Advice and Information for Finance Professionals

How to Take the First Step on the Road to Agile Finance

Guest Author

By Robert Landon

In the digital age, CFOs are experiencing a serious disconnect between a rapidly evolving mission and their ability to execute on it, according to Agile Finance Revealed: The New Operating Model for Modern Finance—a new research report by the American Institute of CPAs (AICPA) and Oracle.  

CEOs increasingly want CFOs to serve as corporate strategists or “co-pilots” of the business to help them thrive in the digital age. The problem is, only 30 percent of nearly 500 CFOs surveyed agreed or strongly agreed that their finance function can fully support that new mission.

CFOs need a new, agile operating model, encompassing three pillars:

  1. Greater efficiency through automation
  2. Better information to predict the future
  3. More influence to drive business outcomes

In this article, we’ll look at the first step: greater efficiency through automation.

The Constant Pursuit of Automation

“As we looked at the characteristics of agile finance teams, we found that they shared certain qualities that other teams lacked,” said Anne Ozzimo, senior director of product marketing at Oracle, who worked with AICPA on the research. “Agile finance teams are more likely to have centralized shared services or centers of excellence. And they’re making better use of cloud and digital technologies like robotic process automation and machine learning.”

Such teams were found to be far more likely to have automated routine processes, freeing up staff for more strategic work.

Learn about the new operating model for finance. Get the full report.

In his thought-provoking paper "Finance 2020: Death by Digital," Accenture industry analyst David Axson predicts that within the next three years, legacy finance systems—and the data and operational silos they tend to produce—will be largely a thing of the past.

Axson says they will be replaced by massively scalable cloud-based platforms capable of not only executing finance transactions, but of reporting, planning, forecasting, and analytics. These platforms enable finance to simplify, standardize, and automate their finance processes—and provide the kind of scalability that agile finance requires.

Agile finance leaders are supplementing their cloud platforms with a new generation of technologies, including:

  • Artificial intelligence for in-depth analysis.
  • Machine learning to optimize business processes, such as internal audit and fraud detection.
  • Robotic process automation (RPA) to speed and automate high-volume, repetitive tasks, such as account reconciliation.

If finance teams navigate this transition successfully, they will be able to spend 75% of their time on decision support and predictive analysis, Axson predicts. In short, they will have the tools—and the bandwidth—to become the co-pilot CEOs are looking for.

A Case Study in Agility

For HSBC, cloud-based finance solutions started out as a program to increase control and transparency around costs. However, the simplification and standardization of the cloud enabled the company to react with remarkable agility to changes in the regulatory environment as well.

"We couldn't have responded to that regulation as quickly as we've been able to do if we'd gone with an on-premises solution," said HSBC's CFO Joanna Fielding.

Agile finance organizations are already aggressively embracing the concept of continuous automation—and the technologies that make it possible, according to the report. But most organizations are still playing catch-up:

  • Only 32% of finance leaders surveyed said they have fully implemented cloud technologies.
  • Only 28% have fully implemented intelligence or embedded controls for risk and compliance. 
  • Only 29% have fully implemented machine learning and robotic process automation.  

Turbo-Charging Shared Services

Many finance departments have already moved their accounting operations to a shared service model. But when you empower them with a cloud platform and digital automation, you have the chance to become truly agile, the report finds.

“With a standardized cloud platform in place, finance departments can quickly migrate end-to-end processes to a global service center,” said Ozzimo—processes such as such as procure-to-pay or record-to-report. Of course, tools like RPA further automate high-volume, repetitive tasks, driving even greater efficiencies such as touchless processing.

Obvious candidates for centralization include external reporting, tax management, and financial planning and analysis (FP&A). However, the model can be extended to any number of domains. “Particularly acquisitive businesses can create a mergers and acquisitions team, while an engineering or defense company might centralize project accounting,” Ozzimo noted.

Consider Indiana-based Irving Materials, Inc. (IMI), a leading manufacturer of construction materials. Since 2015, the company has completed five acquisitions and doubled its revenues, while reducing accounts payable headcount by 35%.

"The fact that we’ve been able to integrate these acquisitions seamlessly without extra costs to my finance function is fantastic,” said Chad Kelley, controller at Irving Materials.

Kelley and his team can handle complex reporting requirements in 240 different locations, with the ability to refresh financial statements in just minutes.

In future posts, we'll take a look at the other two key dimensions of agile finance identified in the report: better information and increased influence.

Can't wait? Get the full AICPA/Oracle report now: Agile Finance Revealed: The New Operating Model for Modern Finance.

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