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Delivering Value in a Complex WorldThe Next Battleground for the Finance Organization in the Netherlands

High Performance Finance Study

ContentsForeword 3

Executive Summary 4

Finding #1: Driving business value 6

Finding #2: Developing the finance workforce 8

Finding #3: Managing risk 10

Finding #4: Balancing finance costs and innovation 12

Conclusion 13

Implications for the future 14

About the Research 15

Our original study explored the relationship between overall enterprise performance and the finance function, and demonstrated a more than 70 percent correlation between high performance in finance and overall high performance in business and government. It also identified specific ways in which high-performance finance teams actively drive overall enterprise performance, acting not solely as accountancy service providers, but as bona fide “business partners”. Obviously, a high-performance finance team has its accounting operations and capabilities well in hand. But it can further contribute to overall business performance by shaping a broader business culture in which financial knowledge, metrics and analysis are pervasive. In this way, it can help to ensure that the decision-making process is informed at all levels by sound financial thinking, to the ultimate benefit of both the business and its shareholders.

Since our original study, we have been continuously refining our perspective on high-performance finance through rigorous research. Our current research program commenced in 2011, in the midst of what has been characterized as a period of permanent economic volatility. It is therefore a significant object of our current research to define High Performance Finance in these uncertain times, and to understand how contemporary events are shaping the finance agenda for today and tomorrow.

Our recent findings show, perhaps surprisingly, that finance teams have substantially improved their capabilities in recent years, and that there is now less variability in the maturity of fundamental accounting capabilities across the finance sector. For the first time, we have also surveyed the “customers” of the finance function; that is, the senior executives and government officials who run the organizations that finance teams support. We found a high degree of alignment between the perspectives of these “customers” and those of finance executives, in terms of what finance teams are currently doing to drive business results, where they can improve, and what should be their priorities for the future. Given that the past several years have presented the most challenging business environment we have seen in some time, we think this alignment – and the broad satisfaction expressed by the “customers” of the finance function – is both notable and commendable.

Our research also highlights the intense pressures that a variety of factors place on today’s finance organization, and that create a more complex environment in which to operate. Drawing on our interviews with finance and other senior executives, the experiences of the organizations in our research we identified as “finance masters,” and Accenture’s own extensive client experience, we present guidance on possible investments CFOs can make that can help their finance organization address these challenges and strongly support the larger enterprise as it looks to reignite growth and high performance across the business.

This research has also sought to gain more insight into how the Dutch finance community specifically is faring in the context of our global high performance finance study. Even though the Dutch market is faced with many of the same challenges as the global market, the present study has identified a number of differences in the priorities and approaches of Dutch financial organizations – some driven by local environmental factors, and some by differences in the culture or focus of the Dutch finance community.

I would like to thank the participants of our study – those who responded to our survey, and those who added depth and richness to our findings with their perspectives during personal interviews – for their time and valuable insights. We hope you find this study useful as you craft a strategy for moving your finance organization forward. We certainly live in interesting times, and it is those finance leaders who respond with vision, conviction and effective execution that will define the standard for high performance in the years to come.

Best regards,

Bart DeckersLead Finance & Enterprise Performance Benelux

Foreword For almost ten years, Accenture has studied the concept of “high-performance finance”, beginning with the simple question: Does finance really matter to an enterprise’s overall growth, competitiveness and ability to be a high-performance business? Overwhelmingly, our research confirms the significant potential impact of finance on overall enterprise performance. We have now expanded the scope of our original research with a Netherlands-specific study, in order to better understand the impact of local differences, influences and circumstances.

3

4 | High Performance Finance Study

In this increasingly volatile and complex environment, the CFO has become one of the CEO’s most vital partners in keeping a company on track. Finance efficiency goals are important as ever but in addition capabilities for financial forecasting and assessing the potential impact of both strategic options and key risks have also become crucial for the profitability and growth of an enterprise.

