1. © 2005 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. The KPMG logo and name are trademarks of KPMG International. Measuring the finance function Measuring the finance function National Accountants Conference 2005 Mark Hankins

2. 2 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Agenda Why measure performance? Why benchmark? Process maturities and better practices Practical steps

3. 3 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Why measure performance? To improve performance levels to support the organisation’s business and finance strategies

4. 4 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Why measure performance? To improve performance levels to support the organisation’s business and finance strategies You only get value from measuring performance when you improve performance. And that takes management action.

5. 5 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Why Benchmark? Performance Time Gap Benchmarking identifies and calibrates the gap Current performance Best-in-class performance

6. 6 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Why Benchmark? Performance Time Gap Benchmarking identifies and calibrates the gap Current performance Best-in-class performance Benchmarking helps set goals

7. 7 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Performance Time Gap Benchmarking identifies and calibrates the gap Current performance Best-in-class performance Benchmarking helps set goals Benchmarking helps to measure success in closing the gap Why Benchmark?

8. 8 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Performance Time Gap Benchmarking identifies and calibrates the gap Current performance Best -in-class performance Benchmarking helps to measure success in closing the gap Benchmarking maintains the stimulus for continuous improvement Benchmarking helps set goals Why Benchmark?

9. 9 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Process maturities and better practices Process maturities are a self review of your current processes focusing on: Process strategy; Relationships; People; Process; Systems. Process maturities allow us to clarify where we are and where we want to be

10. 10 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Process maturities and better practices Better practices tell us what other people are doing in terms of managing: Process strategy; Relationships; People; Process; Systems. Better practices allow us to clarify how we can get to where we want to be

11. 11 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Process maturities 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 1 2 3 4 5 6 7 8 9 10 11 1213 14 15 16 17 18 19 20 21 22 23 Average Score Standard deviation Strategy Relationships People and resources Process Systems

12. 12 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Process maturities Now Desired future state Current initiatives Appetite for change IT enhancement review New skills and training Technology solutions Process maturity and adaptability better practice and world class finance 0 2 5

13. 13 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Process maturities POORAVERAGEEXCELLENT Relationships and structure *Finance perceived as the scorekeepers by the rest of the organisation. *Finance perceived as the professional advisors or functional experts, but only concentrating on financial matters. *Finance seen as specialist team members who are an integral part of the business team and understand all aspects of the business. *Finance do not actively participate in the future direction of the business. *Finance perceived as the professional advisors or functional experts, but only concentrating on financial matters. *Finance seen as business partners who are actively involved in the strategic issues facing the business. *Each location has its own finance function providing the majority of financial services. *Some centralisation of finance functions across locations. *All financial processing centralised, either in a shared service or outsourced. Finance managers support the business decision makers through close liaison.

14. 14 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved.  Linkage to business strategy  Predictive capability  Delivers insight  Balanced measurement  Technology leverage  Use of analyst resources  Ease of access  Cost  Cycle Time Better Practice Right content / Poor execution Cheap, fast but not useful Better practice High Low Value Efficiency Better Practices is synonymous with a well-managed business

15. 15 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Practical steps Decide what you are trying to achieve Agree the level of benchmarking –High-level to understand the business case –Detail to identify specific process improvements Use maturity profiles to be honest about the current position Identify a number of best practices and the benefits they bring

16. 16 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Practical steps Track the benefits –Implement a reporting structure that shows the benefits Start again

17. 17 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Practical steps Track the benefits –Implement a reporting structure that shows the benefits

18. 18 © 2004 KPMG LLP, a UK limited liability partnership and the UK member firm of KPMG International, a Swiss cooperative. All rights reserved. Practical steps Assess Identify Improve