Controlling 4.0 – Management Control Processes and ... · Controlling 4.0 - Management Control...
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28.5.2015 I Congreso del ACCID - Barcelona I Heimo Losbichler
Controlling 4.0 - Management Control Processes and Controllers' Role of the Future
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Controlling 4.0 – Management Control Processes and Controllers'
Role of the Future
Heimo Losbichler ICV - International Controller Association
University of Applied Sciences Upper Austria, Steyr
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 2 Heimo Losbichler
Table of contents
§ Review § The pace of change in controlling - has controlling really changed so radically?
§ Outlook § Possible path to the future of controlling
§ Controlling 4.0 § Selected trends and potential consequences
§ Digitization § Gen Y
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 3 Heimo Losbichler
Radical change in controlling – illusion or reality?
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 4 Heimo Losbichler
How new are our controlling processes and instruments?
Modern Budgeting Fast Close Integrated Reporting, GRI IFRS Volatility Big Data
Industry 4.0 ...
? Future
Direct C
osting
1899
RO
I, Du-Pont-System
Strategic planning
Budgeting
1910-1930
Capital Budgeting
Cost of C
apital
1950-1965
Experience Curve
BCG
-Portfolio Target-C
osting
1970er
Shareholder Value
Six S
igma, E
FQM
A
ctivity Based C
osting
1980er
BS
C
1990 G
reen Controlling
IGC
-Processmodell
2015
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 5 Heimo Losbichler
Even the "New" was usually not so new!
„The message we bring is not new, but it is not as well understood or as widely practiced even today as it should be.“ Stewart, The Quest for Value, 1991, S. xxiii
„EVA is based on something we have known for a long time… I discussed EVA at considerable length in my 1964 book, Managing for Results, but the last generation of classical economists, Alfred Marshall in England and Eugen Böhm-Bawerk in Austria, were already discussing it in the late 1890s.”
Drucker P.: The Information Executives Truly Need, HBR, January-February 1995, S. 59
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 6 Heimo Losbichler
Planning and reporting were and are top priorities in the tasks of controllers
81
75
53
48
30
25
15
11
10
10
7
6
3
3
Planung, Budgetierung
Berichterstattung
Abweichungs-, Ergebnisanalyse
Rechnungswesen, Kostenrechnung
Finanzbuchhaltung
Allg. Betriebswirtschaft
Investitions-, Produktplanung, Wirtschaftlichkeitsrechnung
Beteiligungscontrolling
Finanzplanung
Organisation
Unternehmensstrategie
Erarbeitung eines Planungssystems
Revision
Aufbau eines Informationssystems
Source: Bornemann, Controlling heute, S. 25, 1986; Eisl, Losbichler, Hofer, Höfler, 2011
Tasks 1986
56
85
6
75
Tasks 2011
16
Planning, Budgeting
Reporting
Analysis of variances and results
Cost accounting
Financial accounting
General economic issues
Capital budgeting, investment appraisal
Controlling of subsidiaries
Cash budgeting
Organization
Strategic planning
Introduction/revision of the planning system
Internal auditing
Introduction/overhaul of IT-Systems
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 7 Heimo Losbichler
Ongoing issues – role change, automation, efficiency
Planning!and!
reporting!
Number crunching!
Integrated!systems!
Role change!
Process standards!and quality!
Analysis, business!partnering, projects !
More partnering, less number crunching, lower costs!
Source: 2005!
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 8 Heimo Losbichler
Ongoing issues – progress in IT: Big Data vs. Excel
Is the End Finally Near for Spreadsheets? § But despite advancements in enterprise applications, spreadsheets
have remained business users’ go-to app. That could be changing:
§ 63% say their spreadsheet tool does not offer a collaboration function
§ 55% say their spreadsheet tool does not offer permission management
§ 51% say their spreadsheet tool does not offer security control
§ Nearly 70% say their spreadsheet tool does not offer version control
Quelle: IMA-Newsbrief, 22.1.2015
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 9 Heimo Losbichler
Controllers gained influence and controlling is now a key component of management and financial control
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 10 Heimo Losbichler
Conclusion about past changes in controlling
§ Slow but deep transformation
§ Controlling and controller adapted primarily to the changing competitive environment and took advantage of new technological possibilities
§ Advancement of the role of controllers
§ Increased involvement and responsibility (sparring partner, Co-manager, ...)
