CBC Evolution of the Finance Function October 13 th, 2011

CBC Evolution of the Finance Function

October 13th, 2011

© Deloitte & Touche LLP and affiliated entities.

Introduction

2

Alexandre is a Senior Manager in the Finance and Performance Management consulting practice in Montreal.

He has over 14 years of experience in the review of strategy and operations, financial management, financial consolidation, treasury, trading and risk management.

Alex has led several major projects for global companies in the finance process space in the Americas, Europe and Asia.

Finance & Performance Management, Montreal

Alexandre TanaraSenior Manager

Adelaide is the National Strategy & Operations Leader for Consulting. She was previously the Director of Operations for the Montreal office in the Consulting function. Adelaide is a Chartered Accountant, a Fellow of the Quebec Institute of Certified Management Consultants as well as past president of the Quebec Institute of Certified Management Consultants.

Adelaide has over twenty years of consulting experience in the areas of financial management, finance shared services, operations reviews, performance measures, reengineering for finance and Strategic Cost Management.

Strategy & Operations, Montreal

Adelaide IsraelianPartner, Montreal


Discuss the evolving role of the CFO and the Finance function

Have a dialogue on the current situation of the Finance function at CBC

Increase your understanding of the main challenges facing Finance organizations today and get insights on how they are being addressed

Generate new ideas that could enable your team to better respond to the evolving role of the Finance function

Session objectives

3


StrategistParticipate as a financial leader in defining the strategic direction of the company and align financial strategies accordingly.

OperatorBalance capabilities, talent,costs and service levels to fulfillthe finance organization’s coreresponsibilities efficiently.

StewardProtect and preserve the criticalassets of the organization andaccurately report on financial position and operations to internaland external stakeholders.

CatalystCatalyze behaviors across theorganization to execute strategicand financial objectives whileat the same time creating a riskintelligent culture.

The Four Faces of the Finance function

Finance

Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

4

Core Finance Mandate

Finance Value Add


Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

5

Stewardship role

Focus

• Accounting

• Internal Controls

• Risk Management

• Information Quality

Role

• Ensure compliance of financial reporting and controls

• Ensure the assessment and adequate mitigation of risks

• Ensure compliance with regulations and other legal requirements


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

6

Operator role

Focus

• Efficiency and effectiveness of operations, including global risk management operations of the finance function

• Transformation and optimization projects

Role

• Define and optimize the operational model of the finance function

• Develop talent within the Finance function


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

7

Strategist role

Focus

• Help create the company's vision and future direction

• Improve company performance and shareholder value

• Talent management

Role

• Bring Finance perspective to bear on all strategic decisions

• Integrate entreprise performance management

• Leverage financial perspective to create a framework for acquisition of capital, undertake M&A and other investments


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

8

Catalyst role

Focus

• The rigorous implementation of the strategic choices

• Changing behavior of the organization in establishing an attitude focused on creating value

• Investment Management

Role

• Gaining business alignment to successfully identify, evaluate and execute strategies by partnering with senior management

• Implementing processes to define strategic project targets and to measure benefit realization


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Ro

le o

f F

inan

ce

Growth and Acquisition

Control and Compliance

Regulation and Results

Recovery after the Economic Crisis?

Ext

ern

al E

ven

ts

Evolving role of Finance

9

CBC celebrates the 50th anniversary of public television in

Canada

1998 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Sarbanes-Oxley

2004 -2009 2010 and beyond2001 -20031982 - 2000

Global Economic Crisis Dot.com crash

Collapse of the Dot-com bubble

NASDAQ & Dow Jones hit record highs

World Trade Center Attack

End of Financial

Crisis

All EU companies

required to use IFRS

GDP growth, Dow Jones above

12,000 for the 1st time

Beginning of Subprime Market

Collapse

GM & Chrysler file for

bankruptcy protection

Preparing for Y2K Enron files for

bankruptcy

Financial Markets Plunge

2011

Canadian companies required to use IFRS

CBC launched its new 5 year

strategic plan

Sovereign debt crisis


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

What is the CURRENT allocation of time between the different roles of the Finance function at CBC?

10

70 %

30 %

30 %

70 %

50 %

50 %

60 %

40 %

A B

C D


What is the DESIRED allocation of time between the different roles of the Finance function?

11

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

70 %

30 %

30 %

70 %

50 %

50 %

60 %

40 %

A B

C D


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Market trends: CFO perspective

12

Strategist

OperatorSteward

Catalyst

Desired

60%

Current

42%

Desired

40%

Current

58%


Finance Function

Execution

Efficiency

Perfo

rman

ce

Control

Catal

yst

Operat

or

Strategist

Steward

Opportunity to evolve the role of Finance at CBC ...

13

More financial information required by the CRTC

Greater market visibility on financial results

CEO who wants to leverage finance as a strategic business partner

More pressure to demonstrate the value created to maintain funding

Opportunity to change the role of the

Finance function of CBC by increasing

value-added activities that are aligned with

CBC’s corporate strategy


How to evolve?

Value drivers are the capabilities of the Finance function that create and protect the value of the company

Enablers are the elements that support and help operationalize the capabilities of the Finance function

14

Elements that can evolve to improve the value drivers

Finance Strategy

Performance & Decisions

Risk & Capital

Regulation, Governance &

Controls

Strategy & Execution

Talent & People

Policies & Processes

Close, Consolidate &

Report

Transaction Processing

Systems & Information

Finance Organization

Threshold Performance

Leading Edge


Where do you position yourself with regards to your system and information capabilities?

