1、 Looking beyond Business Disruption: Hong Kongs technology-driven future A guide for finance functions to strengthen their operating model 2 Joint foreword 4 About the survey and interviews 6 Report highlights 8 Impact by business disruption 10 Key concepts of the finance target operating model (TOM

2、) 14 Deep dive in the Target Operating Model 14 Current state of technology adoption 18 People 22 Service delivery model 25 Finance operating model transformation and optimisation guidelines 29 Moving forward 33 Acknowledgements I. II. III. 1 Looking beyond Business Disruption: Hong Kongs technology

3、-driven future 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited (KPMG International), a private English company limited by guarantee. All rights reserved. 2 Looking beyond Business Disruption:

4、Hong Kongs technology-driven future 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited (KPMG International), a private English company limited by guarantee. All rights reserved. Traditionally, fi

5、nance teams spend a significant amount of their time on manual and routine activities. To help them work more efficiently, CFOs have started investing in technology to automate manual activities, improve business insight quality and digitalise workflows. The recent prolonged period of business disru

6、ption has been a catalyst for finance functions to review their operating and technology strategy. A transformation is required in the organisational structure, people policy and processes to allow finance functions to fully capitalise on their technology investments and manage team welfare. Since 2

7、018, KPMG China has closely collaborated with the ACCA (Association of Chartered Certified Accountants) Hong Kong to assess the current state and future plans of technology-related investments by finance functions in Hong Kong. This includes Hong Kongs Automated Future (2018), a report on how roboti

8、cs process automation could be used for manual and routine process, and Hong Kongs Data-driven Future (2019), which explored how finance can leverage analytical solutions to produce actionable business insights more efficiently and effectively. After these two thought leaderships, we observed a need

9、 for organisations to think beyond implementation of individual technologies and take a broader view of the impact on their Joint foreword Jane Cheng Head of ACCA Hong Kong Isabel Zisselsberger Partner - Strategy banking and finance (16 percent); retail (11 percent); professional audit and consultin

10、g (9 percent); insurance (7 percent); information technology and telecommunications (5 percent); healthcare and social assistance (4 percent); real estate, rental, or leasing (4 percent); hotel and food services (3 percent); and education (3 percent). These organisations comprised all sizes: 25 perc

11、ent generating annual turnover above HKD 5 billion, 17 percent between HKD 1 and 5 billion, 23 percent between HKD 100 million and 1 billion, and the remaining 35 percent under HKD 100 million. About the survey and interviews Manufacturing Finance however, a segment of respondents said technology co

12、uld not replace all activities (12 percent). Respondents on average gave a score of 6 out of 10 for the level of support their organisations provided them to effectively use the implemented technologies, upskill for role changes, and be aware of new technologies The most important skill sets that fi

13、nance professionals should possess in the next 5 to 10 years. Technical accounting and reporting knowledge Data analytical skills 15% 20% Technology skills Leadership and Project Management Office (PMO) skills 14% 17% 7 Looking beyond Business Disruption: Hong Kongs technology-driven future 2020 KPM

14、G, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited (KPMG International), a private English company limited by guarantee. All rights reserved. Challenges triggered by COVID-19 COVID-19 has brought unprece

15、dented impact and challenges to the global economy. Every element of the business has been significantly affected: rapid changes in customer trends, robustness of supply chains, pressure on managing remote workforce, and the strength of organisations liquidity and cash flows. Amid the unpredictabili

16、ty, one key to both business survival and future success is resilience throughout the entire enterprise namely, having an operating model that is sufficiently agile and effective to cope with all these changes. Businesses expect their finance team to support them in making agile decisions via faster

17、 and more accurate insights. However, many finance teams have faced formidable challenges during the recent business disruptions, preventing them from completely fulfilling these new expectations in addition to their BAU commitments. These are among the challenges companies must contend with in ligh

18、t of COVID-19: Impact by business disruption Emerging need to quickly provide and enhance infrastructure support for flexible working arrangements At the pandemics outset, many organisations had to implement flexible working arrangements within a short period of time. Our survey revealed that the av

19、erage score for the support finance staff received to work flexibly was 6.6 out of 10. This shows that organisations have generally coped adequately with these disruptions, but there is still area for improvement when finance staff encounter challenges. The most critical challenges are deemed to be

20、heavy reliance on paper (32 percent) as well as company culture/policy not supporting flexible working arrangements (24 percent). Other challenges include physical-access-only to confidential information (15 percent) and fundamental technological issues (12 percent), such as existing technological i

21、nfrastructure that does not support flexible working arrangements (e.g. no laptops, softphones, or VPN). 2 Higher pressure to deliver faster and more accurate insights, driven by liquidity concerns Organisations are facing significant pressures around their liquidity positions, resulted from lowered

22、 sales and late cash collections. Finance teams must closely monitor liquidity and working capital on a frequent basis and pay extra attention to manage the account-receivable process. Businesses also expect their finance teams to provide faster analytics to support agile decision-making, such as ne

23、w marketing campaigns to drive online sales. 1 Source: KPMG China and ACCA Hong Kong joint survey A B C D E 32% 24% 15% 12% 17% Processes are heavily reliant on paper (e.g. hard copy approvals/ documents) Company culture/policy does not support flexible working arrangements I work with confidentiali

24、ty information that can only be accessed physically A B C D E Existing technology infrastructure does not support flexible working arrangements Others What is the most critical challenge for you when working remotely? 8 Looking beyond Business Disruption: Hong Kongs technology-driven future 2020 KPM

25、G, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited (KPMG International), a private English company limited by guarantee. All rights reserved. The most common challenge, as revealed by the survey, is that