§ Increased complexity (global, higher number of consolidation units, planning items, ...)
§ Faster processes
§ More and faster information
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 11 Heimo Losbichler
Table of contents
§ Review § The pace of change in controlling - has controlling really changed so radically?
§ Outlook § Possible path to the future of controlling
§ Controlling 4.0 § Selected trends and potential consequences
§ Digitization § Gen Y
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 12 Heimo Losbichler
Change of competitive environment
Cur
rent
suc
cess
Hig
h lo
w
high low
Controlling today
Today, controllers have a good position but no time to rest on their laurels
HR today
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 13 Heimo Losbichler
The cornerstone of controlling will not change: the management process of setting objectives, planning and control
Measureperformance
Setobjectives
Communicateinitiatives
Analyzevariances
Define initiatives
Management
Counter-initiatives
Execute initiatives
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 14 Heimo Losbichler
The cornerstone of controlling will not change: instruments are conceptually advanced and available in abundance
SCOR
BSC EFQM Performance Pyramid
Pro
cess
es
Lear
ning
C
usto
mer
Fin
anci
al
2 4 5
9 10 11 12 14
20 21 22
23
24 25
26 27
28 29
6 Increase
CSI
Maximizing value
Reduce costs
Increase Revenue
Faster service Reduce
throughput time
MBO Customer centric cultur
Tableau de Bord Value driver trees
Example: management cockpits
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 15 Heimo Losbichler
The likely path to the future of controlling
§ The cornerstones of controlling will not change § Management process of setting objectives, planning and control § Existing controlling instruments § Controllers as sparring partners
§ Who act free from emotions
§ Who actively support decision making and restrict managers as guardians of company interests
§ Need to adapt to the accelerating pace of change of the competitive environment § Instruments, IT, processes, organizational structure, roles, behavior
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 16 Heimo Losbichler
Table of contents
§ Review § The pace of change in controlling - has controlling really changed so radically?
§ Outlook § Possible path to the future of controlling
§ Controlling 4.0 § Selected trends and potential consequences
§ Digitization § Gen Y
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 17 Heimo Losbichler
Digitization will significantly effect controlling and controllers
§ Shared/Collaborative Economy § Instruments
§ Internet of Things - Industry 4.0 – Big Data § Reporting § Automation and the job of controllers
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 18 Heimo Losbichler
Traditional economic paradigms
§ Size as competitive advantage – Minimum Efficient Scale (MES):
Economies of scale Experience curve Entry barriers - capital requirement
§ Transaction cost as key-driver of vertical integration
Purchasing
Production
Sales
Fixed cost per unit
quantity accumulated quantitiy
A B C Competitors
(Mio. €) Groß Klein
Umsatz 1.000,0 10,0
F&E-Aufwand 100,0 1,0
Large Small
Revenues
R&E-Expense
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 19 Heimo Losbichler
The internet lowered transaction costs significantly
Size and vertical integration partly become obsolete
0
20
40
60
80
100
120
140
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Britannica hard copy sales
Quelle: Philip Evans, Ted-Talks, 11/2013
Wik
iped
ia la
unch
Web 2.0: User creation
Wikipedia pages (m)
4,0 Web 1.0
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 20 Heimo Losbichler
The „Shared/Collaborative Economy“ challenges existing paradigms
§ Fragmentation of „economies of scale“ across the community § Many individuals can achieve the same as large,
hierarchically organized companies (horizontal rather than vertical!)
Purchasing
Production
Sales
A B C
You have!
I need!
