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Building and Developing the Finance Scorecard

Historically the finance professional has been seen as the ‘keeper’ of the organization’s most valuable assets, but in the new knowledge-era, where many of the assets are no longer tangible, and many processes now automated, this role is under threat. Finance now faces the challenge of re-positioning itself as a value-adding business partner to the organization, and driver of corporate strategy and new management systems. This groundbreaking report reveals how top finance professionals are doing just this through implementing management techniques such as activity-based management, value-based management, financial shared services centres, e-commerce strategy implementation and intellectual capital development. Crucially, the report places these skills within the framework of a Balanced Scorecard, both organization wide and specific to the finance function Who should buy this report? The Finance Scorecard report is a key resource for any finance professional considering their future value to the organization. It also provides senior management with the knowledge and best practice examples of how they should be developing their finance function to be the key force in driving the corporate strategy. Building and Developing a Finance Scorecard features: Ten in-depth case studies, and many more case reports from leading international organizations including Diageo, The Royal Bank of Scotland, Tate and Lyle, Elf Oil UK, Skandia and Nestlé, illustrate how their finance function's have implemented new management systems to respond to the ever-changing business climate. Results and analysis of an exclusively commissioned in-depth research survey of current finance management practice, based on 90 top finance professionals from a diverse cross section of industries. Two templates detailing step-by-step processes required to plan, develop, and implement a Finance Scorecard. Details of skills and knowledge required to become a value-added business partner and to be integral in the development and execution of organizational strategy.
Chapter 1: Introduction
Executive Summary
Section A: Context
The Challenge to Finance
Research Finding
Section B: Value-adding Finance
Research Findings
Elements of Value-adding Finance
Section C: Contributing to Strategy Implementation with the Balanced
The Balanced Scorecard Explained
Case Report: Coca-Cola Beverages Sweden
Scorecard Ownership
'Unbalanced’ Scorecards
Section D: An Integrated Management Approach
Budgeting and Planning Shortcomings
Case Report: Diageo
Steps for Linking Strategies to Resource Allocation and Budgeting
Implications for Finance Professionals
Section E: Becoming a Business Partner
Case Report: International Truck and Engine Corporation
Case Report: Royal Bank of Scotland
Section F: Leveraging Technology Throughout the Company
Web-based Technologies
The Threats of Information Technology
Section G: Delivering Shareholder Value
Case Report: Skandia
Section H: Delivering World-class Financial Processes
Shared Services and Outsourcing
Section I: The Finance Scorecard
Finance Scorecard Examples
Section J: Conclusion
Key Learning Points
Case Study: Diageo
Chapter 2: Transforming Business Performance Management and Measurement
Executive Summary
Section A: Context
Acceptance by the Business
An Integrating Framework
Section B: Research Findings
Obstacles to Business Partnering
Section C: Finance as Custodians of New Integrated Management
Key Research Findings
The Balanced Scorecard and Business Integration
Case Report: Nationwide Financial Services
Section D: Rethinking the Budgeting Process
The Strain of the Budget
Research Findings
Planning and Performance Measurement Study
Why a Good Strategy is not Enough
Case Report: Diageo
Case Report: SKF
Case Report: Borealis
Rolling Forecasts
Activity-based Budgets
Budgeting Research Programme
Section E: Barriers to Integration
& Difficulties in Re-engineering the Planning Process
Re-engineering Success Case Reports
Case Report: Xilinx
Case Report: Nationwide Financial Services
Section F: Balanced Scorecard — Critical Success Factors
Case Study Examples
Scorecard Success and Failure
Skills Requirements
Section G: Conclusion
Key Learning Points
Aligning the Budget with Strategic Initiatives: Kaplan’s Four-step Process
Case Study:The Royal Bank of Scotland

Chapter 3: The Finance Scorecard: Exclusive Research
Executive Summary
Section A: Ten Key Findings
Section B: Context
Comparison with 1997 Findings
Section C: The Role of the Finance Function
Broader Business Skills
Customer Feedback
Section D: Re-engineering or Radical Restructuring of the Finance
Section E: Outsourcing and Shared Services
Shared Services Centres
Section F: Corporate Performance Measurement
New Performance Measures
The Finance Scorecard
Shareholder Value Techniques
Intellectual Capital Measures
Integrating Strategic Planning, Budgeting and Performance
Section G: Future of the Finance Function
Risks to Finance
Effectiveness of Professional Institutions
Implications of E-commerce
Mergers and Acquisitions
Section H: Conclusion
Key Learning Points

Chapter 4: Managing, Implementing and Communicating
Shareholder Value
Executive Summary
Section A: Context
Measures of Shareholder Value
Section B: Explaining EVA
Making a Capital Charge
EVA Calculation Example
Accounting Anomalies
Section C: Shareholder Pressure
The Power of Pension Funds
Future Directions
What Investors Look For
Section D: EVA as Management System
The Four Ms
How EVA can be Considered a Management System
Case Report:Alltrista
Case Report: Millennium Chemicals
Section E: Acquisitions and Strategic Disposals
Strategic Disposals
Strategic Repositioning
Section F: EVA and the Balanced Scorecard
Understanding the Wider Sources of Value
Translation Difficulties
Case Report: MultiCom
Case Study Examples
Research Findings
Section G: Incentive—Compensation Mechanisms
An EVA -based Incentive—compensation System
Case Report: Sirona
EVA -based versus Traditional Compensation Systems
Section H: Creating the EVA Mindset
Internal Communications
Case Report: Siemens
Case Report:Tate Lyle
Case Report: Millennium Chemicals
Overcoming Resistance
Section I: EVA Shortcomings
EVA and Intellectual Capital Measurement
Section J: Communicating Shareholder Value
Section K: Conclusion
Key Learning Points
Case Study:Tate Lyle
Case Study: Millennium Chemicals

