The cost of finance operations at the typical large company has been cut in half over the past decade. CFOs got what they wanted: talented and dedicated people doing more with less, and those with a knack for stats polishing their analytical contributions. So, I got to wondering: what’s behind the recent mini-surge in core financial management (FM) process benchmarking?
I looked at ways in which APQC members are using our FM process productivity assessments. A couple of views came into focus. First, I saw that an A-list finance shop (which will remain anonymous) was assembling a custom set of relative performance metrics (top/median/bottom across an industry peer group) involving the end-to-end order-to-cash process. OK. That confirms what’s been in the ether lately. Leaders are wrapping up efforts to optimize global procure-to-pay and are now preparing improvements aimed at the cash in-flow side. They are creating Order-to-Cash base-lines.
Then I came across a different hallmark of continuous improvement. For the last three years in a row, one large organization has been benchmarking five core FM processes (process costs as a percent of revenue, discrete activity costs, and process FTE levels compared to the general population). The motive in this second case was different—and had to do with where they were on their maturity curve three years back. This second case learned then that it lagged the median performance of all organizations when it came to the overall cost of finance operations. That was a wake-up call, and the order came down from on high to improve that performance picture pronto. A multi-year, multi-pronged FM process improvement project was launched, with annual readings designed to assess the pace and quality of change.
It’s reasonable to assume, I think, that questions about when to benchmark FM processes can be tricky. For that reason, I am suggesting a look at a super study done recently by my colleagues in our business excellence (BE) research practice: Using Metrics that Drive Bottom Line Value (Best Practices Report). There is a lot of knowledge in that BE space that FM executives could leverage with strong impact.