§ The changing nature of business § Direct rather than redundant § Shared access rather than ownership § Transparency § Increased utilization of assets and productivity
§ Gatekeepers and companies who do not add value will vanish § Banks vs. crowdfunding § Gault Millau vs. TripAdvisor § New business models at breathtaking speed
(many times in a legal gray area)
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 21 Heimo Losbichler
New business models at breathtaking speed
§ Airbnb § Hilton: 93 years to build 678,000 rooms in 91 countries § Airbnb: 4 years for the same number of rooms in 192 countries; 2014: +25,000,000 guests
§ Uber § 6 years: operating in 277 cities; $ 2 billion in sales § No drivers, no cars
§ Coursera
§ In 3 years: more than 25 million students from 190 countries § In the most popular course 240,000 students participated at the same time
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 22 Heimo Losbichler
We need to adapt controlling instruments to the changing environment: e.g. learning curve
§ Two types of experience § Fulfilling demand
§ Efficiency in operations
§ Shaping demand § Effectiveness in business development
Source: BCG Classics Revisited – The Experience Curve, 2013
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 23 Heimo Losbichler
0
20
40
60
80
100
120
140
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Wik
iped
ia la
unch
Web 2.0: User creation Web 1.0
Britannica hard copy sales
Source: Vgl. Evans
Connectivity of people (Facebook, ...)
Wikipedia pages
Dzt. ca. 5 Mrd. internetfähige „Dinge“
2014
20
15
2016
20
17
2018
20
19
2020
?
Total connectivity (people and things)
Internet of Things - Industry 4.0 - Big Data
5 bn of „internet-ready“ devices
today
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 24 Heimo Losbichler
Visualization: Eye-tracking can truly help to optimize reports
Which state increased its operating profit in 2013 in Euro the most?
Operating profit (in 1.000 EUR)
Operating profit (in 1.000 EUR)
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 25 Heimo Losbichler
... and provides reliable insights that make a difference
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 26 Heimo Losbichler
Analytics: increasing automation and the nature of the controllers’ job
§ What we know: § Increased automation in the future
§ Automation of the mind
§ Industrial revolution § Technological unemployment caused by mechanical automation § Mechanical alienation and tedious assembly line work
§ „Automation makes us dumb“ § Current questions
§ New unemployment in our controlling departments? § Digital alienation?
§ Do we have to submit to algorithms? § Digital Taylorism? § Monotony or enrichment?
§ How do controllers feel when they can no longer challenge analytics provided by IT-systems? § „A fool with a tool is still a fool“ or „A fool with a tool is cool“? § Push or pull?
§ Standard reports vs. Google-like queries of management?
§ 15h workweek? – „John Maynard Keynes – Economic Possibilities for Our Grandchildren“
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 27 Heimo Losbichler
Table of contents
§ Review § The pace of change in controlling - has controlling really changed so radically?
§ Outlook § Possible path to the future of controlling
§ Controlling 4.0 § Selected trends and potential consequences
§ Digitization § Gen Y
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 28 Heimo Losbichler
Gen Y - Millenials
§ A new generation pervades the labor market (born from the early 80s to the late 90s) § 2017: the age group with the highest
purchasing power § 2020: already almost half of workers
§ New values § Status symbol self-determination § Work life balance § Today and the immediate benefit counts § Time limited commitment rather than loyalty
§ Average employment: 2 years
§ „non-committal“ high potentials
§ Two worlds collide § 51% of executives say Gen Y has “out-of-line
demands“
§ How attractive are controller jobs for this generation?
April!
July!December!
January!
Oct
ober!
MR
MR
MR
MR
MR
MR MR
MR
MR
MR
MR
MR
6th WD
Financial statement 15th working day
Forecast 1
Forecast 2
Fore
cast
3
Controller‘s treadmill: fast close and time pressure
FH-OÖ Steyr
Controlling, Rechnungswesen und Finanzmanagement
Congreso del ACCID, Barcelona, May 28, 2015 | Controlling 4.0 – Management Control Processes and Controllers‘ Role of the Future | Seite: 29 Heimo Losbichler
Conlusion
§ Remarkable wrong predictions § „The car is a temporary phenomenon. I believe in the horse. “
Emperor Wilhelm II
§ „The Internet is a gimmick for geeks, we see no future in it.“ Ron Sommer, CEO Deutsche Telekom, 1990
§ Controlling 4.0 – management control processes and controllers‘ future role § No alternative to the concept of controlling (WHAT we do!)
§ Management process of setting objectives, planning and control § "The objective determines the journey" rather than "the journey is the objective" § Being prepared (agility), acting coordinated and aligned, making economically sound
decisions § Continuous adaption to the changing environment (HOW we do it!) § Many open questions
Creating future
Today Tomorrow
Forecasting future
Trends, changes
§ Wish § Controllers should actively shape their future role and not leave it to others