How Finance Can Be a Better Strategic Partner to the Business
Senior Research Director Nilly Essaides talks with Associate Principal Gilles Bonelli and Associate Principal Sherri Liao about what steps finance organizations can take to mature their finance business partnering capabilities.
Welcome to the Hackett Group’s Business Excelleration Podcast, where – week after week – we hear from experts on how to avoid obstacles, manage detours, and celebrate milestones on the journey to world-class performance. This episode is hosted by Nilly Essaides, a Senior Director within the Hackett Group’s Finance Advisory Practice. She provides context and guidance for the episode, which features guests Gilles Bonelli and Sherri Liao. Both Gilles and Sherri are Associate Principals with the Hackett Group, and they join the show today to offer insights on how finance can be a better strategic partner to business.
To start the conversation, Nilly wants the group to consider what strategic partnership between finance and business is and what value it can contribute to business stakeholders. Sherri explains that strategic partnering, to the Hackett Group, gets at the roles different leaders play. More specifically, it focuses on how finance leaders effectively engage with business management, how finance can facilitate key decision-support events, and how finance can continuously drive improved insight. There are different maturity levels that a finance organization can attain to in this area of its work, and the organization should work to climb the maturity scale from baseline roles in business relationships into the roles of influencer, adviser, and advocate.
There are some key characteristics of strong partnerships between finance and business, which may be styled the six pillars of doing partnerships well. As Gilles explains, these pillars involve the “performance principle,” issues of scope, and methodologies and tools. Further, the pillars entail effective handling of analytics, automation, and AI, as well as both clarity on a guiding focus in the relationship and a commitment to learning and development. The relationship is, therefore, rigorously evaluated, maintained, and improved; being a good business partner is not automatic, but requires consistency and care.
Taking a step back, Nilly asks how critical effective collaboration between finance and other parts of an organization is to the functions’ ability to drive value. It is, in fact, highly critical to any finance organization to collaborate with different functions, and finance is uniquely able to drive value by creating the capacity for a business to do more, redefining interaction models, and more. In some of its recent polling research, the Hackett Group learned that finance is playing its most mature partnering role in its interaction with other support functions – SGNA.
Getting into more detail on this point, the group first considers how finance can hamper this particular area of partnership. Usually, hampering maturity in relationships with SGNA starts with a lack of leadership and poor processes. There are four tests that a finance organization can use to evaluate its own relationship with SGNA, though, and testing well in three of the four areas is a fairly favorable result. The tests examine whether an organization is modeling SGNA based on certain benchmarks, instilling best practices and innovating new practices, preparing SGNA functions to scale for planned growth, and having the right hypotheses to close any known gaps. If an organization does not score adequately on the evaluation, it probably need a deep dive and instilling of improved practices.
Beyond SGNA, finance works with areas like R&D/innovation, and so must determine how to set up a structure of interaction with these other areas. In order to set up a strong structure, Sherri says, finance needs to ask what it is trying to provide and what problem its partner is trying to solve. It must also create adequate capacity to get needed information and consider how to structure the collaboration in view of how the business imagines a partnership with finance looking. Gilles adds that finance needs to build a scalable model and get the right balance of centralized and decentralized activities. As the conversation wraps up, Sherri and Gilles each offer what they consider the three most important considerations or actions finance should embrace in order to evolve its partnership role.
- 0:30 – Welcome to this episode with host Nilly and guests Gilles and Sherri.
- 1:32 – Turning to strategic business partnerships, how should the concept be defined?
- 4:50 – Gilles explains the six characteristics, or pillars, of strong business partnerships.
- 10:05 – Conversation turns to collaboration between finance and different business functions.
- 12:18 – The group talks about research results and the issue of hampering progress.
- 14:52 – Here are four questions to evaluate your relationship with a business.
- 16:10 – Finance has to work not just with SGNA, but also with other areas of a business.
- 18:41 – Gilles offers thoughts on centralizing and decentralizing different activities.
- 21:52 – Sherri and Gilles give parting advice on evolving a partnering role.