Digital transformation within every organizational function is a hot topic these days.
For finance, cloud-based ERP, data analytics, data visualisation and collaboration applications are making tools available to provide far better insight.
PwC found that organisations who view these developments positively, rather than feeling threatened by the way they may impact the function and the roles played by those within it, have the greatest chance of being top performers in the long-term.
“I think the more informed finance departments out there have recognised that they don’t just need to produce the financial information more efficiently,” says PwC UK’s Mark O’Sullivan. “They have to show they can actually analyse, interpret and predict rather than just produce. They’re also starting to realise that they already have a lot of the thinking, systems, processes, and controls in place for the more important strategic information relating to their key resources and relationships, such as their customers, their employees, and their supply chain.”
Until relatively recently, the function was past-oriented and dealt largely with bringing together information. It dealt to a large extent with production of data, rather than its analysis. As such, recent advances require cultural and behavioral shifts within the finance function.
Beyond data creation to data analysis
According to the Harvard Business Review, the real return on digital transformation comes from embedding new work practices into the processes, work flows, and ultimately the culture of organizations.
Mike Prince, Director of UK Finance for the Royal Mail Group, is correct in his claim that “we have to generate new value propositions, some of which will completely swim against the tide and tread on the status quo.”
For finance, this means moving to a culture that puts value creation first.
Among its many implications, culture change entails changing ingrained behaviours that slow the company down. One way to do so is to welcome platforms that eliminate unnecessary manual labor.
Sage Intacct, Datarails, Freshbooks, and Host Analytics are just a handful of the tools available today that allow for greater value creation within the finance function. Integrating these tools will require professionals not only to embrace the platforms, but also to allocate their time to different or novel tasks that provide more value-added for the organization, such as examining data more intimately and conducting analyses.
Attitude shifts will determine success of implementation
The finance function cannot fulfill crucial business needs or implement a new, more effective and efficient operating model without deep, broad based cultural change. That involves changing and aligning behaviours, performance metrics, and incentives, and adopting technology across finance and the wider organisation.
In addition to sponsorship and behavioural change, technology too can radically shorten the budgeting cycle. Each of these traditional iterations require amendments to the models used.
Real-time data, real-time value
New tools can fundamentally shorten processes and increase the value of the finance function.
According to Sage Chief Technology Officer Klaus-Michael Vogelberg, “if you can harness technology to capture the accounting implication of any transaction in real time…you have revolutionised the world of accounting.” He believes that before too long, automation will make real-time accounting possible, freeing the function from transactional work and enabling it to better support activities such as sales. “As a result of this technology,” he says, “the finance function has the opportunity to become more important as an active business support function.”
This is an incredible step up for finance, but it won’t happen effectively without first adapting organizational culture.