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PwC:s 2019-2020 Finance benchmarking report
Stockholm, March 17 2020
Key points from PwC:s 2019-2020 Finance benchmarking report
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PwC
This year’s benchmarking report focuses on the new demands being placed on today’s finance leaders
The report breaks down the challenges facing our finance leaders into three key themes:
People
Process
Performance
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5 of 6Steps to improve Finance effectiveness are about people5 of 6 steps to improve the finance function are about helping people digitally upskill and collaborate better: 1. Improve communication protocols2. Improve collaboration3. Improve interactions and
relationships4. Upgrade skills5. Clarify roles and decision rights6. Improve technology
People
Three key points are helpful to know, regardless of where you start a functional transformation
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30-40%Of time can be reduced with finance automation and behaviour changeMany of our clients know the potential for process automation in the finance function. They’re taking on core systems transformations, including consolidations or a change to SAP4Hana. Our benchmarks indicate that 30-40% of existing time spent on processes can be reduced with finance automation.
Process
75%Of business analysts’ time in top performing finance functions is spent on developing insightImagine what that means for a competitive advantage. It’s a big call to action for functions who are not making the shift for how staff time is spent. Compared to 47% of top finance functions devoting their time to data 5 years ago.
Performance1 2 3
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Cost of finance by company revenue
Is your finance function cost efficient?Today’s finance budgets are shifting, but they are not necessarily shrinking. Top-performing finance functions are keeping automation high on their agendas, but it’s just the start of a bigger push for performance.
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Efficiency and cost reduction in the finance function have been a major focus in recent years, but finance leaders are reinvesting those gains to improve the insights they provide to the business units and company leaders they support.
Median
2013
0.89%2018
0.85%
Top quartile
0.53%
0.55%
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Companies with larger revenues typically have lower-cost finance functions
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Median
Top Quartile
Revenue
Larger companies take advantage of economies of scale and operating model design to deliver efficient finance activities.
Cost of finance as % of company revenue (2017-2018)
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Large companies have no excuse when operating in a more geographically complex environment
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Revenue < $3bnRevenue > $3bn
Number of operating countries
Cost of finance by revenue and number of operating countries (2017-2018)
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Gauge where you stand against your industry peers
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Median cost of finance
Top quartile
Source: PwC
1.17%0.84%
0.71%0.80%
0.76%0.64%
0.65%0.63%
0.53%0.47%
0.39%0.24%
Cost of finance as % of company revenue (2017-2018)
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Key takeaways from our report: People
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Think pro-finance and pro-people at the same time
Assess where people’s skills are today for the specific outcomes in your finance transformation.Think rotational programs, shadowing and learning that allow people to demonstrate underutilised skills.
Use personas to imagine new roles for finance
A persona is a fictional representation of who will play a role. Thinking in this way helps you design yourfuture-state organisation. Do you need ‘problem solvers’ with business acumen? ‘Value drivers’ that can look at trade-offs across a widerange of scenarios? ‘Dreamers’ whocan visualise stories, innovateand experiment?
Take down productivity and collaboration barriers
Use workflow automation tools, digital social hubs and chat tools to modernise the workplace. But it’s also important to break organisational silos and recognise how spans and layers, work habits or cultural traits hold people back from trusting each other and collaborating.
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PwC
Key takeaways from our report: Process
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Stage improvements carefully to increase finance’s contributions to the business
Move forward in line with the capabilities most needed for the business and stage different technology solutions and role changes carefully. Elsevier, a global information analytics business, conducts periodic benchmarking analyses to identify the process redesigns that would yield the greatest returns and moves forward sequentially.
Match finance roles to outcomes
Transformation efforts are less likely to succeed when there’s not a clear understanding of the target operating model and specific business outcomes. Change roles to get the right role-to-outcome match. Today’s global process owner role, for example, helps standardise end-to-end processes for automation.
Check taxes and compliance before you commit
Process simplification and automation can have trade-offs. Thinking of automating shared-service processes and moving them offshore? Remember changing where work gets done may subject you to different regulatory considerations or it may alter yourtotal tax costs or legal entity structureand collaborating.
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PwC
Key takeaways from our report: Performance
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Select finance performance-pilots to hook early adopters
Start with specific use cases that have a good chance of adoption in the organisation and pilot them. Home in on the types of data you need. For example, in an existing revenue model, you could start layering in unstructured data coming from social media platforms to track customer sentiment.
Self-service financial data must equal better service
Self-service dashboards drive nimble decision-making, but business teams still need support from finance to draw conclusions or validate decisions.Keep collaboration strong with regular touchpoints so that both finance and business teams have the same interpretation of the data and the same basis for measuring performance.
