What, Exactly, is “Decision Support” Within the Finance Function?
By: Phil Searle, Founder and Managing Director, Chazey Partners Ltd.

Based on definitions of the words “Decision” and “Support” from the Compact Oxford English Dictionary, “decision support” could be defined as, “The assistance given to help consider, reach and confirm a particular conclusion or resolution”.

Decision support should operate to support a company’s commercial and strategic functions and goals. The role of finance decision support requires strong financial acumen that helps the business to make better informed decisions. Decision support should be able to carry out fast and accurate analysis of, and commentary on, key business drivers and parameters that impact future profit and revenue growth. The function should be able to challenge and validate assumptions made, and provide “what if” type analyses on expenditure and investment proposals.

Decision support must not become what I refer to as “decision rubber stamping”. This is where no additional value is added to a decision, but rather there is just a form of “finance sign off” without any real challenging and testing of a decision and without additional thoughts and recommendations being provided to the ultimate decision maker on how the desired outcome might be best achieved.

It is very important to remember that a company has to invest in providing decision support services. There is no specific set of legal or tax reasons why there has to be a decision support function and set of services. Suppliers and employees will still get paid, and money will be collected from customers without it. Indeed, some organizations operate with little or no decision support and just leave the decision solely with the business. The key, therefore, is to maximize the ROI in providing decision support, as with any investment. And having a qualified, experienced finance professional copy numbers from one spreadsheet into another does not provide good ROI!

Finance decision support could be responsible for some or all of the following services:

• Financial and operational planning, budgeting, forecasting and analysis at the operational level
• Detailed performance commentary on results
• Margin, profitability and variance analysis
• Business case analysis for new products, markets, marketing plans, etc.
• Expenditure and capital investments
• Resource optimization
• Support for long-term strategic decisions
• Sales incentive plan design and control
• Discount approvals, pricing analysis, and approval of rebates or other claims programs
• “What if” and sensitivity analyses
• Operational ownership of master data hierarchy (profit centers, cost centers, etc)
• Finance support for merger and acquisition due diligence and post close integration

Front-office decision support has sometimes been left alone, or out-of-scope, when looking at finance transformation, with the focus instead being on the more transactional, administrative and compliance functions, and optimization through implementing new Enterprise Resource Planning (ERP) technologies, shared services and outsourcing. While these have undoubtedly added significant value, they don’t address much of the real benefits that can be achieved from understanding the broader role of finance, and the specific requirements and benefits that can be obtained from effective decision support.

But the opportunity is there. Many organizations have recognized this, and continue to improve year after year.

Phil Searle is the Founder and Managing Director of Chazey Partners Limited, which provides business advisory services in Finance, Shared Services, Business Process Outsourcing and Technology. Prior to establishing Chazey, Phil for nearly 20 years held operational roles in Finance and Shared Services, including Group Vice President and CFO of Cendant TDS’s International Markets Division and Corporate Controller and Head of Worldwide Financial Shared Services at 3Com Corporation. He is a frequent speaker and chairman at Shared Services events around the globe, and has published a number of articles on shared services, outsourcing and technology enablement. For more information, or if you have any questions, please contact Phil at either pasearle@hotmail.com or philsearle@chazeypartners.com

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One of the key goals of decision support is to help the business make solidly informed decisions on myriad factors such as pipeline prioritization, budgeting and forecasting, product pricing, product roll-outs, and marketing and recruitment campaigns. Informed decisions should be based on accurate enterprise-wide data wherever possible. Therefore, a critical requirement is deployment and utilization of a common ERP platform or reporting tools – whether it is SAP, Oracle or another third-party solution – across your operating geographies.

Second, have dedicated – yet well connected – reporting groups and decision support teams comprised of highly-trained specialists. And make certain the roles and responsibilities of each of these teams and the individual team members are clearly defined.

And third, ensure your reporting group and decision support team members are fully leveraging the power of the enhanced data reporting tools in your selected ERP platform. These tools, together with the dedicated reporting specialists, are key enablers of effective decision support. When the reporting group utilizes the tools to present the required data in a standardized, accurate and user-friendly format, the decision support team has at its fingertips the information needed to help make business-critical decision recommendations.

Reporting group team members don’t necessarily need to be technical in nature, but they must be very adept at understanding the company’s business and decision support requirements, and generating the relevant data via the chosen ERP-based or other reporting tools. They should also understand the critical importance of generating reliable and accurate data…otherwise the decision support team members will not be able to make correctly informed decision recommendations.

Decision support team members are often more commercially-minded specialists who enjoy interaction with the front-end of the business (sales, marketing, etc.) and the management team. They should be highly skilled in analyzing and interpreting the data generated by the reporting team and/or system, and working with the organization’s management team to make an informed decision on the given issue. Commercial acumen is an important characteristic for decision support specialists, as it gives them the credibility necessary to present their recommendations to the organization’s management.

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