Finance
in Business
The role and impact of financial
management on strategy, operations,
and business performance
Table of Contents
Introduction........................................................................ 1
The Challenge of Business and Finance
Transformation .................................................................. 2
Raising the bar .................................................................. 2
Finance Transformation Drives Business
Performance ....................................................................... 8
How It Works: Finance as an Enabler of Business
Transformation ................................................................ 10
Finding a pathway for transforming the enterprise
through finance............................................................... 10
Finance and information technology ................................ 12
Finance and human capital .............................................. 14
The Journey to Mastering Finance and Business........... 15
Integrated performance management across
the enterprise ................................................................. 15
Finance and customer operations marketing,
sales, and service ............................................................. 17
Finance and innovation new products and services...... 19
Finance and supply chain operations plan,
source, make, and deliver ................................................ 20
Conclusion ........................................................................ 21
Appendix: Methodology and Company Profile ............. 22
As used in this document, Deloitte means Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of
Deloitte LLP and its subsidiaries.
32
Introduction
Finance
Masters
Business
Capabilities
Tr
an
sf
o
Th rm
ro in
ug g t
h he
Fi E
na nt
nc er
e pr
ise
Low
Low
Finance Capabilities
High
Operating Margin
(After Taxes)
Revenue Growth
Asset Efficiency
Expectations
100%
Percentage with
high or very high
importance for
performance
improvement over
the next three years
80%
60%
40%
20%
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the Enterprise Through Finance
Reduce structural
structure cost
Reduce
cost
0%
0%
20%
40%
60%
80%
Revenue Growth
Shareholder Value
Operating Margin
(After Taxes)
Asset Efficiency
Expectations
100%
80%
Percentage of
companies
60%
40%
20%
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the Enterprise Through Finance
Business scenarios
Enterprise risks
Inventory costs
Return on assets
Procurement costs
Manufacturing and
logistics cost
0%
Finance capabilities:
Steward: Ensuring company-wide compliance with financial
reporting and control requirements, managing risk, and
providing high-quality business and operational information
across the enterprise
Operator: Defining and adapting the operating model to
balance efficiency and service levels in financial processes
and ensuring the availability of highly skilled talent for
financial management
Business capabilities:
Strategist: Supporting business-strategy development
through robust decision-making processes and performance
management
Business Capabilities
Leading Edge
St
st
Ca
gi
ta
te
ly
st
ra
ce
Pe
rf
io
or
ut
ec
an
Ex
Threshold
Performance
ro
Co
nc
ar
pe
ra
ew
to
St
ie
nt
fic
Ef
Finance
Function
Finance Capabilities
Source: Deloitte
Non-existent
Developing
Baseline
Advanced
Leading
20%
40%
60%
80%
100%
Percentage of companies
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the Enterprise Through Finance
Non-existent
Developing
Baseline
Advanced
Leading
20%
40%
60%
80%
100%
Percentage of companies
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the Enterprise Through Finance
Non-existent
Developing
Baseline
Advanced
Leading
20%
40%
60%
80%
100%
Percentage of companies
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the Enterprise Through Finance
20%
40%
60%
80%
100%
Percentage of companies
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the Enterprise Through Finance
Finance Transformation
Drives Business Performance
Investing in financial management capabilities and underlying
processes, tools, and technologies can pay off. Our research
shows a strong linkage between the maturity of finance
capabilities and business performance. It suggests that
companies need to go beyond the core finance capabilities
of steward and operator to leverage finance capabilities as
strategist and catalysts. In fact, the strongest link between
finance capabilities and business performance is the role of
finance as a strategist and a catalyst. Only where finance
effectively supports strategy and operations is there a
significant impact on business performance, according to our
research.
Finance masters are leading the pack with superior financial
performance and shareholder value creation relative to
their peers.9 These companies have not only built a strong
foundation in their capabilities for being capable financial
stewards and operators for their companies, they have gone
much further by building and leveraging finance and business
capabilities as strategists and catalysts across the enterprise
(figure 10).
Figure 10. Defining Finance Masters:
The finance and business capability quadrant
High
25%
Business
Capabilities
Finance
transformation path
Strategist
and catalyst
capabilities
35%
Finance
Masters
40%
of
respondents
Novices
Intermediates
Low
Low
Finance Capabilities
High
0%
20%
40%
60%
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the
Enterprise Through Finance
Figure
Figure
12.12.
