The finance function faces four major forces that are converging to force a change or risk irrelevance. According to the EY report, The DNA of the CFO, digital, data, risk and uncertainty, and stakeholder scrutiny and regulation will require CFOs to re-evaluate their own competencies and equip the finance team with the right tools and the right team members if the function is to become the strategic enabler it is expected to be.
So how does finance move from providing hindsight to insight?
“The new expectation of finance is decision-support. Knowing what happened in the past and why it happened is important. But being able to help the business grow through forward-looking analysis is even more important,” said Jeffrey Capulong, head of Finance Shared Services, Coca-Cola Bottlers Business Services during an exclusive interview with FutureCFO.
Challenges facing finance
Thee KPMG report, Future Finance Ready Survey 2019, suggested that in 2019 CFOs faced a host of forces that open new opportunities [and challenges] for Finance to take a leadership role in the enterprise like never before.
Factors such as rapid technological advancements, relentless regulatory changes, the rise of agile enterprise models, an explosion of data, and a heightened need for analytics have combined to place an abundance of new demands on the Finance function.
While these demands can seem daunting, with the right operating model, tools and talent—Finance can rise to a strategic leadership role.
The rollout of digital strategies, new tools and new practices to help modernise finance have its limitations. Capulong believed these enhancements to finance processes, including giving the opportunity for finance to perform more analysis, all these must start with having the right, clean information.
He also believed in the empowerment of businesses to produce their own reports as opposed to waiting for finance to generate these. Alleviating finance from standard report generation would give them more time to focus on deeper analysis and do recommendations as opposed to just reporting data.
Right skilling the finance team will also be critical if the business is to benefit from these emerging technologies.
Expectations from finance
One of the most thematic phrases of the Marvel comic character Spiderman “with great power comes great responsibility” rings true to finance. Finance today is no longer just the guardian of the company’s finance and financial data, it is also expected to use this knowledge to help the company go to the next level.
Capulong reiterated that decision-support is about giving the business information that will enable them to make forward-looking analysis that will support informed decisions will be key. A view shared by human resources consulting firm Robert Half in the report, Finance 2020 Closer than you think.
“The finance function needs to evolve to a strategic, analytical, data-driven powerhouse that embraces digitisation and drives performance, thereby adding value throughout the business. In order to successfully adapt to the finance function of the future, CFOs need to have an efficient finance model, technologies, and not least, highly skilled people,” suggested Robert Half.
Figure 1: Top 5 initiatives of finance in 2020
Source: Finance 2020 Closer than you think, Robert Half
Orchestrating towards one goal
For an organisation to move [grow as a group] Capulong believes there is a need for shared metrics and shared accountability. For instance, he proposed that finance be given sales volume target even if the department is not selling a product.
“Finance will need to help sales or enable sales to do more selling. Being on the operating side, Finance can provide insight and guidance to sales on things like pricing strategy, as an example, to achieve the operating income target,” he added
He also suggested that finance be considered a business partner to sales, not just a support function. Finance can assist in helping sales not only generate reports but also understand what the data from the reports are saying.
“I think that is very important to remove that silo mentality in the organisation,” he concluded.
The days when finance operated as a silo cannot continue. The Accenture report, The CFO Reimagined, noted that the CFO and finance must integrate and connect with other business units as part of the transformation process.
Figure 2: 3 hats of CFO [and finance]
Source: The CFO Reimagined, Accenture