To identify the consequence for the finance function in these uncertain times, the Dutch High Performance Finance study aimed to investigate the current concerns and level of performance of finance organizations in the Netherlands in comparison to the global High Performance Finance study. Online surveys were conducted with 56 Dutch senior finance executives, 530 international peers, and approximately 300 C-level customers of finance (CXOs).

The data from the global surveys was complemented by in-depth qualitative interviews with chief financial officers (CFOs) and chief operating officers (COOs). In collaboration with the Alex van Groningen organization, the preliminary outcomes of the Dutch study were then discussed by over 30 finance executives in three sessions.

The study resulted in four key findings:

1. Dutch finance organizations are good at reporting and analyzing existing performance, but lag in driving future business value.

2. Finance workforce management appears undervalued at a time when Dutch CFOs are challenged to develop new capabilities, operate more efficiently, and add more business value.

3. Dutch CFOs plan only limited investment in Risk Management capabilities, despite their limited satisfaction with the way the capabilities are currently dealing with the present economic volatility and complexity.

4. Dutch CFOs may have to rethink their focus on finance cost reduction and selectively invest in capabilities to drive more business value.

These four key findings will be described in more detail below.

Executive SummaryTo say the world has changed in the past few years would be an understatement. Since Accenture last conducted its global High Performance Finance Study in 2008, we have seen a fundamental restructuring of the global economy and, with it, massive changes in the challenges faced by companies and governments and the ways in which they must do business.

5

• Dutchfinanceorganizationsappearsatisfied with current performance management and reporting capabilities, with 63% indicating advanced capabilities in this area (10% points above their global peers). However, their focus is more exclusively financial. Less than one-third of the Dutch finance executives surveyed actively report non-financial measures, compared to over 55% in the global peer group.

• Whilealmosthalfoftheglobalfinancemasters are identifying growth opportunities for their organizations, only a fifth of the Dutch finance community are doing the same.

• JustoverathirdofDutchfinanceexecutives consider their organizations to have advanced Planning and Budgeting capabilities – well below the global peer group, of whom two-thirds indicate advanced capabilities in these areas.

• Dutchplanningandforecastingpracticesremain, as yet, quite traditional. Whereas a fifth of the global peer group and a quarter of finance masters apply driver-based and rolling forecasting capabilities, only 9% of the Dutch finance organizations apply these more advanced practices.

• Dutchfinanceorganizationsanticipatelittle impact from the increasing volume of available data. In contrast, relatively twice as many global finance executives as Dutch finance executives expect increased data availability to offer significant opportunities to better support the business. This is also reflected in the fact that, at present, almost 60% of global finance executives possess capabilities to report and analyze their business performance at will, compared to only 38% in the Dutch study.

Business partnering

The ability of finance organizations to drive future value is closely linked to their drive to become more effective business partners. The ability to manage the future value of the business requires the finance organization to be deeply engaged with the business and understand its fundamental drivers. Overall, Dutch CFOs do not assess their Finance organization strategy as being particularly advanced (they lag 18% behind their global peers). Developing a finance strategy that effectively combines the development of core finance functions with business partnering capabilities is key.

Move to a future value-focused organization

Developing more advanced, forward-looking finance capabilities requires a refocusing of time and capacity within finance organizations. Earlier research (Figure 1) shows how high-performing finance organizations tend to direct analytical manpower and resources less to data collection and reporting and more to insight creation and interaction with decision-makers.

Finding #1Dutch finance organizations are good at reporting and analyzing existing performance, but lag in driving future business value and partnering with the business.


7

Figure 1: Finance Masters have found ways to allow analytical departments to focus more time on value-added analyses instead of on operational data processing (Axson, David A.J., Best Practices in Planning and Performance Management, Wiley, New York, 2010)

CommonMonday Tuesday Wednesday Thursday Friday Monday Tuesday Wednesday Thursday Friday

Finance masters

Collecting data

Collecting data

Maintaining Spreadsheets

Maintaining Spreadsheets

DevelopingReports

OtherActivities

OtherActivitiesCollecting

dataPerformingAnalysis

StrategicInitiatives

Personal Development

PerformingAnalysis

PerformingAnalysis

Interactingwith DecisionMarkers

Interactingwith DecisionMarkers

DevelopingReports

Finding #2Finance workforce management appears undervalued at a time when Dutch CFOs are challenged to develop new capabilities, operate more efficiently, and add more business value.