Laying
Laying
a Foundation
a Foundation
forfor
Mastering
Mastering
Finance:
Finance:
Finance
Finance
as aassteward
a steward
of the
of the
enterprise
enterprise
Manage
Manage
credit
credit
(e.g.,
(e.g.,
investment
investment
management,
management,
credit
credit
decisioning,
decisioning,
collection)
collection)
Comply
Comply
with
with
regulatory
regulatory
reporting
reporting
requirements
requirements
(e.g.,
(e.g.,
GAAP,
GAAP,
IFRS)
IFRS)
Manage
Manage
liquidity
liquidity
(e.g.,
(e.g.,
cashcash
management,
management,
capital
capital
structure,
structure,
structured
structured
transactions)
transactions)
Comply
Comply
with
with
global
global
tax tax
regulations
regulations
(e.g.,
(e.g.,
income
income
tax,tax,
VAT,VAT,
GST,GST,
duties)
duties)
Manage
Manage
control
control
andand
compliance
compliance
programs
programs
(e.g.,
(e.g.,
Sarbanes-Oxley,
Sarbanes-Oxley,
andand
other
other
financial
financial
andand
environmental
environmental
programs)
programs)
Manage
Manage
market
market
riskrisk
(e.g.,
(e.g.,
commodities,
commodities,
foreign
foreign
exchange,
exchange,
interest
interest
rates)
rates)
Report
Report
compliance
compliance
to impacted
to impacted
stakeholders
stakeholders
(e.g.,
(e.g.,
support
support
investor
investor
relations,
relations,
audit
audit
committee)
committee)
Identify,
Identify,
manage
manage
andand
report
report
risksrisks
(e.g.,
(e.g.,
insurance,
insurance,
asset/liability
asset/liability
risk)risk)
Finance
Finance
Masters
Masters
Intermediates
Intermediates
Novices
Novices
Integrated
Integrated
riskrisk
management
management
across
across
the the
organization
organization
(including
(including
e.g.,e.g.,
strategic,
strategic,
operational,
operational,
financial
financial
andand
external
external
risks)
risks)
0% 0%
20%
20%
40%
40%
60%
60%
80%
80%
100%
100%
Percentage
Percentage
of companies
of companies
with
with
advanced
advanced
or leading
or leading
finance
finance
capabilities
capabilities
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
on Deloitte
the Deloitte
Global
Global
Survey
Survey
on Transforming
on Transforming
the Enterprise
the Enterprise
Through
Through
Finance
Finance
11
Perform
procurement
pay accounting
accounting
Perform
order totocash
20%
0%
40%
60%
80%
100%
Finance Masters
Intermediates
Novices
12
Data Warehousing
Demand Planning/Forecasting
Finance Masters
Intermediates
Novices
0%
20%
60%
40%
13
Figure
Figure
16.16.
Finance
Finance
andand
Human
Human
Capital
Capital
Figure
Figure
16.16.
Finance
Finance
andand
Human
Human
Capital
Capital
Employee
Employee
benefits
benefits
management
management
andand
control
control
Employee
Employee
benefits
benefits
management
management
andand
control
control
Develop
Develop
workforce
workforce
compensation
compensation
strategy
strategy
(incentives,
(incentives,
benefits,
benefits,
pensions,
pensions,
healthcare,
healthcare,
etc.)etc.)
Finance
Finance
Supporting
Supporting
Human
Human
Resources
Resources
Management
Management
Measure
Measure
labor
labor
productivity
productivity
andand
costcost
Align
Align
individual
individual
andand
organizational
organizational
performance
performance
metrics
metrics
with
with
business
business
objectives
objectives
Assess
Assess
recruitment
recruitment
andand
retention
retention
of talent
of talent
(including
(including
compensation,
compensation,
development,
development,
deployment,
deployment,
turnover,
turnover,
etc.)etc.)
Finance
Finance
Masters
Masters
Intermediates
Intermediates
Novices
Novices
Develop
Develop
human
human
resources
resources
strategy
strategy
(recruitment,
(recruitment,
retention,
retention,
deployment,
deployment,
etc.)etc.)
