Reimagining the Finance Function: Six Elements of Modernization
A version of this article first appeared at Finance Technology Today.
In the era of digital transformation, “modern finance” represents the evolution in skillsets and proactive decision making. Modernizing improves efficiency as well as the ability to provide forward-looking insight and decision support.
According to recent benchmarks reported by APQC, only one in five finance professionals can readily access necessary internal and external data. Only two in five reported an adequate upskilling investment by their organizations. Both findings limit the finance function’s ability to take advantage of new technologies.
Despite potential complexities, modernizing the financial function affords countless benefits for the entire ecosystem: enhanced decision-making capabilities for leaders; increased functionality in information technology, operations, and marketing; improved controls and transaction-related processes; advancing the role of human capital. Companies can also expect modern finance initiatives to enhance the employee experience by removing repetitive tasks, opening access to cleaner and more actionable insights, and unfolding a more expedient problem-solving process.
While the emerging role of finance is often broadly expressed, stakeholders may be uncertain of the core tenets of a modern finance initiative. To simplify stakeholder acceptance, a framework comprised of six elements helps communicate a basis for how a reimagined finance function creates value:
1. Drive the organization forward with advanced data and analytics
Data orchestration and analytics address fundamental principles such as transparency, problem-solving, and insight-generation. Today’s companies need data to serve as a useful guide in both decision-making as well as performance measurement. Advanced analytics provide leaders with the financial information they need to make better decisions. This increased functionality promotes agility and collaboration, and the ability to package financials in a meaningful way. Additionally, technology enables self-service for leaders across the company, as finance professionals are able to disseminate information more fluently.
2. Gain efficiencies via integrated systems and information
In finance and accounting, the effective use of digital solutions helps standardize data while also increasing access. The strategic integration of technology streamlines an organization’s ecosystem to eliminate silos, which in turn reduces inefficiencies.
3. Compete at a desirable pace through a cost-effective delivery model
In response to changing and competitive landscapes, product-offering businesses must consider appropriate growth strategies, design shared service centers, outsource partners, and set-up remote delivery centers. The finance function is best suited to offer a cost-effective delivery model through the data that various technologies collect.
4. Improve employee experience and impact by automating processes and controls
Modern CFOs are embracing automation to identify efficiencies and capture productivity. When done well, automation reduces the repetitive tasks that drive employee fatigue, attrition, and costs. To achieve this, companies must review and reimagine processes, and then overlay appropriate technologies that best promote accuracy and efficiency.
5. Evolve the tech-backed capabilities and overall skills of financial professionals
Integrated technology seeks to solve business problems, with the aim of cutting new paths for finance professionals. Additions such as robotic process automation (RPA), machine learning, and other technology-backed improvements seek to complement rather than substitute the finance workforce. Ultimately, this will lead to additional skill development and the application of time to strategic tasks rather than mundane tasks such as manual data entry . Success in this regard depends on appropriate change management, upskilling, and addressing collaborative structures.
6. Build internal strength by enhancing cross-functional partnerships
Modern CFOs must identify and embrace their cross-functional, formal, and informal leadership roles in influencing decision-making. In effect, CFOs should focus on the strategy of building internal relationships as if all employees are customers of financial functions. Ultimately, working toward internal understanding offers the support necessary to achieve measurable results.
The success of this six-point framework hinges upon the finance function having a deep understanding of the organization’s goals and strategic initiatives. CFOs and finance professionals must then hold the posture of adopting changes in an ongoing, collaborative manner. Implementing a modern approach can enable a competitive response to market forces.
For a deeper look at these concepts, explore related success stories to understand how companies are imagining new possibilities across financial planning and analysis (FP&A), working capital, supply chain, and more. Here’s a roundup of recent insights on reimagining the finance function:
Roundup: Modern Finance Series
Examining the Principles of Modern Finance
Businesses today can reshape their finance functions, strengthen decision-making, and uncover new potential by aligning modernization efforts to these six principles.
Exploring Modernization Across Company Stages
Organizations of all sizes can reimagine their approach to finance and drive more informed decisions, whether an organization is newly formed, established yet accelerating growth, or a large enterprise.
Evolving the View of Working Capital
Working capital sits at the center of companies’ efforts to evolve their finance functions. By enacting a modern approach to working capital, companies can optimize financing, operations, and competitive advantages.