Chapter 5: Driving Excellence in Finance Processes
Executive Summary
Section A: Context
Section B: Activity-based Approaches
Section C: Activity-based Approaches and the Balanced Scorecard
Case Report: Royal Bank of Scotland
Case Report: International Truck and Engine Corporation
Activity-based Approaches and Other Performance Improvement Tools
Case Report: Sallie Mae
Section D: Activity-based Budgeting
Activity-based Budgeting in Practice
Section E: Implications for Finance Professionals
A Value Adding Focus
A Ten-point ABC/ABM Implementation Guide
Section F: Benchmarking
What is Benchmarking
Case Report: BT
Case Report: Celestica
Research Findings
Benchmarking Benefits
Section G: Benchmarking Findings
Main Processes Benchmarked
Benchmarking Data
PriceWaterhouseCoopers’ Benchmark
Ensuring Data Relevance
Implementing a Benchmarking Programme
Gunn Partners Benchmarking Process
Case Report: IBM
Benchmarking Conclusion
Section H: Conclusion
Key Learning Points
Case Study: International Truck and Engine Corporation

Chapter 6: Measuring the Effectiveness of Financial
Shared Services Centres and Outsourcing
Executive Summary
Section A: Context
Section B: Financial Shared Services Centres and Outsourcing
Key Approach Differences
Approach Fusion
Section C: Benefits of Shared Services
Achieved Benefits of Shared Services
Case Report:AlliedSignal
Shared Services: Research Evidence
Section D: Benefits of Outsourcing
Research Findings
Section E: Shared Services — Critical Success Factors
Making the Business Case
Shared Services — Total Process Costs
Performance Measures
Change Management
Effective HR Management
Section F: Outsourcing — Critical Success Factors
Culture Fit
Understanding the True Process Costs
Continuous Improvement
Robust Performance Measures
Staff Involvement
Vendor Selection — Critical Success Factors
PriceWaterhouseCoopers Six CSFs
Section G: Performance Measurement
Hackett BenchmarkingSolutions Shared Services Benchmark
Section H: Balanced Scorecard
A Shared Services Centre Scorecard
Case Report:Whirlpool
Case Report:American Express
An Outsourcing Scorecard
Section I: Conclusion
Key Learning Points
Case Study:Whirlpool Shared Services Centre
Case Study: Elf Oil UK

Chapter 7: Creating Future Value
Executive Summary
Section A: Introduction
Section B: Intellectual Capital
Human Capital
Structural Capital
Organizational Capital
Customer Capital
Section C: Benefits of Measuring and Managing Intellectual Capital
Research Findings
Creating Economic Value
Case Report: Clarica
Assured Survival
Improved Investor Understanding
Improved Internal Understanding
Improved Profitability of Hidden Resources
Case Report: Dow Chemical Company
Section D: Intellectual Capital and the Balanced Scorecard
Section E: Knowledge Management
Knowledge Hierarchy
Section F: The Balanced Scorecard and Knowledge Management
Research Findings
Section G: Intellectual Capital Metrics
Measuring Human Capital
Case Report:Whirlpool Europe Shared Services
Case Report: Royal Bank of Scotland
Structural Capital
Case Report: Coca-Cola Beverages Sweden
Customer Capital
Choosing the ‘Key’ Measures
Section H: Intellectual Capital and the Finance Function
Case Report: Skandia
Case Report: Clarica
Section I: E-commerce
Research Findings
Changing the Shape of Organizations
The Pressures on Measurement
Integrating the Customer Supply Chain
Section J: Implications for the Finance Function
Information Management
Finance Function Skills Requirements
Section K: Conclusion
Key Learning Points
Case Study: Skandia
Case Study: Nestlé

Chapter 8: Developing the Finance Scorecard
Executive Summary
Section A: Context
Section B: Benefits of a Finance Scorecard
Questioning the Value of Finance
Value Components
Case Report: Coca-Cola Beverages Sweden
Research Findings
Can a Finance Scorecard be Stand-alone?
Section C: Designing and Implementing a Finance Scorecard
Key Factors
Functional Vision
Case Report: Coca-Cola Beverages Sweden
An Implementation Template
Case Report:ABB Sweden
Human Resource Policies
Choosing Measures
Section D: Finance Scorecard Templates
The Balanced Scorecard Collaborative
Melville Template
Section E: Skills Requirements
Overview of Skills Required
Financial Perspective
Customer Perspective
Internal Perspective
Learning and Growth Perspective
Section F: Conclusion
The Balanced Scorecard
A Considerable Challenge
The Future — Finance in 2005
Key Learning Points
Case Study: Coca-Cola Beverages Sweden
Appendix — Listings

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