FINANCIAL SERVICES 2011 Finance Strategy May...

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.


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.


› 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


Business

MDNP / Health

Science



Arts

Eng

agem

ent

Func

tiona

l Exp

ertis

eS

peci

alis

t


Management





Treasury


& Analysis

CFO Incl.

Communication


Corporate Finance

(central units)

P2P

O2C


1. Transferring core business as usual “lights on” process activities

2. Establish separate improvement group

We need: to define clear accountability for processes

20


Business

MDNP / Health

Science



Arts

Eng

agem

ent

Func

tiona

l Exp

ertis

eS

peci

alis

t


Management





Treasury


& Analysis

CFO Incl.

Communication


Corporate Finance

(central units)

P2P

O2C

A&

C

FPR

&A


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

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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

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Key issue :Processes and procedures consistently rated as “poor”:

Introduction of Strategic Financial Solutions

23

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

24

CUSTOMERS - Support for new Divisional Groupings

25


Business

MDNP / Health

Science



Arts

Eng

agem

ent

Func

tiona

l Exp

ertis

eS

peci

alis

t


Management





Treasury


& Analysis

CFO Incl.

Communication


Corporate Finance

(central units)


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


Business

MDNP / Health

Science



Arts

Eng

agem

ent

Func

tiona

l Exp

ertis

eS

peci

alis

t


Management





Treasury


& Analysis

CFO Incl.

Communication


Corporate Finance

(central units)

P2P

O2C

A&

C

FPR

&A


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

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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

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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

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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

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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

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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

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