financial services 2011 finance strategy may...
TRANSCRIPT
FINANCIAL SERVICES
2011 Finance Strategy
May 2011
Mark Easson – Chief Financial Officer
2011 FINANCE STRATEGY
Agenda
1. Finance Strategic agenda for 2011
2. Strategic Plan 2011-2015
3. Context for developing a structural framework
4. Proposed structural framework
5. Staff – the critical role you all play
6. Conclusions
FINANCE STRATEGIC AGENDA FOR 2011 1
The Objectives of Financial Services
› High quality transactional services:- Processes, procedures, systems
- A service culture – people have a big impact on the outcome
› High quality control and Governance oversight of financial operations
› Insightful analysis and decision support advice to all Managers, at all levels
› Strong financial stewardship of the University
› An enabler of the delivery of the Strategic Plan – particularly where resources are required to be invested
› An enabler of change and transformation where such changes will advance the core mission of the University
4
We are here to provide a range of high quality and efficient services:
What we’ve achieved over the last year
› Financial Reporting and Planning- Financial Forecasts and budgets were within a few million of final result
- Senate through to SEG have been very complimentary of transparency
› Move towards greater Financial Sustainability - University recorded a strong improvement in performance – up $50M on 2009
- We have restructure the Future Fund to be $400M of discretionary reserves
› UEM introduction – a huge technical undertaking
› Established the Capital Structure and financial disciplines to commence a borrowing program
- We can now fund our ambitious capital investment plans e.g. CODCD
› Procurement successfully transitioned to a value add category strategy
5
2010 was a big year for Financial Services !!
What we need to achieve in 2011
› My aim: communicate the underlying strategy so staff can participate› We need to continue to support the University’s implementation of its Strategic
Plan › We need to get the Financial Services structure right:
- Robust and service focused- Must promote efficient and effective use of our resources- Must enable grouping of resources to focus on priorities and continuous improvement- Must enable development of staff
› We are also bedding down key initiatives from 2010:- Further enhancements of the budgeting and resource allocation process- Operationalising the UEM to achieve its full benefits
› Funding our major Capital Expenditure – Borrowing› Procurement successfully transitioned to a value add category strategy
6
2011 will be another big year for Financial Services!!
STRATEGIC PLAN : 2011-2015What is specifically relevant to Finance 2
UNIVERSITY STRATEGIC PLAN 2011-2015
8
Strategy Sixteen: Refine and apply the new University Economic Model (UEM) to ensure greater transparency in resource and cost allocation and support strategic decision making.“Our aspiration is ground to strategic development in the actual financial circumstances of the University and its constituent academic units. We will work to achieve this through a new economic model, mutual accountability for Faculties at the Divisional level in the development of the budget strategies, more transparent financial reporting, and more regular review of the budgets” – White Paper.
Initiatives
Introduce the new University Economic Model Align the budget allocation models with the new divisionsIntroduce a transitional process in the five-year planning cycle to ease the adjustment of
academic units to the implications of the University Economic Model.
UNIVERSITY STRATEGIC PLAN 2011-2015
9
Strategy Seventeen: Systematically review arrangements for the provision of administrative and professional services“Efficient, cost-effective and coordinated administrative services are an essential foundation for the realisation of our aspirations in education and research. If we are to sustain a University that seeks to achieve our strategic purpose we must support our staff and students through an effective, coordinated and efficient system of administrative and professional services delivery” – White Paper.
Initiatives
Establish a Services Reform Steering Committee of SEG to systematically review servicesRefine existing arrangements for location and management of services in
relation to finance, human resources and ICT.
UNIVERSITY STRATEGIC PLAN 2011-2015
› Strategy One - Initiative (a) - Creation of “Divisional Boards”
› Strategy Two – Manage more effectively the size and shape of the University – e.g. Portfolio analysis
› Major capital project investments –
- Strategy Four – Initiative (c): Student Housing
- Strategy Six – Initiative (f): AIN
- Strategy Seven – Initiative (g): Abercrombie Precinct
- Strategy Eight – Initiative (a): CODCD
› Strategy Twelve: Provide enhanced learning opportunities for all our staff
10
Other elements of the Strategic Plan that are relevant for Finance
FINANCIAL FORECAST – 2011- 2015
11
ENABLER TO DELIVER FINANCIAL TARGETS IN THE STRATEGIC PLAN
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
180.0
200.0
220.0
240.0
260.0
280.0
300.0
320.0
2010 Bud 2010 For 2011 2012 2013 2014 2015
mill
ions Op Margin for Infrastructure
Capital CommitmentsProposed Capital Charge
CONTEXT FOR DEVELOPING A STRUCTURAL FRAMEWORK 3
Why do we need to focus on Structure?
