Growing Decision Volume Exposes Broken Model
The analysis also revealed that most business managers responsible for making such exceptions are operating in a vacuum. Twenty-two percent don’t consider a single financial implication when making such a decision. These factors translate to a company with $5 billion in revenue sacrificing upward of 3 percent of earnings through poor decision making across the thousands of material business decisions it will face each year.
“The current model of financial business partners aligning to stakeholders lacks the level of expertise needed to provide support on the specific decision types faced by midlevel managers,” said Mr. Rathindran. “Unfortunately, 77 percent of companies we surveyed are still aligned to the stakeholder-based model.”
Redefinition, Not Reorganization
In order to plug the leakage of margin and profits associated with poor financial decisions, Mr. Rathindran outlined a new model that provides managers support tailored to each specific type of financial decision they encounter. The transformation to a decision-expert model can be phased in with as little as 20 percent of a company’s financial planning and analysis team. It requires no additional placement of finance team members with business units compared with a traditional approach.
“Focusing on changing behaviors of finance business partners is the most effective and fastest route at providing the type of support managers need to make effective financial decisions,” said Mr. Rathindran. “Finance departments can start small and see an immediate impact. When they evolve to a decision-support model these finance organizations can more than double their effectiveness in making appropriate financial decisions.”
More information on the characteristics that define decision support experts can be found here:
More data and detailed analysis is available in the ebook Transform Finance Business Partnering (free registration required). Gartner’s full research on the effectiveness of switching to a decision support model is available to Gartner for Finance Leaders clients.
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