivers and supports alignment of decision making with the strategy and objectives set through the planning process. Reports and information are accurate, reliable, consistent and timely.
Self-evaluation questions for finance	Is target setting top-down or bottom-up? Are planning and budgeting processes aligned and integrated? Are planning and budgeting simplified and focused on key performance drivers? Has the budget been de-emphasized in favor of more forward- and outward-looking objectives? Is the budgeting process complicated, long and burdensome? Does the process provide clear, actionable direction or does it lack relevance to current conditions once complete? Is workflow optimized Is technology fully leveraged?	Is the forecast reliable and accurate? Does it have integrity as a pure outlook of the organization's position? Is the best-fitting horizon and frequency used? Are forecasts event-based? Is there a high degree of involvement and collaboration with finance? Are numbers changed as they move up the organization? Do forecasts comprise both numbers and assumptions? Is forecast accuracy actively tracked and managed?	Is information standardized (e.g., common data definitions)? Has unnecessary complexity been taken out of the production process? Do analysts spend more time compiling data than interpreting it and providing actionable insight? Are reports relevant for decision making, forward looking and action-oriented? Is information timely, relevant and reliable? Are there sufficient automation and self-service capabilities? Is sharing of consistent information across the enterprise enabled?

• Planning and Budgeting
• Forecasting
• Business performance reporting and analysis
• Process objective