New research from ACCA (the Association of Chartered Certified Accountants) suggests that finance leaders see challenges in implementing global business service (GBS) models as well as recognising the significant impact they may have on the traditional role of the finance organisation.
With many finance functions within businesses having moved into outsourced or shared services models, for some businesses the next phase is GBS – the aggregation of functions such as finance, human resources, IT, property and facilities into one organisational construct and governance model.
ACCA’s report suggests chief financial officers could bring even more value to the business through this structure, but the model poses potential risks for finance chiefs and the finance function remit, and may alter traditional finance career opportunities.
Deborah Kops, principal, Sourcing Change and co-author of the report, says: 'Today’s CFOs should be prepared for GBS, and understand what it means for the finance function as a whole. Will GBS free them up to focus on more strategic objectives?'
Jamie Lyon, ACCA head of corporate sector, said: 'Finance leaders see advantages and disadvantages in moving to a GBS model. While it may enable CFOs to bring more value to the business and play a much more strategic role across the whole enterprise, it could be a distraction to the further transformation of the finance function, particularly if the CFO becomes the corporate owner.'
Creating more value
The ACCA report Global business services: a game changer for the finance organisation? reveals that GBS could increase the impact of finance by combining comprehensive data, technology and capability across business functions to provide more accurate and actionable business insights, and free up finance chiefs to focus more on all their other responsibilities.
Jamie Lyon said: 'GBS potentially has benefits such as enabling even quicker market entry and business integration as organisations evolve their business models. It should also give a much better 'end-to-end' view of business processes, and that means opportunities to drive further efficiencies. But it also necessitates CFOs looking across the entire finance activity map and determining what remains in 'finance', and what can move into a GBS operation. It essentially redefines what is 'core' and 'non-core' to the finance organisation.'
Leadership and capability implications
In its assessment of GBS, ACCA looked at what the model meant for the career pathway of future finance leaders. With many finance activities no longer in the finance function under this new business construct, and instead placed in a global business services function, finance professionals will need to adapt their ways of working to be better prepared for working and reporting cross-functionally.
Deborah Kops explained: 'The ways in which finance professionals interact with professionals in other functional areas becomes of paramount importance in a GBS model. That’s easier said than done when historically most business models have been demarcated along functional vertical lines.
'To make GBS work, you must develop different capabilities in your finance professionals so that they can operate effectively in a cross functional, matrixed construct. They need to be able to break down those functional barriers, and develop a broader business perspective rather than a narrower finance orientated viewpoint. It’s a big cultural shift for the finance organisation, and the implications for traditional finance career paths could be profound.'
Jamie Lyon added: 'The other significant question when transitioning to global business services is who leads the operation. For those businesses which may be considered to be well on the road to GBS, often we see ownership residing with the CFO. But this could simply be because finance has traditionally led the way on transformation initiatives within the organisation.
'With the breadth of priorities facing CFOs today, perhaps there is a strong case for ownership to rest elsewhere, for example, with Chief Operating Officers. One thing is certain, the scale and impact across the enterprise of GBS is potentially very significant, and the benefits possibly very rewarding. It’s got to have the mandate and ownership at board level for these to be fully realised.'