Finance: New jobs for the money men in a changing world

The signs are that the finance department, traditionally run as an ivory tower within the organisation, is having to reassess its role and move into the mainstream of company strategy. Roger Trapp reports on a need for the finance function to 'add value' in addition to providing its traditional number-crunching services.

Amid all the changes and restructurings that have been visited on business in recent years, one thing has apparently remained constant. The finance function. Sure, it has probably been re-engineered a bit, and its employees encouraged to shed their traditional "bean-counter" image in the interests of becoming more "pro-active". But nobody has ever questioned its existence.

Indeed, a recent book makes the case for the "Super CFO", the person at the chief executive's elbow, deeply involved in all kinds of strategic decisions, based on his or her experience at the centre of operations.

Now, though, along comes a management consultant and suggests that companies do not necessarily need a dedicated finance function. Speaking at a software conference yesterday, KPMG consultant Paul McCunn said that activities traditionally associated with the finance area, such as transaction processing, planning, reporting and control, treasury and banking, even basic accounting processes, can be outsourced or made the responsibility of other parts of the organisation.

Certainly, progress has been made recently by the likes of Arthur Andersen and Ernst & Young in doing the more routine work in such areas, particularly for oil companies. However, it has mostly been assumed that some overall responsibility remained with the "mother organisation".

But Mr McCunn told the audience: "In some companies, responsibility for planning and budgeting, and management reporting and control is being passed to other departments; in others, purchasing and accounts payable are now part of the supply chain operation. In many companies, credit control is part of a broader customer service function and opportunities to outsource tax, cash and banking are starting to emerge. Payroll is usually outsourced; even audit, statutory reporting and general ledger maintenance, the basic building-blocks of traditional finance departments, can be outsourced, something that many small companies already do."

So, what should a beleaguered finance function do to survive? Mr McCunn points out that "it is widely accepted that the finance function must change its role from an essentially 'non-value-added' activity to one of 'value-adding', and provide genuinely useful management information."

This can be achieved, he adds, by understanding and appreciating which decisions taken in the business are the ones that matter, how these decisions affect the organisation and how often these decisions need to be taken. "All too often," he says, "the finance function ignores the company's overall strategic considerations and focuses on number-crunching and an analysis of past performance."

In case this looks fanciful, he points out that some companies are changing their ways. Several leading companies have abolished traditional budgeting, with some beginning to abandon monthly management accounts.

But this cannot be done lightly. "Drastic measures such as these obviously require a complete reappraisal of the company structure and the role that the finance function can play within an organisation," says Mr McCunn. "The finance function has traditionally been seen as the information provider, but it should not be driving the content of the information: this content should be driven by the information customers."