Four years represents a significant length of time in the finance function. Since 1998, finance functions have negotiated a stock market boom (and bust), the Y2K problem and – in the majority of Europe – the switch to the euro. Most are currently grappling with the impact of a global recession.

In reality, those are only the headline issues. There have also been mergers and acquisitions, regular restructurings, a boom in e-commerce and constant pressure to cut costs. With this hefty agenda, it is time to take a fresh look at how far the finance function has come in the long march towards a new role in the business.

This Report demonstrates that finance functions have made significant progress in the past four years. However, while they have often met the objectives that they have faced, they now find that the goal posts have moved. There are new challenges. This Report sets them out and points to a number of ways in which to tackle them.

In outline, this Report deals with the following key issues:

Chapter 1: The Finance Function in the New Millennium
This Chapter outlines the challenges posed in the next decade. It explores the main strands of change in finance functions during the past five years and looks at what needs to be done now.

Chapter 2: The Value-adding Finance Function
This Chapter looks at what the concept of adding value actually means. It then explores some of the detailed performance metrics that leading finance functions adopt to measure themselves.

Chapter 3: Driving Finance Change
This Chapter argues that finance professionals need to take a long, hard look at the value of the work they do. In particular, it explores how the ‘beyond budgeting’ movement is transforming some finance functions and enabling them to become a driver of change in their businesses.

Chapter 4: Shareholder Value and Capital Markets
This Chapter deals with what is the foremost issue for finance directors of both listed and unlisted companies. It explores the sources of shareholder value and, in particular, the growing importance of intellectual capital as a value driver. In addition, it argues that senior finance professionals need to become far more effective at communicating with shareholders and other investors.

Chapter 5: New Skills Requirements for the Finance Function
This Chapter looks at how the competencies required by finance professionals are rapidly changing. Soft skills, such as the ability to manage people, are at least as important as technical accounting skills. In addition, the ability to manage risk effectively is also of growing importance.

Chapter 6: Managing and Reporting Balanced Performance Measures
This Chapter explores how new metrics have taken their place alongside the financials. It looks at the part this can play in helping a company achieve its strategic objectives. It also addresses the culture change issues that arise when a company moves towards a ‘balanced scorecard’.

Chapter 7: Adding Value to the Finance Function with IT
This Chapter examines the latest approaches to using information technology effectively. It looks at the key role of e-business and (comparatively) new technologies, such as enterprise resource planning (ERP) and application service providers (ASPs), which have become increasingly important in finance functions since the first edition.

Chapter 8: Creating a Shared Financial Services Centre
This Chapter takes a detailed look at what is involved in the process of creating a shared financial services centre and explores the benefits thereto. However, it also notes that developing the shared services centre approach is not necessarily straightforward.

Chapter 9: Outsourcing Finance Operations
This Chapter looks at some of the latest thinking in outsourcing finance operations. On the face of it, outsourcing can cut costs and remove some complexity, but it may also lock a finance function into a supplier where, in the long term, costs rise inexorably.

Chapter 10: Conclusion – A View of the Future
This Chapter takes a final high-level view at the issues that senior finance professionals need to be addressing during the next five years.