Organizational transformation through the adoption of new technologies has been critical in revolutionizing business functions including finance departments.
From SMEs to MNCs, the role finance plays may vary across these organizations as well as the industries to which they belong.
However, fundamental tasks in statutory accounts, management accounts, investments, budgeting, analysis, compliance, risk, payroll, audit, taxation and managing working capacity are very much interconnected.
Regardless of the size of a company or the industry in which it operates, these functions have to work seamlessly with other business functions to drive real organisational success.
In close-knit industries, it’s increasingly important to create the most value from strategic partnerships by drawing on intelligence from financial and operating data.
In the case of CFOs, this also means having capabilities to extract information more efficiently and accurately to enhance organization-wide performance.
CFO in 2020: Influencing digital innovation
Innovation in technology and the streamlining of business management structures can create opportunities for CFOs to add value across the organisation. The future of finance is about evolving and innovating the various roles across the department, or risk being left behind.
More evidently, the use of cloud computing has been a game changer in managing core finance functions. Software-as-a-Service (SaaS) providers now offer features that aren’t present in legacy systems, enabling finance employees to collaborate more effectively and improving the overall efficiency of the department.
The benefits of SaaS are obvious, and it is likely to grow in favour among finance professionals over the next few years.
The analysis of data will lead to greater interdependence between CFOs and CIOs or CDOs for the creation of better business outcomes
Unlike other business functions, such as marketing where channels and tactics are constantly changing, the scope of finance management remains the same.
With new accounting standards, including, but not limited to, revenue accounting and lease accounting, organizations will need to integrate new application software with enterprise resource planning (ERP) to manage the complexities.
CFOs have to adjust their approach and carefully assess the most suitable application for their organisation’s needs.
For many CFOs, the hesitation to move from rigid back-office systems to cloud-based platforms are largely around reliability, security, and upskilling workers.
Cloud service providers are hinged on the security they can offer to their customers and have invested in building strong reputation around it. The cloud is here to stay and CFOs have to prepare for this inevitable move to the cloud.
However, the real challenge is around managing data outside of the cloud, for instance when accessing it across various devices and connections. Also taking into consideration the regulatory environment in some countries, organizations may have to store certain data in cloud servers located within the country.
The year 2020 will see more companies dabble in these technologies and CFOs must start to see them as new opportunities for growth.
Don’t rush into it. Think about the outcome.
Old practices associated with manual transactional processing are already undertaken by cloud-based ERP to minimize input, deliver better interface and automation in reconciliations.
For most organizations, especially SMEs, resources in financial capital and human capital allocation remain a challenge in enabling finance to harness applications that works optimally for the entire organisation.
One cannot simply apply the latest state-of-the-art applications software and reap the benefits immediately, since it works differently for each company, depending on their size and industry.
Adopting a phased approach
A phased approach allows for better management and balance of resources from the daily operational activities rather than a ‘big bang’ approach.
Epsilon, for example, progressively adopted a new sales management application as the company moves into the next phase of growth.
The implementation saw all of our core business functions, including finance, building it from the ground up and linking to other core IT systems in phases.
This allows the organisation to better maximize the value of the application for the long term.
At the same time, finance can continue to tap on existing data analytics software and tools, to provide customised actionable information efficiently without disrupting day-to-day operations.
For many CFOs, the hesitation to move from rigid back-office systems to cloud platforms are largely around reliability, security, and upskilling workers
Data and the need of business partnering
While the finance department is subject to digital transformation initiatives in cadence with rest of the organization, the fundamental challenge remains the same: data source and integrity.
The data is used by various leaders within the organization to establish ‘the single source of truth’.
The analysis of financial and operating data not only has to be immediate, but also accurate and secured.
Having said that, this will eventually lead to greater interdependence between CFOs and CIOs or chief digital officers (CDOs) for the creation of better business outcomes.
CFO as the pillar of strong culture
To realize the fullest potential in the adoption of new technologies, CFOs need to reconcile their traditional duties with new responsibilities as their role evolves.
The future CFO is someone who has empathy at scale, having the emotional intelligence (EQ) skills to effectively communicate and undertake large-scale digital transformation while facilitating deeper collaboration between employees, departments and stakeholders.
CFOs are rooted in traditional responsibilities yet are becoming a pillar of strong culture in changing workplace mindsets and embracing technology adoption.
There's absolutely no doubt that influence coming from the top to drive digitization tends to be more successful.