0% 0%
20%
20%
40%
40%
60%
60%
Percentage
Percentage
of companies
of companies
with
with
advanced
advanced
or leading
or leading
finance
finance
capabilities
capabilities
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
on Deloitte
the Deloitte
Global
Global
Survey
Survey
on Transforming
on Transforming
the Enterprise
the Enterprise
Through
Through
Finance
Finance
14
Figure 17. Corporate and Finance: Finance masters focused on strategic planning, performance management and execution
Establish business performance measurements
Finance
Supporting
Corporate
Finance Masters
Intermediates
Novices
20%
40%
60%
80%
100%
15
Figure
Figure
18.18.
Business
Business
Capabilities
Capabilities
of Finance
of Finance
Masters
Masters
Strong
Strong
Marketing
Marketing
Marketing,
Marketing,
Sales
Sales
andand
Service
Service
Sales
Sales
Service
Service
(presales,
(presales,
andand
postpost
sales
sales
services)
services)
Product
Product
innovation
innovation
andand
lifecycle
lifecycle
management
management
Innovation
Innovation
Service
Service
innovation
innovation
andand
lifecycle
lifecycle
management
management
Supply
Supply
Chain
Chain
Supply
Supply
chain
chain
(source,
(source,
make
make
deliver)
deliver)
Human
Human
Capital
Capital
Human
Human
capital
capital
talent
talent
management
management
Information
Information
technology
technology
Finance
Finance
Masters
Masters
Intermediates
Intermediates
Novices
Novices
Information
Information
technology
technology
0% 0%
20%
20%
40%
40%
60%
60%
80%
80%
100%
100%
Percentage
Percentage
of companies
of companies
with
with
somewhat
somewhat
stronger
stronger
or significantly
or significantly
stronger
stronger
capabilities
capabilities
compared
compared
to primary
to primary
competitors
competitors
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
on Deloitte
the Deloitte
Global
Global
Survey
Survey
on Transforming
on Transforming
the Enterprise
the Enterprise
Through
Through
Finance
Finance
16
Figure
Figure
19.19.
Finance
Finance
masters
masters
farfar
ahead
ahead
of competition
of competition
in applying
in applying
financial
financial
management
management
to marketing,
to marketing,
sales
sales
andand
service
service
Develop
Develop
marketing
marketing
strategy
strategy
Finance
Finance
Finance
support
support
supporting
marketing
marketing
marketing
Monitor
Monitor
global
global
markets
markets
for for
new
new
opportunities
opportunities
(markets,
(markets,
products,
products,
services,
services,
technologies,
technologies,
etc.)
etc.)
Marketing
Marketing
andand
advertising
advertising
effectiveness
effectiveness
andand
efficiency
efficiency
(e.g.,
(e.g.,
brand
brand
management)
management)
Measure
Measure
product
product
costcost
andand
profitability
profitability
Finance
Finance
supporting
supporting
sales
sales
Optimizing
Optimizing
pricing
pricing
Finance
Finance
Masters
Masters
Intermediates
Intermediates
Novices
Novices
Develop
Develop
sales
sales
strategy
strategy
Measure
Measure
service
service
andand
parts
parts
costcost
andand
profitability
profitability
Finance
Finance
supporting
supporting
service
service
Measure
Measure
customer
customer
costcost
to to
serve
serve
andand
profitability
profitability
Develop
Develop
service
service
strategy
strategy
Develop
Develop
service
service
strategy
strategy
Customer
Customer
relationship
relationship
management
management
Customer
Customer
relationship
relationship
management
management
(e.g.,
(e.g.,
acquire
acquire
andand
retain
retain
customer)
customer)
(e.g.,
(e.g.,
acquire
acquire
andand
retain
retain
customer)
customer)
Finance
Finance
Finance
Finance
supporting
supporting
supporting
supporting
customer
customer
customer
customer
management
management
management
management
Managing
Managing
customer
customer
service
service
Managing
Managing
customer
customer
service
service
(e.g.,
(e.g.,
service
service
level,
level,
agreement
agreement
(e.g.,
(e.g.,
service
service
level,
level,
agreement
agreement
(SLA)
(SLA)
performance)
performance)
(SLA)
(SLA)
performance)
performance)
Customer
Customer
contract
contract
management
management
Customer
Customer
contract
contract
management
management
60%
80%
80%
0%0%
20%
20%
40%
40%
60%
80%
80%
0%0%
20%
20%
40%
40%
Percentage
Percentage
of companies
of companies
with
with
advanced
advanced
or leading
or leading
finance
finance
capabilities
capabilities
Percentage
Percentage
of companies
of companies
with
with
advanced
advanced
or leading
or leading
finance
finance
capabilities
capabilities
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
on Deloitte
the Deloitte
Global
Global
Survey
Survey
on Transforming
on Transforming
the Enterprise
the Enterprise
Through
Through
Finance
Finance
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
on Deloitte
the Deloitte
Global
Global
Survey
Survey
on Transforming
on Transforming
the Enterprise
the Enterprise
Through
Through
Finance
Finance
17
have laid the groundwork. They are far more likely to have
strong capabilities for measuring service and parts cost and
profitability and have made the most inroads in developing
finance capabilities for helping to measure customer costs to
serve customers and profitability.
