Reflections from HFS F&A Leadership Roundtable, London

Any finance leader who has undertaken finance transformation knows that doing so is difficult and time-consuming. It requires careful planning and resources, and it can be costly—especially without proper consideration of how to implement change effectively. Yet, because finance transformation is essential to keeping up with shifting business needs and strategies, tackling these concerns is key. So how do you approach this critical challenge? How do you embrace technology to drive improvements in your finance function? And how does that help create a finance function that enables wider business transformation?

A recent HFS executive roundtable supported by Celonis, held in February 2020 in London’s Ritz Hotel, brought finance and accounting (F&A) leaders from multiple industries together with Celonis experts and HFS analysts to discuss their progression and challenges on the journey to the Finance OneOffice. They also shared their perspectives on the role that process mining can play in broader finance transformation initiatives.

Steward, operator, strategist, catalyst: today’s finance leaders must wear many hats

The role of the smart CFO is evolving from being the bottom-line and compliance enforcer to being a trusted business partner driving sustainable and profitable growth (see Exhibit 1). Different expectations and measurements of value change finance leaders’ roles. Transparent relations and choosing trade-offs to satisfy stakeholders are key. Social responsibility matters. Finance leaders are more accountable to more stakeholders—both internal and external. The need for long-term decision making is palpable.

Exhibit 1. Growth and scale top the strategic drivers driving finance transformation initiatives

Sample: 38 Finance Leaders from G2000 enterprises

Source: HFS Research, 2019

Change is not just an option at this point—it’s an absolute necessity. Those that don’t change in the face of disruption will be dead in the water. Finance functions of the future must form part of the OneOffice (see Exhibit 2), not just an efficient back office. While most finance leaders in the roundtable understand that the Finance OneOffice represents the future, few, if any, have realized that vision. Finance transformation is no longer about finding cheaper labor and some better packaged software. Technology has advanced in the last decade, but senior leaders fear it won’t necessarily deliver as promised. The reality is that many fingers were burned when technology companies did not deliver savings, despite millions invested.

Exhibit 2: Finance must become a part of the HFS OneOffice, but hardly anyone has achieved the Finance OneOffice

Change demands absolute commitment. It takes a shared vision, and the challenges are not technical anymore. But it’s easier to work with tangible parts of a system rather than (re)design processes and policies. People, process, and technology must come together with equal weight, or it’s tantamount to just lobbing technology over the fence. Beware the “quick wins” fallacy. If it’s quick, it’s often not significant. Measure processes again after making changes to get to continuous value.

Transactional F&A must become “invisible” to drive the Finance OneOffice vision

HFS defines “invisible F&A” as the state of an F&A function where accounting transactions run like water and finance professionals focus on driving strategic objectives. Invisible finance will result in continuous accounting requiring no waiting to close books, effortless payables and receivables with near-zero cycles, and real-time analytics capabilities enabling proactive decisions. Most importantly, transactional F&A must become invisible to allow finance leaders to drive toward the finance OneOffice.

HFS identified 10 success factors that are critical to driving the Finance OneOffice, which underpinned the roundtable discussions. Our pre-event questionnaire asked participants where they are investing. The responses in Exhibit 3 show that the areas receiving the most attention are process-automation of transactions, cultivating talent with a value-add mindset, and end-to-end data management.

Exhibit 3: Participants are investing in automation and talent

Source: Inputs from HFS F&A London Roundtable participants, February 2020 

Process mining is your process automation starting point

Nearly every organization at the roundtable is investing in process automation, but robo-skepticism is healthy. The disillusionment with RPA largely stems from the fact that it is being used to simply patch broken processes versus fixing them. Finance leaders at the roundtable don’t want to just automate; they want to continuously improve. Their aims were broader than finding the low-hanging fruit from automation. Their stated intentions included:

• Focusing on process improvement, not just cost transformation;
• Making finance broaden its horizons;
• Using new technology to take other functions in their business to the next level;
• Improving the customer experience (CX);
• Driving continuous improvement initiatives;
• Seeing what’s possible next, i.e., keeping the endgame in mind;
• Finding opportunities beyond the run of the mill; and
• Changing the conversation of the business.

Processes are spaghetti monsters and process deviations are commonplace. It’s important to understand the root causes and many organizations lack that muscle-power. This is where process mining tools such as Celonis are helping enterprises. Manual process documentation takes time, effort and resources. Data-driven approaches that add clarity to the often-undocumented state of “as is” processes and allow for continuous process optimization are increasing in popularity (See Exhibit 4).

Exhibit 4. Data-driven process mining enables you to fix processes before you automate them instead automating broken processes

 Source: HFS Research, 2020

We are still in the early stages of process mining adoption. The roundtable finance leaders were split between those whose process mining efforts are still at the experimental phase and those that have not yet begun to use process mining. But it is becoming clear that interaction between process automation and process mining in accordance with LEAN methodologies will be essential to drive meaningful value from automation initiatives. Process mining is becoming a hot topic in 2020 for finance transformation.

Don’t forget the people—tomorrow’s finance leaders might not be accountants

The talent imperative is directly correlated to driving the Finance OneOffice. It’s a virtuous cycle; organizations must accelerate transformation as a means of attracting better talent. It’s time to rethink talent; look to traits and softer skills, not just experience. People should be first on the agenda.

Tomorrow’s finance leaders might not be accountants. The holistic mindset that manages the broader implications of finance’s role in organizations’ success goes far beyond accounting. Participants observed anecdotally an increase in non-accountants in CFO roles in large global organizations, often ex-bankers. Hiring for leadership capability and competency matters more than checking the boxes of yesterday. 

The Bottom Line:  The starting point of any journey is here and now, and if you don’t map what you have today, you can’t map where you’re going. The most critical step is understanding “as is” as quickly as possible. Process mining helps you do just that!

We’re at a tipping point; everybody wants digital operations and automation. Mindsets are changing, and conversations are all about transformation. Collaboration is necessary, and organizational alignment is critical. Organizations must eliminate the silos, and automation intentions need to take root in hard ground. Change is people-driven, not just technology-driven. The challenge is to convince people that change is valuable, based on logical principles.