Finding #1 emphasized that Dutch finance teams can work harder to drive future value and partner with their businesses. This requires, however, that the finance workforce develop new skills, behaviors, and management capabilities.

• Globally,financeexecutivesratearound49% of their workforce capabilities as being at an advanced or leading practice level. Dutch finance organizations, on the other hand, lag some 15% behind, rating 34% as advanced. Advanced workforce management capabilities, such as comprehensive competency models, can be better developed, as can the state of education across the enterprise on critical finance concepts (by effective workforce development programs).

• Dutchfinanceexecutiveschooseasetofpractices to develop their finance workforce that are strikingly different to those employed by their global peers. In the Netherlands, the most common practices are: real-time critical feedback, formal finance competency models and employee satisfaction surveys (Figure 2). Global finance executives, on the other hand, believe the most effective workforce management tools are competitive salaries and benefits, performance-based rewards, and stimulation of innovation and collaboration (Figure 3). CFOs in European countries like Austria, Switzerland and Germany largely opt for the workforce development practices preferred by their global (predominantly Anglo-Saxon) peers, suggesting that the different focus in the Netherlands is not simply the result of the difference in culture between European and Anglo-Saxon countries.

• Inaddition,internationalfinanceexecutives perceive greater challenges in attracting the right finance talent than the Dutch counterparts (Figure 5).

• Dutchfinanceexecutivesputlessemphasis on workforce development than their global peers. Only 25% of Dutch finance executives plan to implement new workforce programs in the next two years, whereas 36% of finance leadership teams globally have such plans in place.

Figure 4: Issues applicable to the finance workforce

A significant proportion of finance skills areout of date

We have a lack of needed skills in ourfinance organization

We have a difficult time attracting skills in this workforce because we cannot pay what they demand

Thie finance skills we need are not located in countries where we need them

The finance skills we need are difficult to attract because people do not want to work in our industry

The supply of finance skills is too small or non existent

None of the above

0% 10% 20% 30% 40% 50%Global NL

Figure 2: NL top-3 workforce management practices

Figure 3: Global top-3 workforce management practices

1. Competitive salaries and benefits

2. Performance based rewards

3. Innovation and collaboration

0% 10% 20% 30% 40% 50% 60% 70%Global NL

1. Real time critical feedback

2. Formal finance competency models

3. Employee satisfaction surveys

0% 10% 20% 30% 40% 50% 60% 70%Global NL

Based on these findings, there appears to be an opportunity for Dutch finance executives to develop their finance functions more effectively, by instituting workforce management programs that also involve competitive salaries and performance-based rewards, thereby attracting the talent necessary for the required finance capability development.

9

After cost management, risk management is the most important capability for business survival in volatile times. The two greatest financial challenges faced by businesses – managing the complex needs of all stakeholders (board of directors, investors, etc.), and managing complex financial, business and operational risks – are both strongly risk-related.

The present study reveals that while Dutch finance executives do recognize the importance of risk management to successfully face current challenges, there is still significant room for improvement compared to global figures:

• Satisfactionwiththemanagementoffinancial and non-financial risk in the Netherlands is limited (only 61% of Dutch finance executives are satisfied compared with 78% of global “finance masters”).

• Financialriskmanagementcapabilitiesare considered to be less advanced in the Netherlands than globally. 36% of Dutch finance executives rate their organization’s financial risk management capability as advanced, compared to 49% of global peers (Figure 5).

• BusinessriskmanagementintheNetherlands is considerably more mature than finance risk management. 50% of Dutch finance executives rate their organization’s business risk management as advanced (compared with 36% for finance risk management)

• Only14%ofDutchfinanceexecutiveshave implemented centralized, fully integrated financial risk management capabilities that are used across the whole of their enterprise.

