Finance transformation
In a growing number of sectors the traditional view of finance as an inwardlooking function disengaged from the rest of the business is starting to become obsolete. For other industries, however, it has proven a slower process
acquisition of MedImmune in 2007 that saw the company suddenly operating with net debt for the first time in working memory, also brought sharper focus to bear and helped define the role Kenyon and his colleagues could play.
While “business partnering” has been a popular buzz term for some time, those looking to embed what can be quite a revolutionary shift in mentality often struggle to find support. Seen by many as more of a hindrance than a help – dogmatic realists rather than ambitious visionaries – the idea that finance might actively support strategy, decisionmaking and operations elsewhere in an organisation does not sit naturally with all stakeholders. It is therefore the task of the function to prove its credentials.
‘In pharma it’s the big events that act as a catalyst for change,’ he says. ‘If we’re talking about an acquisition, the management team is on the hook for delivering the synergies it’s promised and ideally a bit more. If it’s a major patent going or the failure of a late-stage compound, how are we going to help cover that loss?
Having the capability to do so often requires a great deal of restructuring. Freeing up individuals to align their roles more closely with core business activities involves the removal of existing responsibilities as well as the addition of new ones, the rationalising of systems and processes, and a clear definition of roles and responsibilities. The cutting of costs can prove a great initial driver for change, an aspiration people from across the enterprise will get behind, but in a business of high margins bringing others onside is more of a challenge. This has traditionally been a problem faced by the pharmaceutical industry, which has lagged behind other sectors such as consumer goods when it comes to harnessing the power of business partnering. ‘We haven’t been dreadful at managing costs in the past but it hasn’t been pharma’s top priority,’ acknowledges AstraZeneca’s Paul Kenyon. ‘For a long time we were in a period of strong growth, and when you combine strong growth with high margins the focus, rightly, is on growing the top line.’ But that is starting to change. The operating environment has become more competitive and the pharmaceutical and biologics giant’s SVP of group finance describes AstraZeneca as being perched on the edge of a “patent cliff”, with a number of its most profitable proprietary products set to be released on the generic market over the coming years. M&A activity, including the $16 billion
‘The drug discovery and the regulatory environment have become more challenging, so there’s been an increased
‘Structured development is an essential element of putting the right people in the right places and allowing individuals to play to their individual strengths.’ focus on cost and value. Finance now has a clear role to play in terms of helping the business understand what we need to do in order to deliver on both fronts.’
Inspired into action
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into global centres of excellence and freeing up their people to focus exclusively, or as exclusively as possible, on business partnering and decision support. It was a case of refocusing various parts of the finance organisation on more specific agendas.’ The company has some 1,600 people working across the finance function, which is focused on three core roles: specialist finance, transactional finance, and business partnering and support. The first of these has been embedded in global centres of excellence, while many elements of the second are now outsourced through Genpact. The move from generalists to specialists can be a seismic cultural shift and Kenyon admits that it requires work winning over hearts and minds. ‘It is fair to say that some senior finance leaders were resistant to having their jobs broken up,’ he says. ‘A CFO in a large market or region with ownership of pretty much the entire scope of the function may see transaction processing pulled out and specialist resources going to a separate organisation. What he or she is left with may not be what they signed up for. You need to win those people over quickly, but they invariably either become comfortable or move on.’ In order to accelerate the process, a major investment has been made in people and skills. This not only involves getting internal stakeholders onside but also recruiting individuals with first-hand experience of having travelled a similar route. ‘In the main, the bulk of finance got behind this quite quickly,’ Kenyon claims. ‘This was helped by the fact we have also been refreshing our talent pool and have brought in a lot of people from consumer goods. That is a path finance went down many years ago and having employees come in who can reassure those around them is invaluable in terms of pushing things forward and gaining acceptance.’
Finance-driven business partnering at AstraZeneca can trace its routes back to 2007. Kenyon clearly takes great pride in how much has been achieved thus far, but is equally adamant that success has not required reinventing the wheel. While such integration may remain unusual among a number of his competitors, inspiration was derived from a number of sources elsewhere.
Shared expertise
‘To be honest, this wasn’t driven by any phenomenal insight,’ he says. ‘We saw that a number of multinational finance functions were going down the path of trying to strip-out transaction processing and consolidating specialist disciplines
But profiting from others’ expertise needn’t necessarily focus exclusively on importing talent. While AstraZeneca has done some work with consultants, Kenyon is a firm believer in the benefits of finding answers for oneself and looking towards more informal channels for guidance. Excellence in Leadership