The roles of HR and Finance have always been intertwined, but the wall between both departments is disappearing altogether as companies move their back office systems to the cloud. HR and Finance teams have been the first to make this transition, and it’s only natural that they pair up in this venture given they are being asked to think more strategically about the future of the business and have joint stakes in many processes that feed into business strategy.
This back office transformation is coming quickly. A recent study from MIT Technology Review and Oracle revealed that 35% of businesses plan to create a shared Finance and HR function within the next year.
The move also makes sense from a leadership perspective. Today’s CFOs are being asked to take a more active role in defining business strategies, which requires a firm understanding of the company’s talent and resourcing needs. For their part, HR leaders need a clear view of each team’s budgets, needs and strategic priorities if they are to recruit and retain the right people.
Collaboration between HR and Finance requires constant communication and an alignment on strategies, which requires a free flow of data between teams as well as a unified back office approach from the inside out. In response, businesses are shifting their HR and Finance operations onto a unified cloud system.
According to survey from MIT Technology Review and Oracle, 37% of companies are transitioning their HR and Finance systems to the cloud to improve the way data is shared between departments, and 71% have already seen positive results in this regard. 41% of businesses also expect moving to the cloud will make their HR and Finance employees more productive.
This brings us to the most important element of the company’s cloud transformation—its people. Cloud systems provide a platform for change, but it is ultimately the skills and culture of the company’s back office that will dictate their success as they change their business operating models.
Not only is this the most crucial element of a cloud implementation, it is also the hardest to achieve. HR and Finance teams are being asked to work in a more integrated way and help shape company strategies, but to take advantage of new technologies they must first expand their skillset and shed traditional ways of thinking.
When asked to what extent boardroom expectations and the move to cloud have changed HR and Finance roles, 40% of HR and Finance professionals admit they need to improve their time management as they take on a broader and more varied set of responsibilities and 32% say they must get better at picking up new technical skills if they want to keep up with the fast-changing needs of the business. Perhaps less surprisingly in this age of data and analytics, 30% acknowledge they require more problem-solving, mathematical reasoning and analytics skills.
The struggles HR and Finance professionals are having with time management are telling. Companies face a growing number of competitors who continue to quicken the pace of innovation in virtually every market, and business leaders need their people to operate at pace if they are to stay one step ahead of change. The current gap we are seeing points to an execution problem. Employees still spend too much time on non-differentiating tasks, like reporting or shared services admin, while struggling to adjust to the increasingly strategic requirements of their job.
It may seem ironic to speak of a need for new skills given so many organisations moved to the cloud in part because they lacked enough skilled workers to run their existing systems. However, a distinction must be made between traditional IT management and the more creative, innovative approach to data now required in the back office. 31% of HR and Finance leaders say the cloud allows them to spend less time doing low-value work within their department and frees them up to focus on the company’s strategic priorities.
Brett Sweet, CFO of Vanderbilt University elegantly captured the extent to which back office responsibilities are changing to work with new technologies:
“You’re not only seeing more Finance executives rotating into IT, but the two functions are starting to merge. Being an expert in debits and credits isn’t enough anymore. Finance has to know IT, and IT has to know Finance”.
Encouragingly, businesses are taking steps to develop HR and Finance’s skillsets within the next year. Roughly half plan to bring IT experts into their HR and Finance departments to teach employees how to take advantage of new technologies, and a similar proportion will offer management training course to help back office leaders to break out of their traditionally administrative roles. 42% even plan to automate administrative tasks, which will in turn allow HR and Finance to spend more time on more strategic pursuits.
No matter how far along they are in their digital transformation, companies understand that change is the future of their organisation and that their employees must adapt their skillset to new ways of working. HR and Finance teams have been the first to settle on using the cloud as an enabler, and the success with which they merge and build crossover skills will set the tone for the rest of the company’s transition.
Dee Houchen is Senior Director of ERP solutions at Oracle. Follow her on Twitter: @DeeHouchen