Why it's time for CFOs to take the lead on finance transformation

Remember the time when any mention of technology to a finance leader meant an automatic referral to the CIO’s office?

Wait—that still happens. But it’s encouraging to note the increasing numbers of finance leaders who engage in strategic technology discussions. Leveraging technology is non-negotiable when it comes to competitive advantage and can no longer be avoided or delegated.

Yet, there are still many instances where finance is in the back seat of transformation initiatives being driven by the technology team. As an adjunct professor for Carnegie Mellon’s Heinz College CIO Certificate program, instructing on emerging technology and innovation, I consistently share the benefits of having finance teams lead finance transformation projects. Fortunately, software-as-a-service applications that include mission-critical functionality, along with lessons learned from thousands of implementations, make it a lot easier for finance to take the wheel. Finance leaders are well positioned to drive greater business growth, increase revenue, improve actionable insight into the operations of the business and lead finance transformation.

As impossible as it seems, the pace of change is only getting faster. Transformation projects that were being considered before the pandemic must be re-evaluated to determine how quickly speed to value can be achieved. The business case is even more valid now than it was before, with evolving client and customer expectations, regulatory complexity, and economic uncertainty. What’s the difference now?

In the pre-pandemic environment, business operations were completed in spite of outdated, disparate systems. Today, it’s clear that the future of finance, future of learning, future of work, and the future of audit initiatives accelerated forward by at least 3 years. In the time it took for mandatory shelter-at-home orders to be implemented, businesses had no choice but to leverage technology solutions to analyze their financial position and maintain operations. The future is now. The need for improved analytics, and frictionless, omnichannel interactions integrated across consistent finance processes, are the new table stakes.

The “Great Resignation”

We can also now add the “Great Resignation” to the rationale for the transformation business case. Both new and seasoned finance colleagues are making the decision to pursue other employment options. Gen Y and Z colleagues have made it clear that they don’t want to spend most of their time compiling data into spreadsheets and preparing management reports. They aren’t interested in navigating antiquated processes that take five different systems to complete. Instead, they would much rather work on more strategic and high-visibility projects. As businesses seek to hire the best and the brightest, they can’t afford to ignore these ambitions. “What systems do you use?” might not be a standard interview question today, but it will be eventually. Sooner or later, manual processes across disparate systems will make the difference on whether someone accepts your employment offer or works for your competitor.

To make matters more complex, planned retirements have been sped up. As a former CIO, I distinctly remember not having fully documented business processes in many cases; in other cases, only a few colleagues remembered why we implemented the process that way in the first place. Transformation initiatives reduce this challenge and risk to the business. Eliminating, streamlining, simplifying, and automating consistent processes across the business helps to reduce error and risk if critical team members were to resign.

Today, candidates leverage their networks to seek referrals about prospective employers and what happens beyond the initial 30-day honeymoon. How the work is done is just as important as what the work is to be done. The ability to automatically compile, reconcile and analyze data, conduct financial close and consolidation activities, or manage accounting standards add significant weight to the transformation business case. It also amplifies the case for finance teams to lead these projects.

Building for speed

If there was one bright side to the pandemic, it was that it removed the usual politics and time delays of new projects. When the future of the business was in immediate jeopardy, leadership teams reduced decision timeframes from months and years to days and weeks. Somehow, businesses figured out how to get projects and budgets approved in record time. But the work isn’t finished. Speed to value and speed to insight projects must continue to build upon the initial efforts.

All too often, finance transformation initiatives are defaulted to the technology organization. However, integrated project leadership, with the finance leader assuming the key business leadership role, is more effective in managing the people and process changes required in a finance transformation. Who else is better positioned to understand the skills and processes needed for a centralized chart of accounts, integrated subledgers, and the need to control costs? With the finance leader at the helm of finance transformation, the business case will gain momentum.

Going forward, it is unclear if the speed of change will ever slow down. However, as we anticipate the next normal, finance transformation is not optional. Ensuring finance leadership from day 1 will make the difference between great success and good intentions.

Listen to recent episodes of Kimberly’s podcast series, The General Ledger.