26、 their working process involves manual and labour- intensive activities (13 percent). Employees also find they only have minimal time for value-added activities (12 percent), such as providing accurate insights to the business for decision making. Other challenges include high operating/fixed overhe

27、ad cost; large volumes of reports to be produced; and an inability to hire talent with desired skill sets. Many of the challenges are closely tied to the different aspects of an organisations target operating model (TOM): that is, the technology, people and service delivery model layers, and how the

28、y align with the overall business strategy. The following sections address these areas in detail, including the adoption of technology support organisations amid disruptions and change, the required skill sets to align with future role changes in finance, and whether the service delivery model shoul

29、d be reassessed to better adapt to technology changes and disruptions. Challenges beyond COVID-19 Beyond COVID-19, finance staff traditionally have faced challenges in other areas. These challenges combined with the additional impact of the pandemic have affected finance teams ability to meet their

30、commitments and their businesses expectations. Preference towards the traditional ways of working That said, even among organisations that have implemented solid infrastructure support, many staff still prefer meeting face-to-face as they consider virtual meetings not as effective for carrying-out d

31、iscussions vital to finance activities, e.g. month-end closing. The reluctance to change and accept these new ways of working has limited organisations ability to act nimbly and make rapid operational changes to adapt to the new normal. 3 Service disruption due to lockdown of outsourced parties/SSC,

32、 and strong reliance on key personnel who may have taken ill For finance teams and organisational structures that are relatively lean, it is likely that domain knowledge for specific core processes resides with a few key staff. This poses a significant risk to business continuity if these staff beco

33、me unwell or are unable to travel to work. Smaller finance teams are particularly vulnerable as one team member may hold multiple critical roles. For larger finance teams that have delegated tasks (e.g. account-receivable and billing processes, data transfers) to SSCs or outsourced external parties

34、without proper business continuity planning, their BAU processes may be significantly impacted or even halted when specific locations are on lockdown. 4 These hurdles pose significant challenges for finance staff to access data and documents needed to complete their BAU work. Under the recent busine

35、ss disruptions, some employees have faced difficulties when working from home due to inadequate infrastructure support (e.g. unstable VPN). However, due to the potential health risks, it also restricts organisations to allow all staff to physically attend the offices to meet the regulatory timelines

36、. Hence, companies had to make agile decisions to implement interim solutions to manage such risks, such as split team arrangements. Manual and labour-intensive activities Minimal time for value-added activities Inefficient processes with multiple workarounds/ approvals Increasing complexity of regu

37、latory requirements Insufficient capability of existing employees/ resistance to change A B C F D G E Large volume of reports/ MI to be produced High operating/fixed overhead costs Lack of single source of truth due to multiple data sources Unclear accountability/ roles and responsibilities Unable t

38、o hire the right new talent Inaccurate forecasting H I J K 32% 6% 5% 5% 5% A B C D E F G H I J K 13% 12% 12% 12% 12% 9% 9% What are the top 3 challenges that you/ the finance function in your organisation encountered? Sources: KPMG China and ACCA Hong Kong joint survey 9 Looking beyond Business Disr

39、uption: Hong Kongs technology-driven future 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited (KPMG International), a private English company limited by guarantee. All rights reserved. What is a

40、 target operating model? A finance TOM is a conceptual representation of an organisations capabilities, its ways of working, and structures that support it in delivering its vision and strategy. It helps an organisation understand how to efficiently and effectively deliver its value proposition, mai

41、ntain governance structure, ensure compliance, and execute its strategic priorities. KPMG China and ACCA Hong Kong have defined six design layers of TOM that relate closely to one another to create an integrated and highly functional solution for the organisation. For finance in particular: Key conc

42、epts of the finance target operating model (TOM) 10 Looking beyond Business Disruption: Hong Kongs technology-driven future 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited (KPMG International)

43、, a private English company limited by guarantee. All rights reserved. In the previous published reports, KPMG China and ACCA Hong Kong looked into Technology and Data. Our focus shifted to People and Service Delivery Model in this report to provide insights on how they connect with each other and a

44、ffect the other layers to form a complete view of the operating model. We will take a closer look at these two layers in the next sections. Process How finance processes (e.g. budgeting and forecasting process, payroll process, financial statement consolidation and disclosure process) are carried ou

45、t Performance insights and data Information requirements, KPI framework, structure, and data analytics to drive key business insights and enhance decision- making (e.g. financial and management reporting, forecasting) Service delivery model (for details, please see page 13) Service framework that de

46、fines who, what, where and how to optimise finance service delivery quality and minimise operational costs People (for details, please see page 12) Business elements and activities around people, including organisational structure, recruitment, performance, capability, support and training Technolog

47、y Technology, environment, application and integration that an organisation requires to support the execution of processes and generation of reports (e.g. ERP system, workflow solutions, reporting tools, automation, laptops and VPN access) Governance Appropriate governance and control policies to mi

48、tigate operational risk and enable agility through timely and effective decision-making (e.g. accounting policies, corporate governance framework) 11 Looking beyond Business Disruption: Hong Kongs technology-driven future 2020 KPMG, a Hong Kong partnership and a member firm of the KPMG global organi

49、sation of independent member firms affiliated with KPMG International Limited (KPMG International), a private English company limited by guarantee. All rights reserved. People The People layer within the TOM defines competencies, skills, culture and performance expectations for the people within the enterprise, including incentives and talent management. The following are the key areas of consideration within the layer: A structured organisational hierarchy with clear reporting lines, accountabilities, roles and respons