Part 1 in a 2-part series. Read Part 2.
What is business partnering, why is it important, and how do you successfully apply the concept in your company’s finance function? These topics should be high on the CFO’s agenda. Yet few finance functions have successfully created tangible value as business partners, which continues to riddle a whole profession of finance professionals. It’s time to put an end to this conundrum and crack the code on how to create value with business partnering.
Why business partnering is important
- Traditional finance jobs, like bookkeeping, accounting, and controlling, are either moving away through offshoring/outsourcing or simply being automated.
- Company executives are merchants that constantly evaluate their staff and functions based on their ability to create value.
The first statement should be your call to action, both as an individual and as a finance function. If you don’t act now, you won’t be here in the future. The second statement should guide your actions towards delivering tangible value creation. Now you might ask, what is value creation, really? The term is thrown around a lot, but is it the bottom line, savings, share-price increase, or what? Let’s break it down into these 10 value drivers.
Defining business partnering
To clearly define what business partnering really is, we can show it in one picture.
At the center or heart of business partnering is the customer. If you have no customer focus nor understanding of how to develop a relationship with your customer (typically an internal stakeholder), you will not succeed. By answering the following questions, you can begin thinking about business partnering as a basis for decision-making.
- Who are the customers of the finance function?
- Why is customer focus important?
- What is customer focus?
- How do you develop customer focus?
The business partner’s role is to minimize risks and maximize opportunities – essentially finding the right balance between risks and rewards and taking a more neutral approach to risk than the finance function historically has done.
How does business partnering create value?
Value can be created throughout the company. Various analysis tools can be used to develop insights from the perspective of the finance function itself. For example, what can the function do without involving the customers in creating value – like optimizing finance costs or working capital? These tools can be used to develop insights from the customer perspective, such as how the finance function can drive value creation collaboratively.
It’s a long journey to fully implement the concept and train your people on the competencies required to succeed with business partnering. Together with my colleagues Bo Foged and Henriette Fynsk, we have written a book, “Create Value as a Finance Business Partner – Transforming the Finance Function into a Profit Center,” that covers the why, what, and how of business partnering. It describes important considerations to make at each step of the journey, coupled with examples of how we have personally seen how business partnering can be implemented properly.
Part 2 of this series will address how business partnering can be applied in the three basic roles of finance: compliance, control, and advisory – from the billing clerk to the CFO.
See what’s on CFOs’ minds in the “Top Five Finance Blogs Of January 2019.”