Finance function – changing landscape
Businesses are facing unprecedented change and disruption that threatens their future viability unless they show agility and willingness to adapt. Big data, emerging technologies, evolving workforce demographics and changing regulatory environments are giving rise to new business models. In the face of all this, it is only obvious that the CEOs and promoters expect a lot more from their finance function. The question is – Are the CFOs and their teams ready for it?
Historically, the finance function has, by nature, been conservative, detail oriented, and structured. But the new dynamic nature of the business environment calls for a new finance function with a totally revamped thinking and attitude. To make this transition from a conservative to a forward-looking model requires innovative thinking and agility. Unfortunately, many finance functions today are not structured to support that.
Over the next few years finance professionals will need to disrupt themselves. Finance will no longer be the back office function or a support service. They will need to emerge as true business partners. There will be several demands on them from customers, regulators, management, suppliers and auditors. In order to respond to this, finance organisations will need to develop a strategy to deal with disruption. The strategy will have to be put into action very quickly and only then will we be able to convert such disruption into an opportunity for ourselves rather than get disrupted and cease to be relevant.
Strategic shift – what should CFOs focus on?
Investment in innovation
In this environment of constant change, finance professionals will have to bifurcate their roles into two segments: a) ensuring stability of the finance function and maintaining control over numbers; and b) enabling innovation in the function thereby increasing profitability and efficiency. A CFO or finance function head will need to push the agenda of innovation through constant review of roles and responsibilities and of course through inclusion of automation to drive efficiencies. It will always be a question of cost vs benefit analysis but before that the mindset will need drastic change. The questions to ask yourself are:
- When was the last time I reviewed a process to see if efficiencies can be brought in?
- Do I know enough about the latest technologies that can increase efficiencies in the process?
- Have I trained myself and my team members to learn about the developments taking place in finance functions. Not every new technology is expensive. A little research can go a long way!
Unless such strategy shift in thinking and behavior takes place, the finance functions can never be agile and ready for future.
Future of finance – Are you going to disrupt or get disrupted?
Transformation through automation and upskilling workforce
The only way to transform the finance function is by unlocking the benefits of extreme automation. Many finance organizations are already reaping the rewards of cloud enterprise resource planning (ERP) and robotic process automation (RPA)—from reduced costs and risks to heightened efficiencies and improved cybersecurity.
Once a base technology infrastructure in place, organizations will need to look to future investments in more advanced technologies such as cloud technologies, blockchain, robotic process automation, data analytics and other enabling technologies. Many organisations are already using artificial intelligence for sharper predictive insights and better deployment of capital.
Implementing these technologies is one aspect and the other is about upskilling the team to use these technologies to their fullest in order to reap the benefits. CFO’s will need to build, organise and motivate a finance workforce that’s able to deal with this complexity, is equipped for the future and make the most of the investment in technology. With the right blend of new tech, new skills, a new organisation and a new culture, finance can play a pioneering role within the business − as an entrepreneurial driver of strategies and data-based forecasts.
Insights from data and analytics
CFOs are the only people in an organisation who can integrate strategy, finance, and analytics to drive business needs. Advanced analytics are the only way organisations will be able to analyse customer behaviour and trends ultimately ensuring long term sustainability, direction and growth of business. Traditional analytics are getting automated through powerful tools. Technology is helping finance professionals to automatically analyse large volumes of data thereby helping CFOs and CEOs in making decisions about business.
To embrace such shift, CFOs will also need to shift their analytics from descriptive and diagnostic methods to predictive methods to get insights into what may happen in future. A powerful technology strengthens finance’s ability to identify and make investments in the right projects to drive innovation. Therefore, its time for the CFOs and the finance teams to pause for a perspective and ponder about their own skills and the organisations skills in this area.
Service delivery model
The service delivery model is key to the transformation of the finance function. It defines where and how services will be delivered. This means that it can significantly impact cost, quality and efficiency, thereby increasing relevance of finance to the business as a whole.
Future of finance – Are you going to disrupt or get disrupted?
Choosing the right service delivery model will deliver valuable business outcomes in many ways:
- Greater focus on business rather than on internal processes;
- Reduced overhead costs through labour arbitrage;
- A more agile and lighter organisation; and
- Ability to centrally drive digital transformation
Let’s get ready to disrupt!
The key to success will lie in how one converts the disruptors into opportunities. If not done already, CFOs should start developing a blue print of how they plan to transform their finance organisation in the next 5 years. Buildings teams that thrive during change, modernizing your workplace, automating processes, predicting enterprise risk, innovation powered by technology are the only ways that will help drive the performance excellence agenda of your organisations.