13
Information Analysis and
ReportingEffective Service
Delivery
Process Design and
Standardisation
Technology Enablement
Skills and Talent Development
Cultural Change Management
Governance and Organisation
SERVICE DELIVERY
COMPONENTS
Many objectives of finance require an effective enabling structure:
Structural challenges we face
We need to optimise our structure to support delivery of the Strategic Plan1. The UEM will create more pressure on all central services (including
Finance) to be more efficient and provide a higher quality of service. 2. We still have too much duplication and non optimal co-ordination and
resource use 3. Financial Services cost structure is above comparable benchmarks. The
finance budget for 2011 is $34,391,000 – we will not be allocated more resources. We must deliver within this budget total.
4. Slow progress to date in implementing substantial process and system improvements
5. Current structure does not enable Financial Services to respond flexibly and quickly to resourcing / critical needs and does not support succession planning
6. We need a road map to guide the remaining refinements of our structure7. Provide a high level framework for Directors to build their local departments
14
FINANCE RESTRUCTURES – The story so far…
› 2007 – Transitioned to a “Shared Service” model – with reporting lines changing from Faculties to Finance
› 2008-2010 – Consolidation of central unit support into Corporate Finance
› “Stage 1” - Jan-Feb 2010 – Created Financial Control & Treasury & Financial Management & Analysis
› “Stage 2” – Oct-Dec 2010 – Realigned reporting lines for Financial Support Services to the Faculty Finance groups.
› “Stage 3” – Feb 2011 – Commenced a restructure of Financial Operations and Systems (FOS)
› 2011 – Set the overarching Structural Framework› “Stage 4” – Further individual change initiatives to implement other
components of the structural framework
15
The journey since 2006:
PROPOSED STRUCTURAL FRAMEWORK 4
16
CURRENT STRUCTURE – May 2011
17
The Proposed Structural Framework
18
Sciences / Engineering /
Business
MDNP / Health
Science
Arts, Law and Education
Architecture and Creative
Arts
Eng
agem
ent
Func
tiona
l Exp
ertis
eS
peci
alis
t
Investment and Capital
Management
Strategic Financial Solutions
Strategic Management Accounting
Procurement Services
Financial Control and
Treasury
Financial Management
& Analysis
CFO Incl.
Communication
Business Units: Cards, UPS, Farms, St Housing
Corporate Finance
(central units)
Customers – Faculties / DVCs / Directors / University in General
Where is FOS ?
19
Sciences / Engineering /
Business
MDNP / Health
Science
Arts, Law and Education
Architecture and Creative
Arts
Eng
agem
ent
Func
tiona
l Exp
ertis
eS
peci
alis
t
Investment and Capital
Management
Strategic Financial Solutions
Strategic Management Accounting
Procurement Services
Financial Control and
Treasury
Financial Management
& Analysis
CFO Incl.
Communication
Business Units: Cards, UPS, Farms, St Housing
Corporate Finance
(central units)
P2P
O2C
Customers – Faculties / DVCs / Directors / University in General
1. Transferring core business as usual “lights on” process activities
2. Establish separate improvement group
We need: to define clear accountability for processes
20
Sciences / Engineering /
Business
MDNP / Health
Science
Arts, Law and Education
Architecture and Creative
Arts
Eng
agem
ent
Func
tiona
l Exp
ertis
eS
peci
alis
t
Investment and Capital
Management
Strategic Financial Solutions
Strategic Management Accounting
Procurement Services
Financial Control and
Treasury
Financial Management
& Analysis
CFO Incl.
Communication
Business Units: Cards, UPS, Farms, St Housing
Corporate Finance
(central units)
P2P
O2C
A&
C
FPR
&A
Customers – Faculties / DVCs / Directors / University in General
High level finance activity model
TRANSACTIONAL COMPLIANCE & RISK MANAGEMENT
PLANNING & STRATEGY
MANAGEMENT AND ADMINISTRATION
Purchasing & Procurement Statutory Reporting and Audit Strategic Procurement Investments and Commercial Mgmt
Accounts Payables Treasury (incl. Capital Structure & Risk Mgmt.
