1.Set aside more time for finance process innovation
Few finance functions plan for innovation and process improvement or set aside funding, time and resources. 11% of finance functions never discuss innovation and a further 54% say they would “if only they could spare the time”. Given this data, it is perhaps not surprising that only 12% of investment in innovation is finance-inspired (compared to more 49% of investment that goes straight into customer-facing applications). To underline the point, 2018’s research into the Future of Finance Function Innovation revealed that only 25% of finance functions consider that they have carried out an innovative finance project in the last 3 years.
2.Know your stuff
Lack of familiarity with leading technology and finance systems vendors is becoming a serious drawback to advancing the cause of the Modern Finance Function. According to FSN’s research The Future of Planning, Budgeting and Forecasting 2017, only 6% of CFOs understand the technologies available to them, only 37% say they know what solutions are available in the market and only 25% of CFOs actually have the time to investigate opportunities for technology innovation.
3.Overcome your fear of failure
45% of CFOs and senior finance executives believe their approach to innovation is too conservative, lamenting that “we do not experiment or pilot new technologies”. And 34% are too afraid to make mistakes so they shelve innovative ideas to avoid errors, according to FSN’s 2018 Innovation in the Finance Function survey.
In fact, “fear of failure” is twice as high in European businesses as their US contemporaries. Yet it is possible to drastically reduce the risk inherent in major finance systems change. Choose vendors that are a ‘safe pair of hands’ for example, have reference sites just like yours and have a proven methodology and the domain knowledge to take you to where you need to be. Take advantage of a ‘proof of concept’ (POC) to establish the true capabilities of the software and people you want to work with and, finally, leverage pre-built AppStores and marketplaces that might help you get a head start in the more complex or esoteric parts of your application.
4.Don’t settle for anything less than “data mastery”
FSN’s 2018 research into the Future of Financial Reporting shows that only 19% of finance functions consider themselves, “data masters”, i.e. that data is actively managed as a corporate asset, and that they have the tools and resources to provide competitive edge and insight.
But that leaves a staggering 80% of finance functions that are either data-overloaded, data-constrained, or technology constrained. However, data-mastery is a defining quality that separates strikingly the performance of leading finance functions and the rest of the pack. Data Masters substantially out-perform their contemporaries in terms of speed of reporting, accuracy of reporting and the ability to forecast out further on the time horizon.
But what innovations distinguish the data masters from the rest? The key characteristics of data masters is that they have standardised and automated their ERP and reporting processes across the enterprise and, where feasible, they use a single unified environment for transaction processing and corporate performance management (CPM) rather than a plethora of spreadsheets and best of breed applications.
5.Invest in data visualisation
Around 70% of organisations say that their forecasting process is “respected”, “inclusive” and “strategic”, but disappointingly only 40% say they are insightful! In other words, huge effort is expended in the planning, budgeting and forecasting process yet, in the majority of cases (60%), it fails to support management’s decision-making with the insights it needs to improve performance.
FSN’s study finds that insightful organisations out-perform their contemporaries by a considerable margin. There are 4 stand-out characteristics of insightful organisations. They use specialised planning software, they deploy rolling forecasts, they make good use of non-financial data but they also use ‘cutting edge’ analytical tools, especially those that provide data visualization and charting. Our research suggests that the use of graphing and charting helps to drive insight by enhancing collaboration and understanding with operational and non-financial management who do not necessarily respond well to spreadsheets and traditional ways of reporting.
We would like to take this opportunity to wish all of FSN’s followers on the Modern Finance Forum, a Happy, Healthy, Peaceful and Prosperous New Year!!