Government Finance Profession Annual Conference 19 th and 20 th November 2009 Margaret Ewing Partner and Vice Chairman Deloitte Managing Out of a Recession.

Government Finance Profession Annual Conference 19th and 20th November 2009

Margaret Ewing

Partner and Vice Chairman

Deloitte

Managing Out of a RecessionPerspectives from the Private Sector

2 © 2009 Deloitte LLP. Private and confidential

Managing Out of a RecessionPerspectives from the Private Sector – Overview

• Perspective of the Private Sector CFO Today

• Priorities for Finance Today

• Your Key Challenge - Lessons from the Private Sector

• What Next?

Perspective of the Private Sector CFO Today

Managing Out of a RecessionPerspectives from the Private Sector

4 © 2009 Deloitte LLP. Private and confidential

Deloitte CFO Programme – access to and insights ofCFOs of UK’s major corporates

Deloitte quarterly UK CFO survey:

• launched September 2007

• the benchmark of UK corporates’ financial appetiteand attitudes

• regularly cited in the quarterly Bank of England's Inflation Report and key financial media etc

• early survey results provided to brief BoE's Monetary Policy Committee

• 120 CFOs, accounting for 27% of quoted market, took part in 2009 Q3 survey

Managing Out of a RecessionInformed

5 © 2009 Deloitte LLP. Private and confidential

Managing Out of a RecessionOptimism

Net % of CFOs who are more optimistic about financialprospects for their company now than three months ago

Financial prospects

6 © 2009 Deloitte LLP. Private and confidential

Managing Out of a RecessionFinancial Risk Decreasing

Net % of CFOs who think financial risk on their balancesheet has increased over the last 12 months

Financial risk

7 © 2009 Deloitte LLP. Private and confidential

Long term effects of credit crunch

Managing Out of a RecessionLasting Change

% of CFOs who expect the following to happen

8 © 2009 Deloitte LLP. Private and confidential

Managing Out of a RecessionEmerging Recovery Response

Corporate strategies

% of CFOs following or likely to follow thestrategies below in light of the expected upturn

Priorities for Finance Today

Managing Out of a RecessionPerspectives from the Private Sector

10 © 2009 Deloitte LLP. Private and confidential

Priority to date – “steadying the ship”

• Focus on cash, funding, working capital and costs

Priorities tomorrow – being addressed TODAY• Information for decision-making• Business partnering• Delivery of sustainable cost reduction

But fundamental and urgent requirement • Increased focus on Finance talent agenda• Developing wider skills and relevant capabilities within Finance

Managing Out of a RecessionFinance’s Role in the Private Sector Transition

11 © 2009 Deloitte LLP. Private and confidential

Treasury told public sector can save £9bn

The public sector can make another £9bn a year of efficiency savings by

2014, reviews commissioned by the Treasury have concluded.

Cost-cutting authority is a taste of things to comeMany Conservative councillors and activists are privately enthusiastic about the possibility of major changes to public services so as to make it possible to cut

costs............

Gordon Brown's fire sale

of public assets to raise

£16bn

Managing Out of a RecessionFinance’s Role in the Private Sector Transition

Your Key Challenge – Lessons from the Private Sector

Managing Out of a RecessionPerspectives from the Private Sector

13 © 2009 Deloitte LLP. Private and confidential

Own the agenda

• Manage scope of review• Create timelines and schedules

Manage process

• Manage analyse and assess process• Drive regular review process

Boss the numbers

• Lead opportunities assessment• Own reporting and tracking mechanisms

Empower the business

• Provide training in cost management tools/ techniques• Centrally source and provide benchmarking data

Drive communications

• Ensure that cost management gets constant visibility in organisation

Shape policy• Set and enforce critical policies: delegated authorities,

spend approval limits and policies

Managing Out of a RecessionSustainable Cost Reduction – The Role of Finance

14 © 2009 Deloitte LLP. Private and confidential

Strategist /Catalyst

Source: Deloitte Research

Managing Out of a RecessionFinance Characteristics – The Four Faces of Finance

Steward /Operator

35% 40%

25%

Low

High

Low High

Strategist / Catalysts

Finance d’vpmt path

Laggards Mediocres

FinanceFunction

What Next?

Managing Out of a RecessionPerspectives from the Private Sector

16 © 2009 Deloitte LLP. Private and confidential

Finance has leading role to play as we manage out of a recession – in private and public sectors

Challenges facing finance professionals have many similarities in both sectors – but some key differences

What can you do to play your part?

• Improve your capabilities and skills in understanding relationships between:

- costs and outcome

- forecasting and planning

- business partnering and relationship management

• Provide leadership within your Department, particularly around prioritisation of programmes and services in context of reducing expenditure

Managing Out of a RecessionWhat Next?

This document is confidential and prepared solely for your information. Therefore you should not, without our prior written consent, refer to or use our name or this document for any other purpose, disclose them or refer to them in any prospectus or other document, or make them available or communicate them to any other party. No other party is entitled to rely on our document for any purpose whatsoever and thus we accept no liability to any other party who is shown or gains access to this document.

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu ('DTT'), a Swiss Verein, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTT and its member firms.