• Thoughriskmanagementisconsideredimportant in the Netherlands, in practice it is not high on the Dutch CFO’s development agenda. Whereas one-third of the global peer group plan to invest in further professionalizing risk management capabilities, less than a fifth of Dutch finance executives plan to invest in this area, despite the present capability already lagging behind global practices (Figure 6).

Improving risk management is an opportunity for Dutch companies

These results suggest that there is still a tendency to overlook risk management in Dutch finance organizations. While seen as an important capability to manage volatility, its true business value is perhaps not yet sufficiently recognized.

Risk management is an integral part of a finance function’s ability to increase business relevance as a business partner. In the Netherlands, there is an opportunity for finance organizations to be more effective in helping their businesses to be aware of key risks and control them better.

Finding #3Dutch CFOs plan only limited investment in Risk Management capabilities, despite their limited satisfaction with the way the capabilities are currently dealing wwith the present economic volatility and complexity.


Figure 5: Finance executives: advanced financial risk management capabilities

Figure 6: Finance executives planning to invest in integrated risk management capabilities

NL

Global

0% 10% 20% 30% 40%

36%

49%

50% 60%

NL

Global

0% 5% 10% 15% 20%

18%

32%

25% 30% 35%

11

In the past few years, virtually all businesses have been concerned with keeping costs under control, while delivering more value adding activities. 59% of Dutch finance executives (and 50% of global finance executives) reported that their finance organization remains primarily focused on controlling finance costs (Figure 7).

Dutch companies are still strongly focused on cost control, but are planning to focus on growth-oriented activities in the future

The perspective on cost control versus selectively investing in finance capabilities appears ready to change: 41 percent of Dutch finance executives believe the finance organization will be focused primarily on growth oriented activities in the future, and another 41 percent indicate that they plan for the finance organization to be evenly split between growth and cost control (Figure 8).

This raises an important question: will a finance organization that has been focused on reducing its costs for the past several years actually have the capabilities in place to support a broader growth agenda? Our research suggests that finance organizations that have been too focused on cutting costs may struggle.

Investing selectively is important to enhance finance capabilities

“Cheaper isn’t always better” is a principle that also holds true for finance organizations. Value-adding capabilities – especially those that are currently lacking – are as important as operational efficiency in the quest for high performance.

Globally, we found that those finance organizations that had the smallest budgets (expressed in terms of percentage of overall company revenue) also had less sophisticated finance capabilities and, consequently, tended to under-perform in their function.

Obviously, limited finance capabilities impede the ability of finance organizations to effectively support their businesses, beyond mere transaction processing. In addition to operational efficiency programs, therefore, Dutch CFOs should consider selective investment in finance capabilities to help their businesses achieve higher performance.

Figure 7: Current focus of the finance function

Figure 8: Focus of the finance function in next 12 months

Finding #4

NL

Global

Masters

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Primarily on cost control

Primarily on investment in growth oriented activities

About evently split between cost control and growth

NL

Global

Masters

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Primarily on cost control

Primarily on investment in growth oriented activities

About evently split between cost control and growth

Dutch CFOs may have to rethink their focus on finance cost reduction and selectively invest in capabilities to drive more business value.


ConclusionThough there are considerable similarities between the outcomes of the Global and the Dutch High Performance Finance studies, some notable differences between Dutch firms and their global counterparts also appear. The differences center on the ability of the finance function to help drive future business value and to make the necessary internal changes.

While the global finance community is more actively planning for growth and preparing to support business more proactively, Dutch finance functions are generally more focused on cost agendas, present-day performance and finance operational efficiencies. In the coming years, Dutch CFOs will need to continue partnering with their businesses, understanding their drivers and acting as essential catalysts in their quest for high performance. Dutch finance organizations must carefully review their options and move towards a better balance between the desire for cost reduction and the greater value that enhanced capabilities can help deliver. In the process, personal professional development must be nurtured, and new talent attracted.