Planning and Performance Mgmt
Finance Systems Support
Travel and Expense Mgmt Compliance and Policy Monitoring and Reporting Systems and Process Development
Revenue Cycle Taxation Business Analysis Projects Office
Accounts Receivables Accounting Advice Governance
Project Accounting and reporting (acquittals)
Business Cases Staff Training and Development
GL Control & Accounting (reconciliations, journals)
Special Projects
Payroll related (e.g. New / term., casual / pt teaching)
Procure to Pay Order to Cash Accounting & Control Financial Planning, Reporting and Analysis
21
What activities are included in each of the Process groups
We need to improve processes, procedures and systems
1. Broad strategies to enable efficient and effective processes and systems:a. Governance – clear ownership and end to end accountability for process groupsb. Clear process values – including complexity reduction, reduced cycle time, sharing of best
practice processesc. Clear vision of what we want from systems – technology enablement that offers users a very
high “web standard” user experience d. Process owner has a mandate and accountability to implement improvements - including
automation, centralisation where it is efficient and customer responsiveness
2. Redirecting more resources to strategically target investment in technology and process improvement where we need it most
3. We need to develop more expertise and competencies in:a. Assessing best practiceb. Technology enablement and system expertisec. Process and procedure designd. Change management, facilitation and implementatione. Project Management and realising the benefits of projects
22
Key issue :Processes and procedures consistently rated as “poor”:
Introduction of Strategic Financial Solutions
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A new group to support Financial Services:1. Set strategic priorities for resources and improvement initiatives2. Core focus - Technology enablement and process improvement 3. Support and facilitate improvements throughout the department4. Consultancy to support department initiatives5. Change Management and communication6. Benchmarking and performance reporting of finance
Director
Systems Development & IT liaison
Change Management
Process Solutions
Project Management Office
Relationships between Engagement units, Functional Expertise groups and Strategic Financial Solutions
Engagement units Functional expertise Strategic Financial Solutions
Front line customer Service
Operational excellence Major Innovation
Develop and extend roleto provide analysis and decision support capability
Mitigate transaction work by system enablement and process centralisation
Drives major initiatives through Change andProject Management
Transaction Support – ad hoc / do what it takes
Centralised processing hub – economies of scale
Implement significant improvements & initiatives
Focus on the customerand current service delivery
Continuously improvingenabling technology and processes
Strategically analysis of performance - identify best practice, advise CFO
Incidental process and system advice
First line system support / access control
Second line system support – complex problem resolution
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CUSTOMERS - Support for new Divisional Groupings
25
Sciences / Engineering /
Business
MDNP / Health
Science
Arts, Law and Education
Architecture and Creative
Arts
Eng
agem
ent
Func
tiona
l Exp
ertis
eS
peci
alis
t
Investment and Capital
Management
Strategic Financial Solutions
Strategic Management Accounting
Procurement Services
Financial Control and
Treasury
Financial Management
& Analysis
CFO Incl.
Communication
Business Units: Cards, UPS, Farms, St Housing
Corporate Finance
(central units)
Customers – Faculties / DVCs / Directors / University in General
We are supporting two new groupings of Faculties
Key principles guiding our Engagement Strategy
1. Align teams to the Divisional boards – ensuring newly grouped Faculties are adequately supported:a. Arts/Law/Ed – with Economics
b. Architecture and Creative Arts (Architecture, SCA, SCM)
2. Front line engagement groups can focus on client service and are supported by:a. Functional Expertise groups that improve transaction processes and procedures
and take on specialist transactions (e.g. Specialist Procurement)
b. Strategic Financial Solutions to provide significant support for change initiatives, technology enhancements and improvement projects
3. Staff development strategies including:a. Standardised Position Descriptions and clearer career pathways and linkages
b. Rotations programs that take advantage of pathways and cross-skilling
c. Graduate programs – which may allow earlier exposure to Faculties
26
FINANCE STRUCTURAL FRAMEWORK
27
Sciences / Engineering /
Business
MDNP / Health
Science
Arts, Law and Education
Architecture and Creative
Arts
Eng
agem
ent
Func
tiona
l Exp
ertis
eS
peci
alis
t
Investment and Capital
Management
Strategic Financial Solutions
Strategic Management Accounting
Procurement Services
Financial Control and
Treasury
Financial Management
& Analysis
CFO Incl.