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Point of view on the future of Finance
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A series of mega-trends are impacting business…
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… and changing customer expectations and modern technologies are impacting how we work in Finance
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Future Finance organisations will be different
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Improved efficiency will create additional capacity
… and Finance will pivot to a greater advisory role
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These trends are impacting the whole Finance Operating Model
Defines the finance services, where they will be delivered from, and
how they will be delivered to the customers of finance
Sets out the Finance Organisation Structure and Location Model with
roles and responsibilities
Sets out the Vision for Finance, the transformation roadmap, benefits case and design principles
Sets out the Finance job families, competency framework, learning journey & career path framework
Defines the process taxonomy, process designs, RACI matrices,
risk & controls frameworks, and how automation will be used
Defines the Finance data model and master data management strategy
Defines the performance management strategy, KPI framework, and reporting arrangements and capabilities
Sets out the technology architecture and key systems used, ‘fit to standard’ alignment, and integration roadmap as necessary
Technology
PerformanceManagement
Data & Master Data Governance
Process, Automation & Controls
Organisation & Location
Model
Organisation & Location
Model
Vision & Strategy
People & Talent
Service Delivery Model
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The Future of Finance
PwC – The Future of Finance17
How can Finance respond and transform?
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The modern Finance agenda
You can start on different pathways but to transform thesemust come together.
People
Process
Performance
• Investing in an upskilled workforce that’s digitally savvy
• Supplementing new human and machine based roles
• Creating a modern and collaborative environment
• Using a highly efficient delivery model
• Simplifying and standardising processes with next generation cloud ERPs
• Achieving end to end process automation and self service delivery
• Embedding predictive and automated controls
• Creating a connected data, insight and analytics capability enabled by a digital core
• Predictive and forward looking insights supported by Machine Learning and data science capability
• Real time insight and self service supported by NLP
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PwC
We often hear from our clients a desire to constantly improve processes“Can we evolve the scope of shared services and outsourcing and what's the role of a CoE?”
“Should we expect shared services to be significantly cheaper or even eliminated in the future?”
“What are the benefits of next generation cloud ERP and what’s the role of Finance in leading this agenda?
“What are the automation focus areas?”
“How can we embed compliance and controls?”
“Does real time reporting really exist and how can we reduce the number of days to close and the effort spent collecting and reconciling data?”
“Lead with Process
of Finance effort could be realigned to more value-driven activities through use of automation [1]
40% 62%of Finance executives are making significant investments in AIover the next three years. [2]
46%Amount of time that automation can reduce in completing key data gathering processes. [3]
80%Improvement in productivity of individual processes as a result of Small Automation. [4]
[1] Finance Effectiveness Benchmark Study 2017[2] PwC:s 2017 Global Digital IQ Survey[3] Finance Effectiveness Benchmark Report 2017
[4] strategy+business, 2018
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Lead with Process
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With pre-configured Cloud ERP at the core and broader digital enablement; Finance processes, data and controls become simplified, standardised and automated.
Lead with Process
Pre-configured Cloud ERP
Next generation cloud ERP and a ‘fit to standard’ design enables simplification and standardisation of global processes and controls which improve data quality and drive a highly efficient end to end process.
Cloud ERP and Finance Data Lakes with in memory computing, simple to use app interface, speech recognition and chatbots - real time self service reporting further enhances the process.
Predictive Risk & Regulatory Reporting
Automated controls has advanced to predictive controls over and above retrospective trend and anomaly analysis. Integration tools further enhance controls with electronic regulatory reporting.
Robotic Process Automation
Leveraging ‘fit to standard’ Cloud ERP; end to end transaction processes can be automated with RPA and automation can extend further with Blockchain and speech Recognition.
Digital Twin & Process Monitoring
A digital replica and monitoring of end to end finance processes, potential bottlenecks and the ability to simulate process optimisation through changing team workload or applying RPA drives continuous improvement.
Machine Learning Intelligent Automation
ML further automates finance processes beyond transactional, such as automation of the “first mile” of budgeting & planning, the close process, performance management insights and analytics.
Cloud ERP & Digital Platforms
Risk & RegulatoryProcess Excellence & Automation
Connected Self-Service Data
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We often hear from our clients a desire to add value to the business through forward looking insights
“How can we improve our data quality?”
“Can we integrate our systems and data sources?”
“How do we reduce the number of reports and spreadsheets and move to self service reporting?”
“How do we start using more consistent and relevant metrics that are aligned to strategy?”
