WITHIN THE NEXT FIVE YEARS, FINANCE WILL OPERATE DIFFERENTLY Member of the Team that gives DIRECTION, comes up with strategy and evaluates the structural content of the organization. NEW TOOLS: JIT, CAD/CAM, ABC. ABMS, TQM, FMS, CI, TC NEW MEDIUM: Computers - PC- Networks - “The Virtual Close” - AA Instant Info FLT ANALOGY SHOWS IN TROUBLE BUT NOT WHY; NO CAUSALITY

1. THE CHANGING ROLE OF THE CFO:BECOMING A STRATEGIC BUSINESS PARTNERCFO Alliance- BostonBreakfast Roundtable July 7, 2009 LAWRENCE P. CARR, Ph.D. PROFESSOR OF MANAGEMENT ACCOUNTING BABSON COLLEGE

2. Full Size Half Workers Blue Collar/white collar Worker focus Knowledge worker Longevity & seniority Rewards Performance Functional hierarchy Structure Networked Large Scale Flexible Organization Mergers & acquisitions Economic relationships Strategic alliances Paper Communications Electronic Formal plans Plans Visioning Tangibles Value Intangibles Mass Distribution Targeted Management Control Management Coordination Multinational Competitive calibration Global Support Information technology Enabling 1960 1975 1980 1995 2010 Today's Managerial Challenges Production Orientation Customer satisfaction Industrial economy Transitional economy Information/service economy Period of “creative destruction”

4. COMPLEX

5. MOSTLY INDIRECT COSTS

6. SYSTEMATIZED

7. STRATEGIC MANAGEMENT

8. CONTINGENT-FLEXIBILITY

10. SIMPLE

11. MOSTLY DIRECT COST

12. COMPARTMENTALIZED

13. SCIENTIFIC MANAGEMENT

14. OPTIMIZATION

16. THE CHANGING ROLE OF THE CFO:What is your opinion? Circle your choice FUNCTION Traditional----1-------2-------3-------4-------5-----Emerging Overall Role Watchdog Analyst Information Base General Ledger Integrated Database Methods Full Cost Incremental, Direct Attributable Cost Output Inventory Valuation Decision Support Financial Reporting Frame of Reference Historical Strategic Style Autocratic Consultative Orientation Functional Integrative Skills Accounting Interdisciplinary Organization Staff Team member, Liaison

17. THE CHANGING ROLE OF THE CFO: Where are you on the spectrum? Traditional Emerging A staff specialized in a hierarchy A team player, a partner A data gatherer, score-keeper analyst A data gatherer, score-keeper, and analyst (more real time, more diverse data) An interpreter of the past Concerned with the future A commentator Focused more on recommending actions A policeman Empowering & helping others The bearer of bad news Accountable for team results A preserver of the accounting system’s Customer oriented to serve both external & accuracy and completeness internal customers