Finance as a Business Partner: Lessons from the BBC

Trends favouring business partnering

Commercial organisations have been critically examining their finance functions in recent years to determine how best to align them with changing business needs. The pressure to evolve has come from the commoditisation of transaction processing and to some extent technical expertise. Technological improvements in communications have meant that far flung organisations, in India for example, can process transactions far cheaper and more efficiently than some UK companies can in-house.

Expertise in accountancy issues was once considered enough for middle management positions in finance but this is no longer the case. Everyday accountancy queries can also be outsourced so senior management positions can only be justified for finance staff capable of applying their accountancy expertise to solving business problems, thereby demonstrating their value to the business.

Finance departments that operate as effective business partners can add significant value by improving the quality of decisions and ensuring that the chosen business option delivers the highest financial value at an acceptable level of risk. This is not about delivering highly technical or complicated analysis but more a matter of supporting business decisions with the right analysis, insights and judgements so that better decisions are made.

Besides adding value to the business finance staff will also benefit from performing broader roles and offer them more professional satisfaction and an opportunity to apply their skills on a wider business canvas.

The BBC has established itself as a world-class and highly recognised brand worldwide and is known for its quality, reliability and creativity.

As the pace of change increases in the media sector, we face significant challenges to our licence fee-based funding and increasing audience demand for content on mobile platforms. As a publicly funded UK broadcaster we are also constantly subject to media scrutiny and must respond to the high standards of compliance required of us, be they on the editorial or financial fronts.

Our Finance Function is also required to respond to these challenges and issues by ensuring that the basics run seamlessly and by supporting our operational colleagues with the right business advice.

Our business colleagues expect transactional activity and management reporting to work seamlessly and would like greater support and creativity from their finance staff in managing their constrained finances and in addressing business issues, such as:

• What are my options, challenges and risks in financing this programme/service or in undertaking this project?
• What are the analytical techniques available to me in tackling this issue and how can I best deploy them?
• What is good practice in this area both internally and externally?

This is where the concept of finance as a business partner comes into its own. Business partnering is about the ‘effectiveness’ of the finance function. For us it is about shifting the focus of finance’s relationships with the business divisions so that finance is seen as a valued partner in the delivery of shared objectives. External evidence shows us that organisations that have successfully embedded business partnering have been able to deliver better decisions leading to value creation and competitive advantage.

The BBC’s approach to business partnering

Structure

At the BBC, over the past three years, the finance function has been through an extensive transformation programme and has emerged a much tighter and more focused operation. Our current structure separates out the back, middle and front office services as set out in figure 1.

We have created an in-house shared service centre to manage the accounting, reporting and running of financial systems; transaction processing has been outsourced and the total cost of running the finance function has fallen by 45%. Our outsourcing arrangement has been a big driver of the current lower cost structure and was achieved through a staged process:

• Re-engineering of our core processes;
• Determining what would be managed in house and the how/where to do so;
• Developing a clear set of parameters for outsourcing and wrapping it into a second generation outsourced contract with a much higher proportion of activities being externally run.

At well under 1% of the BBC’s annual income the running costs of our finance function benchmark very favourably against external best practice. Consequently, we are now confident that we are nearing the end of our journey on "efficiency". However, we still have some way to go in terms of effectiveness. Our view is that business partnering will enable us deliver improved effectiveness.

Our finance staff embedded in the business divisions, and those based in the slimmed down central finance team, are now required to perform a primarily advisory role. We have an experienced team of professionals with decision support capability at the centre. They work across the business divisions and are tasked with bringing rigour and consistency to cross-divisional business issues, from setting definition, measurement and reporting frameworks for the current five-year efficiency programme, to providing investment guidelines and associated training on how to use them (Figure 2).

Business Partnering in Practice

The BBC’s current five-year efficiency programme has provided a unique opportunity for Decision Support (DS) team members to partner with the divisional finance directors and finance partners. DS set up the definitions aligned with Treasury guidelines, engaged NAO experts to challenge and test the initiatives being put forward by business units, designed and implemented a quarterly executive reporting pack and a consolidation tool for divisional initiatives to monitor progress against targets. Perhaps the most fun and challenging of all, they developed and delivered a training module to c.80 finance staff to ensure clarity on the definitions and measurement and governance of the programme. Case studies and video footage of good practice around the BBC were used to illustrate the point. The deployment of DS skills in this manner has been a very successful engagement with clear business benefits for the BBC.

Case study of business partnering

The creative heads in our TV division developed an idea for a multiplatform programme offering with a strong web based element drawing on material in the BBC archive. While the Commissioner involved was persuaded by the idea and its benefits for audiences, there were a number of challenges in delivering the outcome. These included the reporting of the costs under the service licence regime which was set up to capture costs by channel, the specific audience measures that could be used to track audience response and the ‘value’ measures that could be used to prove to the commissioners that the proposition should attract further investment.

