The finance function is transforming into one that plays a much more strategic role in a business than ever before. Too often, the role of finance is to look backwards and report on what the business has done. Today, more than ever, the finance function is tasked by the business with a forward-looking brief, forecasting and helping senior leadership to plot a path forward. Instead of looking in the rear-view mirror, now their role is critical in helping to drive the business and navigate the road ahead.
If finance’s ultimate objective is to be a business partner, it needs to be able to bring insights to the CEO and the board such as: what markets should we be going into? What customer insights are we getting? Where should we invest our capital?
It may sound simple but in terms of approach it amounts to a 180-degree turn. In the past, it wasn’t uncommon for a CFO and finance function to spend 60 per cent of their time looking at historical reports, safeguarding assets and overseeing compliance and controls. A modern digital business needs them to flip that percentage to at least 70 per cent of the time looking forward, focused on planning, budgets, and forecasting, providing action-led analysis enabled through real-time reporting and insights delivered through a modern flexible and agile digital platform.
Deciding on the direction of change
To achieve this turnaround, the finance function needs to address three areas: technology, processes, and talent. Let’s look at each in turn by thinking of some key questions. In the case of technology, a CFO or finance leader might ask: are the existing legacy systems providing the right data that can guide the business to better decisions? Are those ERP systems nearing the end of their life and could this present an opportunity to migrate from those platforms and adopt more agile tools?
One common scenario with many finance teams today is a high level of manual workarounds that are needed to produce reports. It’s common to find teams dedicated to creating lots of spreadsheets using information extracted from the core finance system which is not built for those kinds of quick calculations.
A large-scale ERP implementation in the cloud can address many of the longstanding issues facing finance today. It gives finance leaders the flexibility they will need into the future, giving them a faster and more efficient platform to run the finance function while also meeting all compliance and regulatory requirements.
Data analytics puts finance in the driving seat
Gathering all of the key business data in one place such as a cloud-based ERP speeds up month-end reporting but, importantly, also makes it easier to run analytics that deliver insights back to the business in an easily digestible format. We have worked with clients to understand their requirements and use visualisation software and data wrangling tools to present relevant information in a user-friendly display.
This is a significant time saving for the finance team because it would no longer need to pore over financial statements manually to identify trends or uncover issues. Most importantly, when vital information is at the fingertips of senior leadership, they will be able to reach the right decision faster, supported by data.
The process imperative
The second pillar the finance function needs to address is process. When the finance function starts to embrace digitisation of its processes, it can capture greater quantities of high-quality data more easily. Having this level of detail can makes it easier to track costs, identify potential areas for saving and investment and improve processes end to end.
Other enabling technologies for finance to consider for its processes could be robotic process automation (RPA), which can take some of the tedious manual tasks away from the finance team.
With process, a good question to start with is by asking: can the finance and accounting team close its month end virtually? This has become more of a necessity during the extended periods of working from home during the height of Covid-19 restrictions. Adding automation to the regular processes reduces the risk of needing to re-enter data into systems manually, and the extra time needed to check for errors.
Another aspect of processes is in global shared services. Many large organisations duplicate their finance functions across multiple sites, but there is an opportunity to look at setting up a global shared services centre where the most suitable talent is working from one place, serving multiple locations. When this happens, businesses benefit from the shared knowledge as well as the economies of scale.
The changing skills requirement
The third way the finance transformation agenda impacts people is the talent pool and their skillset. Before, a finance professional was prized for their ability to pour over a set of accounts and spot detail, or to work wonders with Excel. Through investments in advanced technologies, finance is undergoing a shift from being reactionary and transactional to becoming a more proactive and analytical function with the agility to respond to business needs as they arise. As there is a shift in finance delivering less transactional processing and more analytics and insights, skillsets needed are evolving as well. Finance leaders are striving to develop their teams with related competencies to help them cultivate data-driven or data-based analytical thinking.
Finance will continue to evolve through improving data infrastructure, automating as much as possible, understanding the business, and increasing its technical and analytical skills
While upskilling talent is an essential ingredient to any future workforce plan to align finance talent to the promise of tomorrow’s technologies, reframing the finance role to include more non-traditional skill sets can be just as essential to the evolving financial landscape. Automation and the promise of disruptive technologies may allow finance professionals to not only develop required finance skills but also to broaden their role into storytellers, interpreters, and more strategic business partners.
We have worked with clients to assess the skills their finance workforce has today, map those capabilities to the ones it will need in the future, and develop a strategy either to hire for these roles or work with a partner to deliver and operate this capability as an add-on to the finance function.
Finance will continue to evolve through improving data infrastructure, automating as much as possible, understanding the business, and increasing its technical and analytical skills. There is no technology or analytics nirvana. No company or finance function is ever completely ready for the risks, disruptions, opportunities, and innovations that the digital age will continue to manifest, but organisations can prepare to meet challenges head-on more effectively in this exciting new world for finance.
By taking the steps of a managed modernisation from legacy systems to the cloud, consolidating data into a single system, analysing that data for insight, and equipping teams with the skills, finance leaders will have the foundations to build a finance function that is robust, resilient, and future-ready.