The finance organization is in a unique position to drive new value for its business stakeholders. Accenture Research reported that 82% of CFOs are seeing measurable business ROI from digital finance investments.

Several digital technologies have matured to a tipping point in terms of cost to operate, power and usability. While achieving further efficiencies, Finance will be able to drive value by out-learning and out-smarting competition. And when leveraged to its fullest, digital technologies promise:

  • Deeper and faster learning through big data and analytics
  • Embedded intelligence in finance and business decision making
  • Greater agility and responsiveness by bringing insights at the right time to the right stakeholders

However, is Finance ready to unlock the value of digital?

Digital is Driving the Next Wave of Transformation

CFOs believe value will only be realized by those that innovate and execute at speed. Digital is not just a “tech” thing; established players are also redefining themselves for the digital age. Digital embraces a wide spectrum of technologies, all of which can impact core finance processes and metrics. Consider technologies like sensors, machine learning, robotics, blockchain, Augmented Reality and 3D printing that all have varying implications for finance depending on the industry. These technologies drive changes in operating models, cost structures, risk profiles and - perhaps most importantly - the required skill set of the finance professional. Developing new skills and becoming a true business partner requires more than incremental improvement.

In addition, external forces are driving the need for enhanced data and analytics capabilities providing deeper insights and agility to help solve real business problems. With businesses more readily disrupted and consumers being more opportunistic and empowered than ever (millennials are 262% more likely to be influenced by smart phone apps than the average consumer, while low loyalty is driving a huge Switching Economy), the finance organization is stepping up to become the strategic business partner by delivering new and timely insights that exceed customer expectations. With high performers that are twice as likely to spend over 25% of their total Digital, Finance and/or IT budgets on data and analytics, we see that leading companies are heavily investing in data and analytics transformations, the basic Digital finance building blocks.

Still, many companies are struggling to make the shift from static environments where data gathering, reconciliations, and manual reporting rule the day, toward investing across the people, process and technology spectrum to focus on issue driven insights, BI and data visualization. Finance is currently being challenged to stay up to date. Research by Accenture shows finance consistently lags behind business in adoption of digital technologies.

Image: Finance Adoption ERP wave

We believe the secret to digitizing finance is a connected ecosystem of people, data, technology, tools and techniques that, when integrated, evolves the finance organization from delivering traditional reporting and analysis practices to providing more advanced learning, more relevant and actionable insights when and where needed.

What Prevents Finance from Benefiting from this Digital Transformation Wave?

To unlock the true value of digital, Finance must overcome these three challenges:

  1. Defining a clear vision and strategy as foundation
  2. Dealing with legacy technologies
  3. Understanding required digital capabilities and investing in tomorrow’s finance talent

1. Defining a Clear Vision and Strategy as Foundation

The Finance Business Partner role has been a promise for years. Driven by a high degree of automation (both operationally as in control) Finance should be able to focus more on value added services to enhance business decisions. However, as the ERP wave demonstrated, the business partner role will only materialize if there is a clearly defined vision for that role, combined with a development agenda of selected target areas to drive supporting digitization. Otherwise, significant parts of the finance organization will just become smaller and cheaper, but with a business partnering role that develops only marginally. Therefore, Finance needs to gain alignment with its leaders on the new digital strategy, its implications, and the path forward. Defining next generation support models and implementing next generation finance technology through sprints are essential building blocks.

Where does that leave Agile? Agile is not an alternative for vision, but it does help test and challenge strategy’s key assumptions and explore new opportunities more quickly, to enhance and adjust the vision and its tactics more effectively. Especially in more innovative and industry specific digital opportunities, agile provides an effective method to learn and adjust, while keeping better control over return on investments.

2. Dealing with Legacy Technologies

A persistent challenge for finance professionals remains within the existing legacy environments. Legacy is still perceived by many finance organizations as a major hurdle to start filling in the promise of greater business relevance, because all the time and focus is spent on performing basic operational finance activities, while knowing that it’s still difficult to use sufficiently reliable and comparable data from the various legacy landscapes. Both Finance and business today consume IT at several speeds all at once; innovation and digital disruption require quick response, while legacy systems call for deliberate care. Unless the IT organization can master the art of delivering change at the pace demanded by each area of the business, they risk being relegated to tending to legacy systems. So, to start managing legacy technologies, CFOs are asked to make choices in close collaboration with the CIO: what is our strategy and plan, how should we reimagine our technology footprint and what are options for rapid advancement, how can new technologies reduce the dependency of legacy harmonization to build analytics capabilities?

