Developing the Finance Scorecard was commissioned by Business Intelligence as part of its ongoing research programmes into latest thinking and developments in the implementation of the balanced scorecard, and best practice processes and systems for the effective management of the finance function.

Through eight focused chapters and ten dedicated case studies, this report explains how exemplary organizations are repositioning the finance function as a value-adding partner to business management. The Report shows how finance leaders are utilizing management approaches such as activity-based management, value-based management, financial shared services centres, outsourcing and intellectual capital development to further this value-adding position.

Crucially, the report positions these skills sets within a balanced scorecard implementation framework, both organization-wide and finance function specific.

Indeed the report shows how finance can become organizational custodians of the integrated management system that is the balanced scorecard. Importantly, the Report shows why this calls for a radical transformation of traditional approaches to strategic and financial planning. A snapshot of each chapter follows.

Chapter 1: Introduction
This Chapter explains why the finance function is undertaking a dramatic transformation from its historic role as ‘corporate scorekeepers’ to value-adding business partners. It shows why non-financial predictors of financial results have become key performance indicators for the knowledge-era, and why increasing numbers of organizations are implementing the balanced scorecard as their primary management and reporting tool. This Chapter also provides an overview of the key learning points from the Report.

A case study on Diageo demonstrates best practice.

Chapter 2: Transforming Business Performance Management and Measurement
This Chapter explains how finance professionals can add value to their organizations by contributing fully to strategy implementation, and how this can be achieved by focusing their skills on assisting the organization in the implementation of the balanced scorecard. The Chapter details why effective scorecard usage requires the integration of strategic, financial and tactical plans and what this means for the skills development of finance professionals.

A case study on the Royal Bank of Scotland demonstrates best practice.

Chapter 3: The Finance Scorecard — Exclusive Research
Based on an exclusively commissioned survey of 90, mainly UK-based senior finance professionals, this Chapter details how these managers view present performance and future trends in areas deemed critical for finance and organizational success. Topics covered include ‘the role of the finance function’; ‘the re-engineering or radical restructuring of the finance function’; ‘outsourcing and shared services’; ‘corporate performance measurement’ (including levels of balanced scorecard and finance scorecard implementation and success); and ‘the future of the finance function’ (including areas such as intellectual capital development and e-commerce).

Chapter 4: Managing, Implementing and Communicating Shareholder Value
This chapter explains why value-based management techniques, such as economic value added (EVA®), have become key shareholder-facing measures for many organizations. It provides a step-by-step template for EVA® implementation and illustrates how an EVA® programme can be used as an effective part of a balanced scorecard framework. The Chapter also explains why communicating ‘balanced’ performance metrics to the shareholding community is becoming increasingly important in the knowledge era.

Case studies on Tate & Lyle and Millennium Chemicals demonstrate best practice.

Chapter 5: Driving Excellence in Finance Processes
This chapter focuses on two approaches to process measurement and improvement: activity-based approaches, such as activity-based costing (ABC) and activity-based management (ABM), and finance benchmarking. It explains why these techniques have become increasingly popular and provides templates for successful activity-based and benchmarking programme implementation. It also shows how these techniques can be used within the balanced scorecard.

A case study on Navistar International shows best practice in ABC/M programme design and implementation.

Chapter 6: Measuring the Effectiveness of Financial Shared Services Centres and Outsourcing
This chapter considers financial shared services centres and finance outsourcing, two approaches increasingly used by finance directors to simultaneously reduce costs and improve service levels. It explains the benefits of the techniques, provides a template for successful implementation and detailed information on best-practice performance standards. It also explains how balanced scorecards can be created for shared services centres or outsourcing arrangements.

Case studies on Whirlpool Europe’s shared services centre and the outsourcing partnership between Elf Oil UK and PricewaterhouseCoopers demonstrate best practices.

Chapter 7: Creating Future Value
This chapter considers the implication of intellectual capital development and e-commerce in creating future value within the organization. It explains why intellectual capital development has become a key focus for many forward-thinking organizations and how finance professionals can use their skills for intellectual capital identification, management and measurement. It also shows how e-commerce is transforming the way companies do business and details the skills that finance will need to play a central role in the new ‘e-world’.

A case study on Skandia demonstrates best practice in intellectual capital management while a case study on Nestlé demonstrates best practice in exploiting e-commerce opportunities through web-based technologies.

Chapter 8: Developing the Finance Scorecard
This final Chapter explains why creating a finance scorecard can help drive the finance function to a value-adding business partnering role. It provides step-by-step guidance in creating a finance scorecard and illustrates this with specific finance scorecard templates. It also details the finance staff skills requirements to succeed with the finance scorecard and for facilitating the organization-wide use of the balanced scorecard.

A case study on Coca-Cola Beverages Sweden demonstrates best practice.