Finance in combination with marketing, sales, and service can
create powerful synergies; finance introduces analytical insights
to the evaluation of new strategic opportunities and market
sizing for products and services. This includes developing
suitable metrics for measuring marketing and advertising
effectiveness, improving sales and service effectiveness in
driving customer satisfaction, loyalty, growth, and profitability.
Toyota illustrates the power of finance in supporting
marketing, sales and service (see box).
18
Figure
Figure
20.20.
Finance
Finance
andand
Innovation:
Innovation:
Finance
Finance
masters
masters
areare
discovering
discovering
thethe
missing
missing
linklink
Measure
Measure
product
product
costcost
andand
profitability
profitability
Tax Tax
strategy
strategy
for for
intellectual
intellectual
property
property
andand
R&DR&D
investments
investments
Finance
Finance
Supporting
Supporting
Innovation
Innovation
Differentiate
Differentiate
value
value
proposition
proposition
(e.g.,
(e.g.,
by channel,
by channel,
customer
customer
or segment)
or segment)
New
New
product/service
product/service
development
development
strategy
strategy
Finance
Finance
Masters
Masters
Intermediates
Intermediates
Novices
Novices
Assess
Assess
product
product
andand
service
service
development
development
effectiveness
effectiveness
Optimize
Optimize
product
product
and
and
service
service
launch,
launch,
transition
transition
and
and
lifecyles
lifecyles
Optimize
Optimize
product
product
andand
service
service
launch,
launch,
transition
transition
andand
lifecyles
lifecyles
(e.g.,
(e.g.,
pricing
pricing
capabilities)
capabilities)
(e.g.,
(e.g.,
pricing
pricing
capabilities)
capabilities)
60%
60%
0%
0%
20%
20%
40%
40%
60%
60%
0%0%
20%
20%
40%
40%
Percentage
Percentage
of
of
companies
companies
with
with
advanced
advanced
or
or
leading
leading
finance
finance
capabilities
capabilities
Percentage
Percentage
of companies
of companies
with
with
advanced
advanced
or leading
or leading
finance
finance
capabilities
capabilities
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
the
on Deloitte
Deloitte
the Deloitte
Deloitte
Global
Global
Survey
Survey
on Transforming
Transforming
on Transforming
Transforming
the Enterprise
Enterprise
the Enterprise
Enterprise
Through
Through
Finance
Finance
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on
on
the
Global
Global
Survey
Survey
on
on
the
the
Through
Through
Finance
Finance
19
Figure
Figure
21. 21.
