5 Steps Finance Leaders Can Take to Transform the Role of Finance
Traditionally, the role of the Financial Controller and Chief Financial Officer (CFO) has been all about crunching numbers. Now though, technology is changing the way organisations do business.
Finance teams need to leverage finance transformation to maximise business profitability. The Controller and CFO are required to take a more strategic approach, providing the business with information to make accurate and agile decisions in real time.
According to a 2021 Gartner report, there are 2 key areas that CFOs need to focus on in order to drive a strong post-pandemic recovery and transform the role of Finance for a better future - reducing costs and funding growth.
This article focusses on funding growth. The most effective way to fund growth is to support investment in new technology and new business models to drive growth and digitalisation. ‘CFOs play a pivotal role in steering their business to digitally-enabled growth, with 97% planning to accelerate digital technologies in 2021.’ (Gartner, 2021). The Digital Future of Finance report from Gartner states that there are 5 key areas to accelerate the digital Finance function:
- Waste reduction
- Technology investment
- Data and analytics
- Cloud adoption
- Digital upskilling
This blog looks at all 5 of these, covering what’s happening now, what it means for businesses and what are some of the benefits of making a change.
1. Waste Reduction
The emergence of new automation technologies over past decade has seen the adoption of robotic process automation (RPA) among many Finance departments. This has allowed organisations to reduce wasted time, effort and human capital. However, ‘pure’ RPA alone is limited and can’t execute decision-orientated tasks.
Using RPA alongside machine learning means that it can be used for more complex tasks such as budgeting and forecasting. Finance needs to turn a critical eye to their current solutions to assess if there is room for improvement.
Adopting the appropriate technologies will free up relevant staff to focus on the most impactful value-added aspects of their jobs. The benefits of RPA in Finance will grow as deployment within the department expands.
2. Technology Investment
Many businesses continue to use manual processes or outdated software. In fact, according to Gartner, ‘Less than one-third of CFOs are confident that their technologies are aligned with their requirements for ensuring the future success of the organisation.’
CFOs have relied too heavily on ‘pure’ RPA, attempting to automate processes and cut out all human intervention and reduce cost; now is the time to invest in value-driving finance technology, such as X3CloudDocs. Here it’s important to work collaboratively. The Finance team and the wider business should agree together which processes to automate in order to achieve the vision and maximise the value-add that people can provide while utilising robotic processes.
By using additional technologies to automate complex finance processes, CFOs can focus on identifying new value-adding services, such as predicting pricing based on consumer behaviour.
3. Data and Analytics
In general, Finance Executives have insufficient technical knowledge to analyse complex data given the quantity and complexity of data now available with modern ERP systems. Without the help of professional data scientists or sophisticated reporting solutions, Finance is challenged to generate insights and intelligence that business leaders can use to make decisions.
The solution to this is the application of emerging technologies such as AI (artificial intelligence) to enhance or automate data management tasks. A perfect example would consist of a specialised team who can leverage analytics from a smart solution in order to present findings to business leaders. The reduced reliance on the most skilled Finance employees to collect and format company data means that up to 20% of their time is freed to carry out high-value tasks like training and analysis.
4. Cloud Adoption
Covid-19 has pushed many Finance teams into remote operation. A significant proportion of businesses plan to keep full-time or part-time remote working in the future, with ratios varying across sectors. As a result, businesses now need to support effective Cloud-based systems in order to facilitate this. Remote access to line of business solutions is no longer optional, it is essential.
Gartner puts this well, ‘The imperative for CFOs is to find the right vendors, at the right time, at the right price, and deploy solutions in places that will improve the speed, trust and predictive nature of insights.’ Most importantly here, businesses need to determine what they really need to meet business requirements so that a smart decision can be made.
5. Digital Upskilling
According to a 2021 Gartner report, only one-third of Finance Leaders agree that their teams have sufficient competencies required for a digital Finance function. The growing digital skills gap reduces the ability to successfully exploit digital technology capabilities, and the pace of change is only increasing with accelerating development and implementation of cloud-based enterprise solutions.
The key is to hire, retain and develop digital skills in Finance. Finance leaders should improve their ability to quickly react to immediate skills needs. The skill-sensing approach improves the likelihood that employees apply newly learned digital skills on the job and close the gap.
As the business landscape continues to evolve, so must the role of Finance and the decisions taken by finance leaders to develop and grow their departments and businesses. A varied but strategic approach must be adopted in order to achieve a more agile finance function that is smarter, more efficient, and more able to inform wider business decisions.
Organisation driven by information and insights, not data; utilising technology but not led by it; and maximising the value of RPA without losing the benefits of human decision making, will excel in the market and maximise the benefits of the global economic recovery in 2021 and beyond.
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