The finance department already has data and some visibility of the entire organization’s internal and external dealings at its disposal. When combined with business objectives, this information can provide in-depth, prescriptive insights. When a company applies these insights to its strategic decision-making process, it can gain a competitive advantage and ready itself for growth and innovation.
Finance leaders spend significant time on value-added activities, including financial planning and analysis (FP&A), budgeting, forecasting risk, treasury, and tax operational-risk management. They are often inundated with data reconciliation or cleansing activities, leaving them less time and focus for creatively using data to help the business plan better. Prioritizing these value-added activities can help build deeper capabilities in core finance functions. To create value, leveraging department findings to direct strategic choices and creating a positive feedback loop has a greater advantage for business growth.
In 2020, we published a report covering critical success factors for bringing finance out of its back-office relegation. During the study, we surveyed 250 finance and accounting (F&A) executives worldwide, and an astonishing 90% of them agree the CFO’s role is changing, going beyond a bottom line and compliance enforcer to a trusted business partner driving profitable growth (see Exhibit 1). This finding echoes our voice that finance leaders must update priorities and integrate into the organization’s ecosystem and processes to fully realize their potential as enterprise value drivers.
Sample: 250 F&A executives across the global 2000, Q1-Q2 2020
Less than 3% is not shown in the chart
Source: HFS Research, 2022
To reinforce the finance function as enablers of enterprise-wide growth and strategic partnership, we have identified four imperatives:
In many organizations, finance functions are the custodians of key metrics and reports. For the entire company to benefit from insights, finance leaders must invest in modernizing their primary data management strategy, implement a roadmap to allow data movement across divisions, bridge gaps in organizational architecture, and find a unified approach to resolution.
Coincidently, the pandemic has pushed many finance teams to accelerate their work to integrate data from multiple silos to a single source of truth and establish clear data pathways and management strategies on a data-to-insight-to-action loop. When finance disseminates its data and analytics into an enterprise-wide platform, analytics and collaboration become seamless and lead to real-time insights.
Automation, analytics, artificial intelligence (the Triple-A Trifecta), and other digital technologies are advancing rapidly. Financial functions in many leading organizations have increased efficiencies through automation in transactional functions and process-oriented tasks; however, technology adoption is limited to a few applications. Technology adoption is nascent in strategic areas of finance such as FP&A, tax planning, internal audit, and risk management. Advances in intelligent technology solutions could benefit complex and strategic tasks:
Sample: 37 clients of F&A accounting
Source: HFS research, 2022
Any transformation initiative takes time and effort. Legacy enterprise resource planning systems, other backbone systems, and employee resistance could impede change. For finance leaders, “backcasting” can be a key skill—working backward from the desired future to identify necessary steps. Another option is to drive change in critical tasks and establish proof points in smaller projects, eventually rolling out across the entire function and other parts of the organization.
Overhauling a process most frequently falls short when there is no clear vision of the source of value in change management. Modernize your finance processes to empower finance to deliver prescriptive, innovative, and insight-driven strategies. Organizations must embrace finance’s role in harnessing data and analytics to spearhead collaborations within and outside. Additionally, support the evolution of their roles from rigid reporting to contributing prescriptive insights.
It’s time to build a hybrid workforce that embraces change. To keep pace with the digital era and competitive business environment, finance teams should broaden their expertise and reshape their skill balance to include cross-functional teams that support delivering prescriptive insights guiding strategic decision making.
Finance teams need a diverse mix of skills complementing core financial functions. Up-skill finance teams with technology capabilities and build diverse teams by adding to finance’s core expertise: communication, collaboration, and creative skills and data scientists, programmers, and software engineers. A recent report from HFS about the changing landscape of the finance talent, Finance leaders: Are you prepared for a talent revolution in the next three years?, offers readers more perspective on this topic.
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