Innovation is very much in the ‘eye of the beholder’. What is innovation in one setting could be considered mainstream in another. While modern finance functions naturally seek to explore the very latest and more experimental technologies (digital assistants, artificial intelligence, natural language processing), there is a treasure trove of benefit to be gained from some of the more settled innovations of the last few years.
Here is a list of five innovations that have proven their worth in the field and if you haven’t considered these yet 2019 is a good time to start.
1. Move to the cloud
The cloud is more or less taken for granted these days. When considering replacement systems many finance functions have cloud deployment firmly in their sights. Early support for the cloud vested in the benefits of having the software vendor (such as FinancialForce) doing the ‘heavy lifting’ in terms of software support, upgrades, maintenance, and operations. But cloud is also a platform for innovation, not only because most of the freshest ideas are developed for the cloud, but also because of the way cloud deployment can transform financial processes, for example, introducing standardisation and control at a stroke. Process standardisation holds the key to eliminating wasted time and the cloud is an accelerant, allowing finance functions to focus on what really matters as well as providing a platform for future innovation.
2. Greater use of non-financial data
FSN’s “Future of Planning, Budgeting and Forecasting” research 2017 identifies that fewer than 11% of businesses have increased their use of non-financial data in the last three years, yet it is the most influential source of data in relation to extending the time horizon over which organisations can predict their results with confidence. In fact, organisations that harness non-financial data are more than twice as likely to be able to forecast beyond the 12-month time horizon. Finance functions that make innovative use of non-financial data can clearly make a stronger contribution to the development of the business.
3. Complete data-mastery
It is perhaps strange to highlight the mastery of data (financial and non-financial) as an innovation yet FSN’s 2018 research into the Future of Financial Reporting shows that only 19% of finance functions claim to have mastered data. But what innovations distinguish the data masters from the rest? The key characteristics of data masters is that they have standardised their ERP and reporting processes across the enterprise and that they use one unified environment for transaction processing rather than a plethora of spreadsheets and best of breed applications.
4. Collaborative technology
Finance teams can spend up to a quarter of their working day simply looking for information. So, if you had a four person finance team, it is as if one of them didn’t show up to work. Part of the problem is that when something goes wrong with transaction processing most of us resort to ‘walking the corridors’, impromptu meetings, conference calls, and lengthy emails to try to resolve the issue. No wonder that the cost of fixing an errant transaction is 80% higher than one that goes through correctly first time. But what’s the alternative? Innovative technologies such as Chatter embedded in the FinancialForce platform, for example, allow instant communication (with presence checking) and screens to be shared with colleagues so that problems can be resolved quickly on the spot. But there is a long way to go. Currently, only 18% or finance organisations take advantage of this innovative technology.
5. Machine learning
One innovation that has caught the imagination of the modern finance function is the use of machine learning to drive more automated processes and better insights into performance across the enterprise. Finance professionals are eager to deploy technologies that can reduce the burden of mundane work, help them focus on exceptions and release time for value-added activities. It is early days for these technologies, but use-cases are beginning to emerge in the ERP environment where data is well defined and there is a sufficient quantity of data to enable machine learning to develop.
There are very many ways to innovate in the finance function. However, for those that ‘grasp the nettle’ any of the above innovations would advance the role and standing of the modern finance function.