Finance Leaders on Their Journey to Business Collaboration

The emergence of digital technology has driven many finance organisations to invest in improved finance business partnering capabilities. Despite this, true partnership remains the Holy Grail, and very few finance functions can claim to consistently deliver partnership that drives better business decisions and real business value. In the Gartner report, “Drive Financially Sound Operational Decisions,” the analyst house claims that “at most companies, poor operational decision making compromises upwards of 3 percent of profits.”

Against the backdrop of a new global study featuring finance leaders, I chatted with Gary Simon, chief executive of FSN and leader of the Modern Finance Forum for CFOs, to go back to basics on business partnership and ask what finance leaders can do to get this right.

The research identified four personas for business partnering in finance. Can you tell us about what you found?

The first one is the traditional finance manager as a business partner, which is a fairly standard part of the function. Next are the partners who drive top-line growth, and by that we mean the people who are involved in commercial discussions about sales pipeline, coaching departments about how to nurture that pipeline, and what impact that has on financial performance. The third persona includes the people who think about strategy, and who want to ensure that decision making takes place within the context of the overall strategic direction of the business.

The fourth persona is the business partner who is a catalyst for change, and there are very few of them. These are the influencers, people who are looking at processes in order to transform them. They are looking at new business models, guiding the business in a new direction. And this, of course, has maximum impact on both growth in profitability and also on growth in the long term. We’re seeing business partners evolve from financial managers through to catalysts for change, but it’s a slow progression that takes time.

How do you measure the success of business partnering?

In the results of our survey, we found that not only do 60 percent of CFOs and finance leaders lack a way of measuring the success of business partnering, but also 90 percent of them claim that their roles contribute significantly to profitability. And nested in there is an interesting finding that about one third can’t define the contribution that business partners make to profitability. So, you’ve got a bit of a mess here, because there is no real agreed way of measuring the success of business partnering. This prompted us to go out with another follow-up survey question to probe more deeply. We wanted to see where people were beginning to unpack this problem about measuring the success of business partnering, and what sort of tools and methods were in use, even if they were not yet fully developed.

We found that respondents conducted appraisals with their internal partners to evaluate the way they performed. Interestingly, they were looking at hard and soft measures, such as their contribution to profitability, their responsiveness to questions or issues raised, and their accuracy and attentiveness. They also looked at more definitive measures, such as how well they performed in terms of contribution to profitability.

How would you describe the importance of the link between good data and successful business partnering?

I’d strip this down to two basic ideas. You can have all the right skills and experience, but if your systems and processes don’t support business partnering, then you cannot enable it effectively. We found a number of interesting correlations between those who use data well in a business partnering context and how well they perform as an organisation. What we call “data mastery” is key to business partnering, because those organisations that are data constrained or technology constrained can’t get at the data, because they haven’t got the right technology or the right skills to enable this. To be an effective business partner, you have to have the right tools in place; that gives you the time and the information to make a significant contribution. If you haven’t got your systems and data sorted, then you’re spending too much time managing data and not enough time delivering on business partnering.

What are the characteristics of an organisation that is built for strong, strategic partnerships?

In the research we looked at the different sizes of organisations and how size impacted the role and effectiveness of business partnering—and its contribution to commercial decision making. From small organisations with fewer than 500 employees, to midmarket companies and large enterprises with more than 3,500 employees, we discovered some fascinating results. We found that smaller organisations, those with fewer than 500 employees, make the best business partners. I think that’s because of the environment. They’re working in close connection with the business, there aren’t too many people, perhaps they’re on one or two sites, and they’re able to walk the corridors. All of those factors enable them to engage with people more easily.

At the other extreme, the organisations that have more than 3,500 employees have all the veneer of good business partnering. They have the grand titles, all the right tools, a large team, and training, but they’re severely handicapped in terms of established legacy processes. And it is lack of standardisation and automation that holds them back from doing a really good job as business partners. Stuck in the middle, you’ve got the midmarket business partners who have a really tough time. They don’t have the resources of the large organisations and they don’t have the fluidity and ability to act freely, as the small organisations have.

What can organisations do to build and maintain successful business partnerships?

You’ve got to give business partners the tools to do the job. The first requirement is to have good data, because that is crucial to making any decisions that are going to be impactful. It’s also important to have the right tools to analyse that data and allow business partners to put the story across to the operational business departments, because this should be a collaborative effort. It’s not all about technology infrastructure.

Not every finance professional is going to be a good business partner, because some just don’t have the softer skills. But I think, increasingly, every finance professional will have these skills, as the function continues to evolve.