“How do we create forward looking insights leveraging advanced analytics, Machine Learning and AI?”
“What’s the role of a Finance CoE when it comes to data, analytics and decision support?”
“Lead with Performance
[1] PwC Finance Effectiveness Benchmark Study 2017[2] Harvard Business Review and PwC [3] PwC Finance Effectiveness Benchmark Study 2019
55%of organizations do not link metrics and budgets to the strategy. [2]
56%of customers of Finance say that their Business Partners do not influence their decision-making [2]
25%of employees’ time is spent gathering rather than analysing data due to inefficient processes. [3]
65%of organizations are dissatisfied with their management information. [1]
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Finance has a critical role to play; sitting alongside the business to navigate and mediate performance management decisions.
Lead with Performance
Connected, Self-Service Data
Finance data lake augments and cleanses the data needs of finance. Creating data quality and a single version of the truth across disparate systems and unstructured data with real time self-service reporting.
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Machine Learning Assisted Insights
Machine learning within next generation ERP creates performance storyboards whereby driver tree insights, data and performance anomalies and predictive baseline forecasts are automated.
Visualisation & Mobile Deployment
Embedded visualisation creates ability to interpret complex performance issues . Available anytime on any device and self service including NLP makes Performance Management pervasive.
DynamicPlanning & Scenario Modelling
Integrated cloud EPM, sophisticated real time planning, budgeting and scenario modelling provides ability to model and compare performance outcomes and investment trade off choices.
Real-Time Performance Management
In memory computing and machine learning moves monthly close to real time virtual close and performance insight. As a result, Finance effort pivots to a forward looking performance management agenda.
Predictive Analytics
Machine learning and AI advances BI to a Predictive Analytics capability. Finance business partners supported by Finance Data & Analytics CoE can support the business navigate a broader commercial agenda.
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Manual Journal Entries
Risky attributes detected!
Connected, Self-service Data
Performance Excellence
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Lead with People
We often hear from our clients concerns about having the right skills in Finance“What capabilities do we need?”
“How do we re-skill our workforce?”
“How do we create meaningful career paths?”
“How will roles change by the use of automation technologies such as RPA and Machine Learning?”
“What will some of the emerging and new finance roles look like?”
“How can we best tap into the “gig” workforce, while mitigating risk?”
“How can we design our workplaces to drive engagement, collaboration, and retention?”
“of respondents cited the reason given by CEOs for the inadequate data was “lack of analytical talent”.[1]
54% 80%of employees’ time will be spent collaborating in a team-based workplace [1]
69%of employers say they prefer job candidates with deep data science and analytical skills over ones without [1]
72%of workers will be working remotely by 2020. [1]
[1] PwC 2017 survey
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Finance Workforce of the Future
Finance Modern Workplaces
Attracting, developing and retaining the right skills are critical if Finance wants to pivot in to a value enhancing advisory role.
Lead with People
Modern Finance Workplace &Talent Management
Clarity of purpose and learning journey; cycles of experience and career path flexibility, a culture of diversity and empowerment and a modern workplace are prerequisites for attracting Modern Finance talent.
The Gig Economy & Augmented Finance Workforce
Contractors and part time employees coupled with flexible working arrangements and working in tandem with bots and machines creates a Finance workforce capability that’s fit for the future.
The Adaptive Operating Model
A culture of continuous improvement, Lean working methods, Agile methodology and cycles of experience enables an adaptive operating model to flex to the needs of the business.
The Cloud Enabled Workplace
The cloud enabled workplace, new working methods and collaboration tools enables a workforce to operate smarter and faster across diverse geographies in virtual teams without being bound by traditional offices.
Modern FinanceJob Families & Competency Framework
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Modern FinanceLearning Journey
Learning programmes develop the right skills for Finance to be effective. From Finance Summits to just-in-time e-learns creating digital, data, analytic and commercial savvy capabilities.
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Alongside global process owners; new job families and competency frameworks will organise and develop the right capabilities within Finance. E.g. Automation Controller, Data Scientist, Digital Finance Lead.
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Would you like to know more?
Please, contact us if you want to know more about PwC:sFinance benchmarking report and how the findings could be relevant to your organization.
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Jan NygårdHead of Finance Strategy & Transformation, PwC SwedenEmail: [email protected]: +46 725 84 92 79
Sara Faskhoody SkärlinaManagement Consulting, PwC SwedenEmail: [email protected]: +46 728 80 92 42
Lars JohanssonManagement Consulting, PwC SwedenEmail: [email protected]: +46 730 82 55 83
