The past two years have been transformative–and certainly not always in ways that we might welcome. Nevertheless, change gives rise to adaptation and innovation; it brings opportunity. As businesses struggle to keep up with the pace of change, finance teams have an opportunity to play a leading role in developing and maintaining a positive trajectory for their businesses.
Finance transformation is ultimately about competitive advantage. It’s about adapting to a rapidly changing world, using data-driven insights to assess the situation, understand the alternatives in front of you, and take the action necessary to win in an increasingly competitive global marketplace.
What Exactly Is “Finance Transformation” Anyway?
Technology analyst firm Gartner describes finance transformation as a process of “re-envisioning the finance function to align with the overall company strategy.” Gone are the days when accounting and finance were primarily responsible for recordkeeping functions. Today, finance is more strategic than ever. Unfortunately, though, not all finance and accounting (F&A) teams are embracing that role to the extent that they could or should.
Going forward, finance must adapt to the new reality; finance transformation will no longer be optional. For F&A leaders, it’s an imperative; they must fully embrace their roles as transformational leaders, or someone else will do so in their stead. For the businesses in which they work, finance transformation is equally vital. It will mean the difference between winning and losing in the global marketplace.
Earlier this year, Deloitte released a report entitled Finance 2025 Revisited in which analysts reviewed their predictions from 2018, assessed progress to date, and outlined their new predictions as they look ahead to the year 2025. Their comments on the role of finance are particularly notable.
“Agility and adaptability separated the winners from the losers… Faced with the pandemic’s enormous challenges, some finance teams stepped up and others did not, but either way, business leaders going forward will expect Finance to be ready for multiple future scenarios. It won’t have the luxury of setting a single strategy and following a linear path irrespective of the world at large.”
Finance teams must proactively prepare to take the reins and lead. They cannot merely tabulate and report on past performance; they must foresee potential changes on the road ahead, evaluate multiple potential paths, and set a course for business success. They must seek out and identify value-creating activities, align financial realities with business strategy, and guide effective business execution.
Many F&A leaders are already well aware of this. As technology-enabled automation and analytics have become more powerful and affordable than ever before, necessity meets opportunity. Looking ahead to 2022, finance leaders must seize that opportunity and build a strong foundation for finance transformation.
Building a Strong Technology Foundation
Naturally, finance teams play a lead role in planning and budgeting, setting meaningful targets for the organization, and in forecasting likely outcomes based on current conditions. They also own the means of tracking and monitoring performance against budgetary targets, and ensuring that the company has the resources on hand to operate effectively.
Yet many still fall short when it comes to their strategic role within their organizations. To operate strategically, finance teams must step beyond the realm of data and into the world of insights. Raw data and reports are still important, but extracting actionable meaning from them provides value of a higher order.
Unfortunately, though, finance teams are bogged down with manual processes. They’re often stuck with the task of managing the mechanics of reporting and analysis, rather than focusing their energy on activities of strategic importance. To make that transition, F&A teams need automation.
In 2020, many organizations implemented automation as a matter of necessity. As Deloitte notes in its Finance 2025 Revisited report: “Automation gains… generally helped a remote workforce keep the lights on, not produce predictive analytics (though that capability readily exists).” The authors of the report went on to say that “technology will… help Finance handle uncertainty and execute on its value proposition, as real-time information moves closer to reality and business analyses are generated on autopilot.”
Enhancing the Value of the Finance Team
Much of this problem stems from the fact that historically, enterprise resource planning (ERP) systems have been poorly integrated with external applications and analytics tools. Their budgeting and planning capabilities are often very rudimentary, and the built-in reporting tools that come with most ERP systems are poorly suited to the kind of advanced analysis and real-time business intelligence that delivers strategic value.
As a result, most F&A teams have come to rely upon a hodgepodge of manual processes, exporting information from the ERP system (and often from CRM or other software that houses important business data), importing it into a spreadsheet, reformatting it and building out formulas, and producing reports that conform to their exact formatting requirements.
Unfortunately, this comes with a lot of problems. It’s extraordinarily tedious and time-consuming. It’s not a task that can easily be offloaded to less skilled personnel, so it consumes a great deal of very high-value time.
It also tends to introduce errors into the resulting reports and analyses. Even the most careful users will eventually miss a formatting error or will forget to adjust a formula somewhere along the way. When executives are using the resulting information to drive important business decisions, that can be catastrophic.
Finally, the manual spreadsheet-based approach makes it impossible to see what is happening in the business in real time. To update a report with current information, most of the manual processes need to be repeated all over again.
Finance transformation is impossible when members of the F&A team are spending a great deal of their time performing tasks that could easily be automated.
As the authors of the Deloitte report noted, the technology is readily available; and automation and predictive analytics are keys to finance transformation, elevating F&A to a role in which they can routinely and consistently deliver strategic value.
If your organization is poised for finance transformation in 2022, insightsoftware can help. We provide financial intelligence tools that integrate with over 140 different ERP systems. We deliver comprehensive reporting, business intelligence, planning and budgeting, and predictive analytics tools aimed at finance users. Contact us today to schedule a free demo.