Point of View

Four imperatives prepare you for the next generation of finance and accounting

Home » Research & Insights » Four imperatives prepare you for the next generation of finance and accounting
The Situation: Traditionally, finance functions focus on transactional activities, but their roles have evolved to accommodate expectations to be strategic partners, collaborators, and enterprise value drivers. Their unique position at the heart of the business enables them to connect data, knowledge, people, and insights across the organization The following imperatives will help finance leaders achieve the next frontier in transformation.
While nurturing core finance capabilities is important, value lies in leveraging them to foster growth and innovation

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.

The CFO role has evolved, making it relevant to today’s needs

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.

Exhibit 1: The role of the smart CFO is evolving from being the bottom line and compliance enforcer to a trusted business partner driving profitable growth

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

Prepare for the next-generation finance function with four imperatives

To reinforce the finance function as enablers of enterprise-wide growth and strategic partnership, we have identified four imperatives:

  • Prioritize data management strategies.
  • Empower finance function with agile and tech-enabled solutions.
  • Reimagine and modernize operations.
  • Develop a new set of skills for a hybrid workforce.
Prioritize data management strategies

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.

Empower finance function with agile and tech-enabled solutions

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:

  • Extend technology adoption from process-oriented and transactional functions to more complex, strategic finance areas. The resulting ability to generate future-focused, prescriptive insights improving end-to-end experience will liberate and empower finance teams.
  • Drive transformation efforts with the outcome at center stage. Focus efforts on a handful of digital themes aligned to the high-level transformation objective and tied to business outcomes. Make targeted technology investments instead of pursuing many agendas without accountability and measuring to assess change impact.
Exhibit 2: Except for robotic process automation (RPA), scaling emerging technologies in F&A operations remains limited

Sample: 37 clients of F&A accounting
Source: HFS research, 2022

Reimagine and modernize operations

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.

Develop a new set of skills for a hybrid workforce

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.

The Bottom Line: Embrace the next-generation finance functions with roles broader than cost and compliance enforcement. These future-focused innovators collaborate and connect across ecosystems, deliver prescriptive insights, and operate as diverse adaptive workforces where technology is the cornerstone.

Sign in to view or download this research.

Login

Register

Insight. Inspiration. Impact.

Register now for immediate access of HFS' research, data and forward looking trends.

Get Started

Logo

confirm

Congratulations!

Your account has been created. You can continue exploring free AI insights while you verify your email. Please check your inbox for the verification link to activate full access.

Sign In

Insight. Inspiration. Impact.

Register now for immediate access of HFS' research, data and forward looking trends.

Get Started
ASK
HFS AI