Communication
Business Units: Cards, UPS, Farms, St Housing
Corporate Finance
(central units)
P2P
O2C
A&
C
FPR
&A
Customers – Faculties / DVCs / Directors / University in General
Strategies embodied in the Structural framework
› Clarity of roles and interactions: Customer Engagement, Functional Expertise, and Specialists
› Further develop expertise across and within the framework› Clear end to end process ownership and accountability› Focus resources on critical process, procedure and system enhancement,
as well as day to day transactions, service and business decision support› Structured to support the Strategic Plan e.g. Divisional engagement› Structure enabled for staff to build experience, skills and develop their
careers
› This presentation is not a “change initiative” – but provides the broader framework for any further change programs planned this year
28
Further Change Programs for 2011
› FOS change program is currently underway, and out of this flows:- Recruitment of Director of Strategic Financial Solutions to enable set up of this
new group
- Procurement to absorb the P2P group
- Finance Control and Treasury to absorb the O2C group
› Recruitment of Finance Director – Architecture and Creative Arts to formalise the creation of this new Divisional Engagement group
› Divisional Finance groups – opportunity for further structural alignment and standardisation following the change in reporting lines of Financial Support Services
› And… workshops for staff - planned to help define what we mean by “Accounting and Control” and any other concept issues that arise
29
Staff – The critical role that you play 5
THE VISION FOR FINANCE
31
Financial Services needs to deliver high SERVICE QUALITY across 4 broad quadrants:
Commentator•Finance as a commentator, explaining the business in numbers & variances
•Business supports the value of decision support available within Finance and requests assistance & comment as required
Business Partner•Acts as a business adviser & integrator of the total business view
•Provides insight & supports commercial decisions
•Takes ownership and actively manages the financial drivers of value
Score Keeper•Role focused on traditional accounting•Efforts expended on transaction processing and providing a month end result
•Apply base level internal controls – valid, complete, timely & valuation etc
•Operates efficiently & effectively
Custodian• Role focused on world class governance & risk management
• Works with the business to ensure compliance and application of effective controls
• Custodian of assets and value protection• Conscience of the business
Business Skills
Accounting Skills
Direction Setting
ProcessDelivery
Rea
ctiv
e Se
rvic
es
+
++
+
Proactive Services
The challenge: we need to continuously add value
32
Strategic Transformation
High impact complex
commercial initiatives
Analysis and strategic decision support - FPR&A
Budgets and management reporting –FPR&A
Accounting transactions, project management, routine reporting, acquittals, funds availability –
A&C
Transactional support and processing – P2P, O2C
SHIFT RESOURCES AND FOCUS TO MORE VALUE ADDED ACTIVITIES
•Technology enablement•Process & procedure improvement & redesign•Automation•In some circumstances centralisation•Training and development
Procurement – increasing focus on value add
Reprioritised Categories
-Major Equip (Grant Funded)-Capital Works >$10m
-IT Equipment-Prof. Services
-PSU/Faculty Support/CRM /Supplier Mgmt-Quote Waiver Support
- Process Exemptions, Tender Waivers-Process Improvements
-Travel Helpdesk-CIS & Major Research support
-Strategy Ownership-Objective Ownership
-Procurement Policy, Manual, Guidelines & Templates-Profectus -
-Spend Analysis Tool & Contract Register -eProcurement -QW Automation -TRIM
-Team Management & Student Resourcing -HES, DSTA, UNSW/DET Networks -AUPN/CIPS Committees
-CIPS Events -Continuing Education-Procurement Best Practise Research & Networking
-Register Updates -Mgmt/Financial Reports -Adhoc CFO Reports-CIS Reports -Category Reports -Travel Reports -TB Reports
-Spare (Reactive)
A
B
C
D
E
F
G+10%
› Workplan Allocation
45%($159m)
45%($20-40m, ex. CIS)
10%
A
B
C
• $192m
• None
Set aside (opportunity cost)
• None
0%
Aim: a culture that supports service and value-add
34
Strategic plans and initiatives are important but on their own have their
limits
All staff need to participate to help build a strong and effective culture:
› Always provide efficient, customer focused service
› Continuously strive to improve processes, make effective use of technology and innovate
› Continuously share knowledge with each other and contribute towards
everyone’s development
› Continuously share resources contributing to effective workload management
› Continuously challenge the status-quo and legacy issues to make efficiency
gains
CONCLUSIONS 6
What’s in it for you?
› We are seeking ways to make improvement not just for our clients, but for you – e.g. better systems, clarity of responsibilities, the right support networks
› Structures and culture enabling more time for challenging and rewarding work, such as sophisticated advice and value-add for our customers
› Structures enabling career opportunities – e.g. rotation through a breadth and variety of roles, both specialist and generalist
› Financial Services transforming into a key enabler of the success of our University – and from this follows genuine job satisfaction
› Finance, despite the process issues, is already viewed as a “department that is working” (and working hard) – but with your commitment we can take it to the next level
36
Summary – take away’s from today
› All staff need to be aware of the University's Strategic Plan and their key role as enablers and supporters
› Understand the role of your team in the overall Financial Services framework and use this to shape your contribution
› Work with a positive attitude – we are on a continuing journey to meet the challenges facing not just this University, but also our sector, and we have a genuine opportunity to lead the way for others in the way we do things.
› Financial Services needs real team effort from all of you to meet the University’s goals and objectives over the next few years.
› Change is the only constant – seek ways in which you can contribute and give feedback constructively, and speak up about opportunities you see to make improvements great and small.
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QUESTIONS 7