In the past three years, top-performing finance teams have been instrumental in helping their organizations survive – and in some cases, thrive – during economic uncertainty. Through a combination of talent, focus and disciplined execution, the finance function has emerged from the global economic crisis with its capabilities and reputation enhanced.

Some finance organizations, however, have struggled to cope. Those that failed to upgrade their processes, systems, organization and talent are finding it difficult to react in a timely fashion to the rapidly changing economic environment. As our study found, doing “the basics” very well is essential not just to ensure accounting integrity, but also to providing a sound foundation for the kinds of advanced finance capabilities that can deliver greater business value to the enterprise.

The lessons derived from the past few years – as well as from our research – are clear. A high-performance finance organization can be an essential catalyst in a company’s or government’s pursuit of overall high performance, and is highly valued in the C-suite as a key enabler of enterprise performance. Accenture believes this is especially the case when a company seeks growth in an uncertain and permanently volatile world, where any weakness in finance capability will be quickly exposed.

13

Implications for the future The relative success of the best finance organizations in the past three years is largely the result of effective cost- and risk management. While these capabilities will remain essential, they will not be enough to ensure continued high performance. As markets stabilize and growth opportunities return, finance must balance its focus on cost and risk with additional capabilities to capture the opportunities and meet the challenges of the future. Considering the findings of our study and our experience working with leading finance organizations around the world, we see the finance agenda for 2012 and beyond as being driven by seven key imperatives:

1. Support a Growth Agenda: Many global organizations are seeking to drive growth across a broad range of markets. In today’s “multi-speed” world, where economic growth rates vary widely, finance has a key role to play in balancing an organization’s focus on slower-growing, more mature markets with the desire to tap into the faster-growth prospects in emerging markets. Amongst the strategies available to businesses is aligning performance metrics, reporting and analysis to the characteristics of different markets, while also looking to optimize overall enterprise performance.

2. Develop a Flexible and Responsive Finance Operating Model: Our study clearly indicates that both business and finance leaders consider volatility to be a permanent feature of the global marketplace. To deliver value in a consistent and timely fashion in such an environment, high-performance finance organizations are developing a flexible and responsive operating model that allows for the early identification of changing business conditions, and rapid response to unforeseen events. By creating a balanced global/local model that combines scalable, cost-effective core finance services and capabilities with high-caliber, front-line talent possessing deep local market knowledge and strong finance advisory skills, finance can continue to drive enterprise value creation.

3. Ensure Optimal Cash and Capital Allocation: Permanent volatility and uncertainty will make long-term planning and resource allocation challenging, yet critical. With many companies sitting on large cash reserves, finance has a responsibility to ensure that cash and capital are effectively managed and deployed, by helping to determine the right mix of re-investment in the business, M&A, debt servicing, and return of capital to shareholders through dividends and share buybacks.

4. Attract and Retain Top-Flight Finance Talent: Despite high unemployment levels in parts of the world, many organizations report a scarcity of highly skilled finance talent. As organizations continue to upgrade their basic finance capabilities by investing in infrastructure and technology, the determining factor of finance value increasingly is the skills and knowledge of finance professionals. Front-line finance support is moving from a transaction processing, accounting and control focus to a strategic, market-driven, forward-looking perspective that demands different skill-sets. Our experience working with finance organizations across the globe supports Accenture’s position that investing to attract and develop talent can provide high-value support to business leaders across diverse markets and geographies.

5. Assure Regulatory Compliance: Two forces are driving the need for finance to focus more on assuring regulatory compliance. First, as companies expand their global footprint, the regulatory requirements they must meet become more numerous and complex. Second, new regulations continue to emerge and must be addressed. Finance has to make regulatory compliance a non-issue by ensuring that finance can understand and apply new or changing regulations in a timely and cost-effective manner – without those regulations becoming an impediment to the business.