How
How
Finance
Finance
Masters
Masters
Help
Help
Drive
Drive
Supply
Supply
Chain
Chain
Performance
Performance
Sourcing
Sourcing
effectiveness
effectiveness
(e.g.,
(e.g.,
measuring
measuring
cost,cost,
quality,
quality,
reliability,
reliability,
leadlead
time)
time)
Demand
Demand
andand
supply
supply
management
management
(e.g.,
(e.g.,
creating
creating
flexibility)
flexibility)
Inventory
Inventory
efficiency
efficiency
Production
Production
efficiency
efficiency
Finance
Finance
Supporting
Supporting
Supply
Supply
Chain
Chain
Management
Management
Assess
Assess
tax tax
implications
implications
of supply
of supply
chain
chain
network
network
design
design
Order
Order
fulfillment
fulfillment
(e.g.,
(e.g.,
on-time
on-time
delivery)
delivery)
Assess
Assess
external
external
operational
operational
risksrisks
(e.g.,
(e.g.,
supply
supply
disruption,
disruption,
exchange
exchange
raterate
risk)risk)
Distribution
Distribution
andand
logistics
logistics
efficiency
efficiency
Finance
Finance
Masters
Masters
Intermediates
Intermediates
Novices
Novices
Develop
Develop
supply
supply
chain
chain
strategy
strategy
Global
Global
supply
supply
chain
chain
optimization
optimization
0% 0%
20%20%
40%40%
60%60%
Percentage
Percentage
of companies
of companies
withwith
advanced
advanced
or leading
or leading
finance
finance
capabilities
capabilities
Source:
Source:
Deloitte
Deloitte
Research,
Research,
based
based
on the
onDeloitte
the Deloitte
Global
Global
Survey
Survey
on Transforming
on Transforming
the Enterprise
the Enterprise
Through
Through
Finance
Finance
20
Conclusion
Financial management is often viewed too narrowly when
managing global companies. Many traditionally consider
it important for budgeting and reporting, but less-thanoptimally applied to business strategy and operations. This is
changing. Leading companies are starting to apply finance
to business in a much more comprehensive, consistent and
analytical way. Our research demonstrates that finance can
lead, rather than lag, business transformation. It can provide
the crucial underpinning to improving strategy and business
operations in key areas like supply chain, sales, and services,
with remarkable results. The companies furthest ahead on this
path for transformation (the finance masters) are by no means
perfect all of them have significant room for improvement
but by breaking out of the pack they are enjoying the
benefits and reporting significantly higher growth, profitability,
and shareholder value than other companies in our benchmark
database.
While companies will have a hard time catching up to these
finance masters, the good news is that many of the lagging
companies have invested significantly in the foundations for
mastering finance and business. This includes investments in
better processes and technologies for managing cash flows,
financial and operational performance, and other enabling
capabilities. Our research shows that these capabilities provide
a vital foundation for transforming the enterprise through
finance.
21
Aerospace
& Defense
5%
Automotive &
Commercial Vehicles
14%
Consumer
Products
18%
Life Sciences
14%
Diversified
Manufacturing &
Industrial Products
9%
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the
Enterprise Through Finance
Europe, Middle
East and Africa
23%
Americas
33%
Asia Pacific
44%
Finance capability
maturity level
Advanced
4
Baseline
3
Developing
2
1
Non-existent
0
Finance Capability
Maturity Level
Description
5: Leading
4: Advanced
3: Baseline
2: Developing
1: Non-existent
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the
Enterprise Through Finance
Source: Deloitte Research, based on the Deloitte Global Survey on Transforming the
Enterprise Through Finance
22
Endnotes
1
11
12
13
14
15
16
17
10
23
24
18
19
20
21
22
23
24
25
26
27
28
29
Authors
Hans Roehm
Managing Partner
Global Manufacturing Industry
Deloitte Touche Tohmatsu
Tel: +49 711 16554 7130
Email: hroehml@deloitte.de
Craig Giffi
Chairman, Global Manufacturing Industry
Vice Chairman and U.S. Leader,
Consumer & Industrial Products Industry
Deloitte LLP
Tel: +1 216 830 6604
Email: cgiffi@deloitte.com
Atanu Chaudhuri
Assistant Manager
Deloitte Research
Deloitte Support Services India Pvt. Ltd.
Tel: +1 615 718 2049
Email: atchaudhuri@deloitte.com
Acknowledgments
25
hroehm@deloitte.de
Manufacturing Sector
Name
Phone
tcaptain@deloitte.com
Automotive
TBD
jbava@deloitte.com
Process
clmartin@deloitte.co.za
Services
Name
Phone
nsowar@deloitte.com
Consulting
TBD
Tax Services
jwiley@deloitte.com
Financial Advisory
TBD
Americas Region
Country
Name
Phone
Americas region
cgiffi@deloitte.com
Brazil
joalmeida@deloitte.com.br
Canada
lmartin@deloitte.ca
Chile
TBD
LATCO Region
cgiaimo@deloitte.com
Mexico
TBD
United States
cgiffi@deloitte.com
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26
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ISBN 1-934025-06-2
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