COVER STORY OF THE MONTH
Changing roles of Strategic Finance Leadership in Digital Enterprise Transformation
The opportunity for the finance function to drive business transformation is only increasing, driven by several factors including visibility and access to information, ever changing regulatory and accounting requirements, constant cost pressures, digital revolution, social media and shifting customer expectations. CFO’s are focusing their energies in orchestrating business growth and agility. They are also putting together a performance framework that will be the basis for continuous evaluation to steer the organization to success. The information and data that will feed into such forecasting and evaluation is made available real time from a host of data sources lying both within and outside the enterprise (including competitor and customer related information), without requiring much effort and time from the finance team to collate and present it. In addition to standard performance metrics, the finance organizations’ DNA is changing, to include KPI’s such as customer information, customer surveys, supplier data, customer sentiment analysis from social media, trends in sales data etc. and determine early patterns that may eventually transform their markets to be able to identify and seize opportunities early.
The finance organization is putting in place technologies, that not only analyze such huge volumes of information from multiple sources, but can also put together meaningful dashboards that can interpret and provide insights to determine the course of action and support decision- making. Solutions like predictive analytics (that can use this information to predict future events) and prescriptive analytics (to suggest possible future course of action in an event), is increasingly becoming a pet project for several finance organizations.
Lastly, the focus on execution is receiving attention like never before. As a famous quote goes “To know is not to be wise. But to know how to use knowledge is to have wisdom”.
The finance organization is focusing on creating a connected enterprise that is fully automated, where employees and business partners are not only able to have visibility to information but also leverage it to execute business processes effectively. The shared services organization itself is seeing a transformation that includes a shift away from a pure focus on cost reductions towards improvements in efficiency and quality, as well as the transfer of more value-added activities to the SSC.
Close to 25% of SSC’s we’ve interacted with are heavily re-investing in their global shared service operations. About 50% are doing some work to move to a wide scale transformation of business process enabled by technology. Given the huge demand from SSC’s on demonstration additional value creation, most are at various stages of moving to a digital future. Conversations are no longer only on cost reduction – they are getting more interesting to find newer ways of servicing customers with the support of technology. This therefore, demands stronger alignment between business objectives and service outcomes. Finance functions are re-thinking existing processes and removing or replacing all “analog” steps which may currently be eased by technology but which aren’t fundamentally digital in nature. They are also investing in improved governance skills to cover these new capabilities, while many service providers are investing in higher caliber talent, analytics capabilities and technology platforms required to create this value. Conversations are moving further from process improvement and cost. Service providers are re-organizing around product management and development teams driven by software engineers and supported by business analysts rather than only capability teams defined by the geography or broad pools of generalist talent.
The finance organization clearly has a huge charter on its plate. Rather than a sprint towards transformation, several are adopting a systematic and methodical approach of continual change, prioritizing initiatives based on an assessment of their own level of maturity and related change management complexity in this transformation journey. A lot of them are taking a hard look at their current resources and realigning or up-skilling them to deliver the new suite of services to their stakeholders.
There is clearly a huge opportunity for the finance function and the finance systems should support the change by being flexible and enabling rather than constraining, adopting the right technologies and encouraging their teams to share good practices.