6. Translate Data into Insight: The ability to effectively manage the ever-increasing volume of data available to an organization is a key requirement for rapidly identifying and acting upon opportunities or threats. Business leaders are increasingly looking to their finance team to filter, synthesize and analyze financial data to distill the information and insights that can impact current and future performance. Consequently, finance organizations may find themselves having to upgrade their performance management and analysis processes to rapidly turn data into forward-looking insight that enable business leaders to make fast, confident decisions.

7. Continue to Focus on Operational Excellence: Our work with leading finance organizations indicates continued efforts to drive cost reduction and productivity improvement across core finance operations. These efforts help to free up professional staff, and equip them with the time, tools and information to be a valued partner to senior business executives. But finance also has a broader responsibility to ensure that the organization as a whole does not relax its focus on operational and cost efficiency as markets improve. Finance must ensure that complacency and waste do not creep back into the organization.

Overall, most finance organizations can be proud of their performance in the past three years, but as stated earlier in this report, this is no time to relax. The criteria for high performance are changing, and merely doing the basics well at low cost is not enough. Business leaders want their finance organizations to deliver increasingly sophisticated levels of service, and to continue their evolution as a true partner in the business. Forward-looking CFOs are setting a clear vision to meet those expectations, and putting in place the practical actions to position their finance organization for success in today’s increasingly volatile and complex world.


About the ResearchThe Dutch High Performance Finance Study was based on Dutch-specific data from the Global study, augmented with additional surveys from within the Alex van Groningen CFO network. In total, 56 Dutch Finance Executives, 530 international peers and around 300 C-level customers of finance (CXOs) responded to the survey.

The preliminary outcomes of the Dutch study were discussed by over 30 finance executives in three CFO Round Table sessions, in collaboration with the Alex van Groningen organization.

•MostoftherespondentstotheDutchsurvey were Corporate Controllers and almost one fifth of the respondents were CFOs, this opposed to the global survey where most of the respondents were Finance Directors.

• MostoftherespondentstotheDutchsurvey were Corporate Controllers, and almost one fifth was CFOs. For the global survey most of the respondents were Finance Directors.

• Almost60%oftheparticipatingDutchcompanies have a revenue of more than US$1 billion

• Mostofthecompaniessurveyedareinthe banking industry, followed by retail, insurance and consumer goods.

Figure 9: Job titles of participants Figure 10: Revenue of Participants’ Organizations in USD

Figure 11: Industries of Participants

Banking

Consumer Goods & Services

Insurance

Electronics and High Tech

Communications

Retail

Energy

Healthcare Payers

Chemicals and Natural Resources

Capital Markets

Healthcare Providers

Utilities

Government National/Federal

Industrial Equipment

Pharmaceuticals

Travel & Transportation Services

Government State/Regional

Biotechnology

Metals & Mining

Education

Freight and Logistics

Medical Products

Media & Entertainment

Forest Products

Global

NL

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

8%

30% 10% 13% 3% 3% 17% 7%0% 3% 7% 3% 3%

8% 7% 7% 6% 6% 6% 6% 6% 2%3%3%4%4%4%4-5%5% 1%2%

Under $100 Million USD

$100 Milliion to $249.9 Million USD

$250 Million to $499.9 Million USD

$500 Million to $999.9 Million USD

$1 Billion to $4.9 Billion USD




$50 Billion or more USD

10%

17%

10%

20%

20%

7%

17%

21%

12%

12%

10%

29%

11%

3%1%1%

NL

Global

Corporate Controller

CFO

Director of Finance or Finance of Director

Senior Vice President (SVP) Finance

Vice President (VP) Finance

Other

NL

7%

10%

13%

17%

17%

37%

Global

12%

15%

32%

27%

13%

1%

Copyright © 2012 Accenture All rights reserved.

Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Its home page is www.accenture.com.

Contact

Bart Deckers Lead Finance & Enterprise Performance, [email protected]

Kees-Jan de KorverLead Finance Transformation, [email protected]

mailto:Bart.Deckers%40accenture.com?subject=Delivering%20Value%20in%20a%20Complex%20World

mailto:Kees-Jan.de.Korver%40accenture.com?subject=Delivering%20Value%20in%20a%20Complex%20World