Digital Transformation » Finance function risks being “automated out of existence”

Finance function risks being “automated out of existence”

Pressure from the top for digital transformation means the finance function must adapt quickly

The finance function is at risk of being “automated out of existence” putting pressure on finance teams to transform into a “strategic hub” and for leaders to focus on “influencing business decision-making”, according to Gavin Fallon, general manager at Board International.

“Finance leaders know they have a choice,” he says. “Either they watch as the finance function is automated out of existence or seize the opportunity to change and take on a new and crucial role in the business.”

In fact, 90 percent of finance leaders agree it’s time to accelerate the change from being scorekeeper to performance driver, according to a recent report by Board. The uncertainty around the pandemic encouraged finance leaders to play a more instrumental role in the business – a trend that will likely continue.

“CFOs are a resurgent force in 2021 and [will continue to be in] 2022,” says Fallon. “They both need and want to be more forward-looking, with a focus on influencing business decision-making and driving strategy.”

However, 18 percent of finance leaders are still spending most of their time fixing the basics, found the report. This provides “less opportunity for more innovative and strategic time investments”, he says.

A race to digital transformation

Organisations increasingly expect digital technology to transform their industries and are racing to accelerate these plans, says Fallon.

As such, the finance function needs to be able to provide more sophisticated insights and planning capabilities for business leadership. This is so enterprises can evolve, “plan for the unexpected, and be able to generate new meaningful insights from data beyond traditional budgeting and forecasting processes”, adds Fallon.

However, current processes are hindering the finance function’s progress as 62 percent of CFOs don’t believe current finance reporting enables them to accurately project performance and adapt forecasts in real-time, found Board’s report.

Similarly, 81 percent of those surveyed believe the way their finance function uses technology to influence business decision making and drive strategy needs a lot of improvement, and in some cases a complete overhaul.

Creating impact through integration

Finance teams operating as a siloed department will find it more challenging to provide better insights and be of strategic value highlighting the case for wider integration, says Fallon.

“Finance leaders must champion democratisation and provide a radically simplified data and analytics experience for finance teams that is capable of joining the dots with all of the most important valuable strategic and operational data and insights from across the complete enterprise,” he says.

Ninety-seven percent of finance leaders think their finance function could benefit from integrated strategic, financial, and operational plans, revealed the report.

The key to successful office of finance decision-making this year will be the integration of  Financial Planning & Analytics (FP&A), he says.

“Since finance leaders are focused on rebuilding revenue and scenario planning, this involves constant changes to products and services, pricing strategies and consumer targeting, backed-up by significant investments in data analytics, intelligence and planning technologies to ensure growth remains firmly on an upwards trajectory.”

An integrated process for financial planning and analysis, supported by the right technology, can provide “genuine strategic value with real business impact”. Organisations can stay on track to achieve that winning combination of operational, strategic and financial goals, he says.

Building a strategic hub

In the changing business environment, “the finance function must make the transformational leap to become the strategic hub for driving more value from their data”, says Fallon

The changing role of finance, therefore, needs to be reflected in their wider finance team’s skills and culture. As such, the new finance team will need to focus on “how to exploit digital technology to drive better outcomes for the finance function and the business”.

“The opportunity exists right now for finance leaders to democratise access to intelligence, analytics and planning delivered via the cloud to provide a genuine empowering and transformative experience across finance teams,” he says. “Utilising a winning combination of technology, skills, and culture, to transform the office of finance today will lead to the digital finance function of the future.”

The transition to a strategic hub is reflective of the evolving talent requirements organisations are looking for in new recruits. In fact, 87 percent of leaders believe broad business and technology skills coupled with practical experience will outweigh finance qualifications in the future, according to Board’s report.

Ultimately, the future of the finance function lies with those who “can leverage analytics to facilitate data generation and preparation, and the discovery and visualisation of findings, and do this quickly and easily”, adds Fallon.

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