Start thinking that legacy and digital does not need to be an “either/or”. Linking the old with the new by way of a common digital platform can truly offer companies the best of both worlds. Legacy information can support digital objectives while systems and application are being modernized. Multi-speed businesses, when running well, use the powerful engine of their legacy applications to fuel digital innovation. An illustrative example is that by using a data lake, an insurance company can draw upon customer information that was heretofore buried deep in legacy applications, allowing them to provide a digitally-driven, consistent customer experience across all channels of contact—in person, on the phone, or online.

3. Understanding Required Digital Capabilities and Investing in Tomorrow’s Finance Talent

Accenture research shows 82% of business leaders expect their organizations to become digital businesses in the next three years. And if they are to realize the benefits they anticipate from going digital, the readiness of their workforce must become a priority.

To become a more efficient finance organization, considerable investments must be made to improve processes and technology, but to become a more effective finance organization the biggest investment that needs to be made concerns people. After all, the right processes and technology mean nothing without the right talent to use them. The basics of finance – accounting, transactions processing and reporting will be totally automated. The skill set needs change as we look to the future – a different mindset that some current finance staff will be uncomfortable with. But how do you become an analytics-led organization? And how can digital enablers help improve data quality, data access, and analytics maturity?

The answer is to find talented people with the right skills to translate financial expertise into valuable business information. It’s important that the right people are on the job: people who can understand the advanced analytical capabilities, ask the right questions and formulate the right hypotheses to drive the value from the analytics capability to the finance organization. Tomorrow’s finance talent needs to possess advanced analytics capabilities, have an independent mind-set and show critical thinking skills, be persistent and able to tell stories about numbers and make impact with business counterparts. Finance will need to look for new places to fulfil these roles, like developing finance-savvy business people, or looking to academia for people with econometrics and analytics profiles.

The Time for Finance to Lead the Organization is Now

Digital technologies have proven that they can help CFOs do things that weren’t possible before, fundamentally changing how finance is structured and run. Digital will help streamline non-value add activities, reinvent the way work gets done, enable teams to capture more value for the business through analytical capabilities, and equip leaders with business ready information. Simply stated, with the use of digital technologies, the finance organization can be taken to the next level and improve business ROI.

Some Illustrative Examples

  1. Cloud technology provides an agile and flexible platform on a unified database, which can plan, forecast, analyze and share important business data, generate reports in various formats and hyperscale data centers (on demand). Budgeting, consolidation and reporting show a continued movement to the cloud, where almost one in five companies considers using software as a service in the future.  Expected benefits are lower capital and operational costs, higher business agility, ‘infinite’ computing capacity on demand, and analytics, dashboards and reports built in with real time chats. Think of fully automated accounts payable processes with no manual interventions or faster end-to-end transaction processing times for increased volumes of data.
  2. Big data analytics combines different functional data sources with advanced analytics to create enhanced insight for the business, improving decision-making and accelerating responsiveness. It is rapidly becoming a key competitive edge to start quantifying the world around you. This enables organizations to out-smart the competition using statistical analysis (‘why is this happening?’), improved forecasting (‘what if these trends continue?’), predictive modeling (‘what will happen next?’) and optimization (‘what is the best that can happen’). Think of the FP&A specialist who integrates advanced statistical modelling with machine learning in planning & forecasting processes.
  3. Mobile technology in controlling increases agility and responsiveness through mobile apps customized to the individual user group needs. Accenture study indicated that 47% of CFO respondents offer mobile apps in Finance. It helps to deliver the right data to the right people when they need it the most, in the format most useful for helping them make the right decisions. Mobile technology enables on-the-go reporting because it supports a wide variety of mobile devices (e.g. tablets as mobile report repositories, and smart phones as continuous access points for real time performance metrics).

Digital capabilities are developing rapidly, requiring individual investments in digital finance innovation to establish company-distinctive capabilities. At the same time, solutions are maturing quickly as well, which allows them to move to more commoditized service implementations.

To become a more efficient finance organization, considerable investments must be made to improve processes and technology.

Image: Maturity of Digital Technologies

Becoming Truly Digital in Finance Requires Dedication and Vision

Becoming truly digital in finance is a constant, ongoing journey that requires agile development of digital technologies to leverage the potential to its fullest. Right now, the key priorities for Finance are:

  • To reduce and develop the finance workforce through automation
  • To integrate planning and move to next generation support models
  • To become the insights engine for the business

Concluding, the CFO of the future will not be the technical architect, but rather a leader in linking digital technologies to ROI. Spearheading digital finance is an inherently multidisciplinary challenge; by tapping into the power of people and next-gen tech, and constantly striving forward, you will be able to unlock a world of new opportunities.