‘If finance business partners in the future just continue to focus on narrow definitions of financial capital, then they will be marginalised in their organisations,’ warns PwC partner Helena Clennell in ACCA’s recent report, Finance insights – reimagined.
‘The traditional narrow approach does not reflect the realities of business nor an understanding of how businesses create value in today’s environment,’ she adds.
The report sets out how the global pandemic has forced a complete re-evaluation of business performance. Organisations are increasingly focused on the attainment of purpose rather than pursuing a purely financial goal. Such a shift requires a similar response from the finance function.
As one Australian CFO quoted in the report says: ‘Who defines performance? We’ve tended to focus on the profit motive because the finance profession has defined that and it’s fairly easy to measure.’
Mindset shift
The answer, according to the report, could lie in the adoption and evaluation of the six ‘capitals’ of integrated reporting: financial, manufactured, intellectual, human, social and responsible, and natural. But in order to measure and analyse these, finance professionals need to develop skills in obtaining better-quality information, making better-quality measurements and generating better-quality reporting.
However, as the report suggests, if finance functions are to play their role fully in the development of the purpose-centric organisation, then defining the role of the finance business partner becomes ever more important.
‘A lot of people discuss whether finance business partnering is a role or mindset,’ says Claus Thorne Madsen, a partner at PwC Denmark. ‘I’m a strong believer that it is a role with a specific mindset.’
The pandemic has refocused attention on the immediate, not only from a financial perspective but also in terms of how an organisation contributes to the social good.
Finance business partnering: six futures
To assess the potential development of finance business partnering for generating insights with practical applications, the following six hypotheses have been developed:
- The role of financial business partner will become more strategic and collaborative to support operational decision-making across the organisation.
- Oversight, guardianship of data integrity and standards will be an essential part of the role, including aspects of non-financial and external data.
- Effective business partners will increasingly focus on evaluating and predicting performance against the six capitals, and supporting the organisation’s overall purpose.
- Business partner roles will be more commonplace than other finance roles as a result of automation and process efficiency.
- A failure to evolve the skills of the business partner will render the effectiveness of the role obsolete.
- Self-service reporting and the emergence of AI and machine learning will free up business partners and take previous responsibilities out of their hands.
The report suggests that finance business partnering should be viewed as an aptitude rather than a specific role. To be effective, the individual needs to demonstrate a broad range of characteristics, including technical, ethical and softer skills. These in turn will allow finance professionals to provide the necessary insights for the organisation as it navigates these challenging times now and in the medium term.
Rules of engagement
To secure the future of finance business partnering, the report has developed six hypotheses (see box). According to Clive Webb, senior professional insights manager at ACCA, currently the two most valued aspects in the finance professional’s role are the support for business strategy and the analysis of current performance; this suggests that finance professionals might not yet be achieving the forward-looking view on which the future of the finance function depends.
‘The six hypotheses generated in this report allow businesses, both large and small, to explore the opportunity for finance insights and the role of business partners in generating sustainable value creation,’ Webb says.
In a survey of 3,500 accountancy and finance professionals that helped inform the report, most respondents rated the role that finance business partners play as effective or highly effective. They are seen as proactive in the majority of cases in providing the required insights and are a fundamental part of the decision-making process.
But against this, there is an apparent focus on current performance, which may suggest the reality is a tactical role rather than a strategic one.
Generating solutions
In the past, when finance professionals spoke of insight they were often referring to historic performance and how the organisation fared in the normal course of business. The pandemic, though, has refocused attention on the immediate, not only from a financial perspective but also from how an organisation contributes to the social good.
The organisation’s leadership has been required to be forward-looking and adaptable in their decision-making.
As Brian Furness, PwC’s global finance consulting leader, says: ‘One key lesson from the pandemic will be how truly transformative a lot of organisations have been digitally.
‘As finance professionals, we need to act as the aggregators across the data sources and to ensure that they can be exploited in the right way.’
The report quotes a CFO in a leading industrial entity in India as saying that business partners are ‘expected to provide solutions, and often that requires integrating knowledge of your market or industry, non-financial data, such as macroeconomic trends, and financial data, and to synthesise that into a solution for your strategic business partner, whether it’s a new strategy, new markets, new products or repositioning an existing product to optimise income’.
Several other interviewees added that those who play a significant part in managing the situation have a robust understanding not only of the business but also of the data that could be used to analyse performance, support forecasting and assess the impact of government initiatives.