15

A

B

C

D

• The systems are obsolete and they don’t meet the business requirements

• Use of multiple non-standardized Excel files for analysis at the organization level

• The systems meet most business needs• Use of analytical tools to perform data mining• The information is validated and is available on time for users

• Use of integrated business intelligence across all functions of Finance

• The systems allow users to make real-time analysis• Reports are created automatically without any manipulation of data

(e.g. Excel)

• The systems meet the business needs but are inefficient• Many manipulations required in Excel to obtain the necessary

information for the disclosure and decision-making

Level 1

Level 2

Level 3

Level 4

Finance Strategy


Risk & Capital

Regulation, Governance & Controls


Talent & People


Close, Consolidate

& Report





Leading Edge


Systems and information

16

Challenges Trends

Benefits and impacts on teams

• Lack of systems integration

• Obsolescence and duplication of functions

• Poor response to business needs

• Lack of access and data consistency

• Defining a strategic vision for the entire portfolio of applications

• Establishing a strategy for business intelligence

• Prioritizing and upgrading key systems

• Rationalization of data sources

• Less time spent to generate reports manually (Excel)

• More time available for value-added activities

• Increased employee engagement as a result of less time being devoted to data manipulation


Where do you position yourself with regards to your finance organization?

17

A

B

C

D

• There is very little or no centralization of finance processes• Different business units/departments perform processes differently

• Most common processes that do not require business unit/department specific skills are performed in a centralized function

• There is focus on measuring and improving process performance

• All common processes that do not require business unit/department specific skills are performed in a separate entity that has service level agreements with business units/departments (customers)

• There are structures in place focused on improving performance, customer satisfaction, service quality and cost efficiency

• There is some centralization of processes but there is room for more centralization of common processes

• Some KPIs in place to measure the efficiency of centralized processes

Level 1

Level 2

Level 3

Level 4

Finance Strategy


Risk & Capital



Talent & People


Close, Consolidate

& Report





Leading Edge


Finance organization

18

Challenges Trends


• Lack of process standardization

• Low degree of process automation

• Multiple IT systems used for the same process across departments

• Moving towards more process standardization and centralization in order to improve process reliability and efficiency

• Once housed in a centralized function, processes are being automated to reduce operational risk

• More reliable processes as a result of being performed by specialized resources

• Positive impact on team morale due to opportunity to specialize and progress within the role

• Possible efficiency gains due to centralization


What are the different finance organization models?

19

De-centralization

• There is very little centralization of finance processes

• Different business units/departments perform processes differently

Centralization

• Common finance processes are housed in one division rather than being performed by multiple ones

• The ‘customers’ of these processes are treated as end-users

• The focus is on standardizing the processes and building functional expertise

Shared services

• Common finance processes are housed in a seperate legal entity

• The ‘customers’ of these processes are treated as clients and the performance is measured against service level agreements

• The focus is on continuous improvement and efficiency

Outsourcing

• Common finance processes are managed by a 3rd party vendor and processes are performed in a low cost area, typically offshore

• The 3rd party vendor is responsible to a defined statement of work and contracted service levels

• The primary focus is on transaction processing of specific processes


Finance Strategy


Risk & Capital



Talent & People


Close, Consolidate

& Report





Leading Edge

Where do you position yourself with regards to your policies and processes?

20

• Poorly defined processes and low level of standardization across the organization

• High level of manual intervention for performing tasks

• Standardized processes across departments• Integrated end-to-end processes (e.g. procure to pay)• Most processes are automated (no manual intervention required)

• Standardized processes across the organization• Processes are integrated and efficient• An end-to-end process owner identified for all processes

• Processes defined and standardized within one function• Some process automation• Several validation and reconciliation processes in place to ensure

information quality

A

B

C

D

Level 1

Level 2

Level 3

Level 4


Policies and processes

21

Challenges Trends


• Semi-automated processes, requiring many manual interventions, which increases the operational risks

• Decentralized delivery model and redundancy in process

• Policies and processes are more or less defined, leaving room for a lot of differences within an organization

• Process automation and use of "workflow“

• Creation of shared service centers and centers of expertise for a majority of processes

• Identification of end-to-end process owners, for better integration of activities and data

• Better integration and standardization of processes equals efficiency

• Most of the time is available for value-added activities

• New skills must often be developed to meet the needs of the changing role


Finance Strategy


Risk & Capital



Talent & People


Close, Consolidate

& Report





Leading Edge

Where do you position yourself with regards to talent management?

22

• No formal assessment of competencies• No performance management process in place

• Performance management framework in place, which includes tools to measure and assess Finance competencies

• Performance management process conducted each year, which is tied to compensation, recognition, and other talent management programs

• A performance management framework that is integrated with the talent agenda and supported by robust tools to measure and assess Finance competencies

• The learning strategy, individual objectives and performance management are linked with the entreprise strategic planning and the business objectives of the organization

• Performance metrics for skills development and learning strategy currently in place, but they are not specific to the finance function

• Informal performance management process, that changes between departments

A

B

C

D

Level 1

Level 2

Level 3

Level 4


Talent management

23

Challenges Trends


• Lack of skills to truly act as business partners

• Lack of career advancement for key employees

• Difficulty in attracting top talent

• Low employee engagement

• Develop a brand image for the finance function

• Attract graduates with high potential

• Develop job rotation programs inside and outside of the finance function

• Promote development and employee engagement

• Promote the attraction and retention of "top talent“

• Develop a proactive and a structured approach to talent management


1. Assess the maturity level of the entire finance function

2. Identify the target maturity level

3. Identify and prioritize initiatives to bridge the gap between current and desired levels of maturity - Roadmap

Where to begin ...

24

Roadmap

Clear vision of how the Finance function can help CBC realize its corporate objectives

Focused energy on strategic initiatives

Increased in employee and team engagement that are now driving towards a common vision

Finance Strategy


Risk & Capital



Talent & People


Close, Consolidate &

Report





Leading Edge

Documents

CBC Evolution of the Finance Function October 13 th, 2011