For the past decade, the finance function has been singularly focused on turning itself into a strategic powerhouse, but in a zero-sum game, it has also been fighting for a share of investment in new systems and resources. Indeed, FSN’s research finds that only 12% of investment in innovation is finance inspired and many CFOs struggle to make a compelling business case for change.
Perhaps 2020 is the year for the finance function to focus on the key relationships that will ensure it plays its full role at the top-table, helping it to deliver innovation and business transformation within and beyond the finance function.
Here are my suggested 3 areas of focus for 2020.
1.Invest in teamwork across the enterprise
The new age of the strategic finance function has come about because finance holds the data-rich key to new insights and invaluable competitive advantage. But if it doesn’t share those insights and use them to elevate the rest of the organisation, then it is only realising a small proportion of the benefit.
Business success is built on teamwork, and the success of that team is directly related to the power of its collaboration, but so far, only a third of finance executives appear to be on the right track. According to FSN’s research The Future of Finance Systems, only 31% of senior finance executives have a fully developed strategy for finance transformation for at least the next three years and are fully involved in the digital transformation of the whole enterprise.
The data revolution is adding an urgency to this cooperation because data volumes are doubling every two years, but poorly shared across functions. The most effective finance functions are the ones that leverage their network. “Data Masters” are more accurate, they can predict further into the future and close the books faster according to FSN research. All of this comes from better data inclusion, a wider net of pertinent information from different business functions, and the willingness to share this information. The silo mentality remains a sticking point in many cases, and it needs to be broken down.
In 2020 CFOs must strive to build relationships with colleagues across the enterprise to embed a modern finance narrative within the business as a whole.
2.Develop and enhance finance business partnering
These days everyone wants to be a business partner. FSN’s Future of Business Partnering research found that 88% of senior finance professionals already consider themselves to be one. But the nature of these partnerships can vary dramatically and only a fifth of finance executives were acting as agents of change, the rest were largely limited to providing operational support or very finance-centric advice. The change agents, who actively explore new business models, seek out innovation across the organisation, and push for process change, can transform the entire business, not just the finance function. Developing any cross-departmental relationship is a positive step in the right direction, but modern finance professionals who want to raise their game need to re-focus their business partnering efforts on real change.
The start of a new decade is the perfect excuse for a new direction, investing in relationships and ensuring that business partners are credible, knowledgeable and well regarded.
3.Invest in Tech-skills in the finance function
All organisations, whatever their size concede that a widening skills gap is threatening their ability to deliver on innovation, advanced analytics and finance transformation. Competition for tech-savvy resources is bound to intensify. Yet, at the same time around 60% of finance functions neither have an adequate training and development programme to nurture talent from within, nor a convincing recruitment strategy to make up the shortfall from outside. Despite these obvious limitations two thirds stubbornly maintain that the finance function is an attractive place to work.
Smart CFOs know that more than ever before, 2020 has to mark a sea-change in the way that they develop, nurture and recruit finance professionals.
Winning hearts and minds
Finance has long-complained about being side-lined for investment in favour of customer-facing functions. CFOs have often struggled to present a cogent business case for centralising data management, changing systems, and upgrading processes. But the business case for change shouldn’t be a zero-sum game. FSN’s research identifies that building strong relationships across business functions, investing in teamwork, business partnering, and the right skill sets is crucial to delivering a compelling business case for investment and change.
May I take this opportunity to wish everyone in the FSN Modern Finance Forum a happy, healthy, peaceful and prosperous New Year!