As part of the business partnering initiative, a cross-functional team representing production, archiving, commercial and finance worked together to tackle the issues and developed a joint implementation plan. This approach to solving a live business issue helped deliver a solution that was forward thinking and took account of future developments thus ensuring that it will stand the test of time.

In contrast, a traditional silo-based approach would have failed to connect up the views of key contributors across the different functional areas of commissioning, production, commercial and finance and as a result would have run a high risk of failure. Some strong cross-functional working relationships have also developed as a direct result of this exercise.

Initiatives

Our business partnering initiative is in its early stages and is aimed at improving the quality of advice provided by embedded finance staff and also the alignment with business issues. A mix of short- and long-term interventions is being driven by the central DS team. Our short-term initiatives are tactical in nature and include:

• Workshops for senior finance staff and operational management from the production and commissioning communities. At these the concepts of business partnering are explored using specific BBC case studies. While centrally driven, these workshops are intended to sow the seeds of a new working relationship between the finance community and the business units. Senior operational management are being encouraged to expect a broader range of skills from their finance counterparts and to demand their involvement in commercial and strategic decisions. External speakers from organisations with advanced business partnering models, for instance Unilever and BP, were also invited to discuss their approach and experiences at these sessions.

• Bespoke training on problem solving and commercial thinking. We have run this course on a tactical basis for a small group of senior finance representatives as a test run.

Our longer term plan is to develop a single, consistent finance skills framework that can be used to identify skills gaps and feed into an evidence-based training plan for the finance function. This framework is at an advanced stage of development and we are currently taking feedback from finance and non-finance staff on it. We intend to incorporate it into our core HR processes with multiple benefits, from:

• offering a common language to benchmark performance
• identifying the right skills and talents for a changing BBC
• feeding into informed training and development plans
• enabling development of clear and consistent performance expectations
• enabling the BBC to reward good performance.

Critical success factors

We sought feedback on our appetite for business partnering by speaking to leaders of our embedded finance teams and found most wanted the BBC to move from being reactive in its decision making to being more proactive. Comparison with external organisations, such as, BP, Unilever, GSK, BT and Diageo has shown us that business partnering takes time to embed, and requires commitment and endorsement from senior operational and financial management to ensure success.

Figure 3 sets out the factors that ensure success:

• An implementation plan that is part of existing business processes and built into divisional and individual objectives. It should be bought into and communicated to all finance staff and the business units. We are increasingly achieving this at the BBC.
• Focusing on skills development. Our short- and long-term interventions are very much around identifying any skills gaps and tailoring development solutions in response to them.
• Developing champions. These individuals can ensure a strong focus on business partnering interventions and can be celebrated for their successes. This initiative is in its early stages.

We believe that senior finance and divisional management support in early-stage involvement of finance staff, backed up by investment in development of capability, will pay dividends in improved decisions. Once the demand for business partnering has been created our finance staff will be required to meet the higher standard set by business unit heads and senior management. This is where a good pool of staff with relevant skills is essential to follow through.

Measures of success

Business partnering benefits can be measured in both qualitative and quantitative terms. The quality of decisions and outcomes on business decisions can be examined for value added from finance interventions. The financial benefits of decisions can also be measured by using proxies where market values may not be available. For instance, where guidelines or frameworks have been developed in-house, a financial value can be attributed in the first instance to the cost avoided by not outsourcing the activity, using consultancy rates as a measure. The additional benefits of applying the framework, in terms of the outcomes, e.g. consistency, accuracy and reputation benefit can also be quantified using a relevant proxy. In commercial negotiations, e.g. those involving service contracts, the financial benefits are very tangible and can be more readily quantified.

A true business partnership will be established when finance staff can demonstrate clarity on organisational priorities and strategies to their operational colleagues and can jointly develop flexible solutions that optimise value and are aligned with strategy. This takes time and from personal experience there is no substitute for proving the case through specific interventions.

Another way to kick-start business partnering is to have champions in the business units. These individuals will have the passion to seek out business partnering opportunities and to apply best practice from within and outside the organisation. The role of champion can be rotated across the business and those playing this role effectively can be recognised publicly for their contribution.

The ultimate measure of success will be positive feedback from the business units and a request for finance involvement at the start of business transactions rather than as a financier of agreed outcomes.

Besides adding value to the business, finance staff will also benefit from performing broader roles and which will in turn offer more professional satisfaction.

Conclusions

BBC Finance is on an irrevocable journey to deliver a more effective function with business partnering at its core. We are committed to investing in the development of capability where gaps exist and to learn from internal and external good practice. Our ultimate tests will be positive feedback from our business leaders on the quality of our service, and the market’s view of BBC Finance as a destination of choice for talented finance professionals.