In my previous posts, I looked at two of the three key pillars of an agile finance operating model: Operational Excellence and Digital Intelligence. These attributes were described in a recent survey of 700+ senior finance executives, Agile Finance Unleashed: The Key Traits of Digital Finance Leaders, conducted by the Association of International Certified Professional Accountants. Now let’s take a closer look at the third and final pillar, Business Influence.
In that study, close to half of respondents (48 percent) say that their CFO and finance function play a “significant and influential role” in partnering with managers to help improve decision-making and performance management. Cloud-based ERP and EPM applications are helping to expand that influence, equipping finance teams with the predictive intelligence and market insights needed to mitigate risk and effectively guide the business forward.
Yet when it comes to helping the organization understand digital disruption, progress has been a bit slower. Just 33% of survey respondents said that the finance function plays an influential role in “mapping future scenarios for a more disrupted and volatile future.” This can constrain finance’s ability to guide and influence business model innovation.
To maintain its influence and provide this important foresight, CFOs will need to focus on two areas: freeing up their teams from time-consuming tasks so they can play a greater role in mapping out the enterprise’s response to digital disruption; and shifting the perception of finance’s “digital IQ” in the eyes of key stakeholders.
As finance functions seek a more strategic role in driving new business models, they often run into a familiar but daunting barrier: the time and resources required to perform their core compliance and control responsibilities. To move forward, organizations need to automate the extensive manual processes involved in these responsibilities as much as possible. The addition of emerging technologies such as AI and machine learning can accelerate this automation. The benefit goes beyond the efficiencies and cost savings discussed in part one of this series. It frees up team members to focus on key areas of influence such as scenario planning.
At the Royal Bank of Scotland (RBS), the team was unable to produce scenario modeling quickly due to the number of spreadsheets, explains Stuart Wray, head of implementation for future finance. To improve the speed of business, RBS decided to move a number of finance functions to the cloud—including planning and budgeting, strategic modeling, financial forecasting, predictive analytics, profitability and cost management, and the financial close. As a result, RBS can now adjust its strategic models in minutes.
|“The cloud has really helped us improve the pace at which we're able to produce scenarios,” Wray explains. “And it's not a case of just building the model and it's finished. Our users are able to evolve their models on a regular basis, in a safe and controlled way.”|
Freed from the manual processes that consume much of its time and resources, finance should turn its attention to increasing its “digital IQ”—and demonstrate that shift to key stakeholders. Finance functions can also build digital skills and awareness among existing employees through training, development, and career advancement opportunities. For example, 40 percent of our survey respondents say they rotate finance professionals to other functions, such as IT and operations, to develop their ability to collaborate with other parts of the business.
Increasing finance’s digital IQ is not enough, however. To establish itself as a leader in the company’s forward-looking digital strategy, finance must demonstrate its greater abilities to the wider organization. Only 15 percent of respondents said their finance function is widely recognized for its strategic awareness of new technologies, such as AI and the ability to drive new business models.
Digital finance leaders who are achieving operational excellence through automation and uncovering better intelligence through data analysis remain in the minority, at just 32 percent of survey respondents. The good news is that they’ve forged a path that companies currently behind the pack can emulate to catch up. The key is taking a customer-first approach that doesn’t shy away from digital disruption, but rather harnesses it for competitive advantage.