2017 has been a particularly busy year for FSN, marked by the conclusion of three global research projects designed to assess the status and progress of the modern finance function. As we approach the end of the calendar year, I wanted to offer 5 stand-out observations arising from the research that have the potential to transform the fortunes of the modern finance function.
1.Take a more holistic approach to delivering insight
Despite all the effort that goes into Planning, Budgeting and Forecasting (PBF), only 40% of organisations characterise their PBF process as insightful, i.e. enabling them to tap into unexpected insights and pathways to better performance. Yet our research finds that with a carefully crafted blend of analytical technology and a broad data pool, all organisations can achieve a more meaningful and insightful outcome.
It turns out that insightful organisations maximise the use of non-financial data, use rolling forecasts, employ specialised budgeting, planning and forecasting software solutions and maximise the use of data visualisation techniques, (graphing, charting and dashboards) to help drive understanding.
2. Make finance technology a higher priority
As CFOs take on a more strategic role, they continue to be time-poor and somewhat in the dark about the available technology solutions. According to our research, only 6% of CFOs really understand the technologies available to them and only 37% know what is available in the market.
CFOs complain that they don’t have the capability or knowledge to choose the right systems, but modern finance functions need to enshrine technology as a core competency because so much of their operations are now tech dependent.
3. Re-examine and re-define the basis of business partnering
Many CFOs are still finding their way in relation to business partnering. The roles and expectations of business partnering are not yet well-defined and many finance professionals are involved too late in critical business decisions.
When partnering with other business functions, senior finance professionals often consider their main priority to be explaining the financial consequences of operational decisions that have already been made! They don’t appear to see it as their role to coach or nurture business units to make better commercial decisions in the first place.
But this is a missed opportunity and an important part of the strategic role that finance can play. If the finance function is to remain relevant is must redefine its role, improve its knowledge of operations, focus on adding value at an early stage of the decision-making process and build trust with the business units.
4. Broaden the finance data universe.
78% of finance functions claim to have become more data-driven over the last three years but it appears they are only more data driven about the data they already know about. If finance professionals are to succeed at adding value, they need to broaden their horizon with new data sources. Encouragingly, a rising proportion (26%) are beginning to see Customer Relation Management (CRM) systems as a rich and largely untapped source of insight that can strengthen the decision-making process.
5. Redefine processes in the cloud
Few organisations have reached cloud “Utopia”, i.e. implementing a single, shared business model across the enterprise, in the cloud, provided by a single vendor and connecting all relevant stakeholders. In the main, those that have migrated to the cloud appear to have replicated the limitations of the processes they had on-premise, with partial implementations in the cloud and different business models in use across different parts of the business.
There are significant benefits of moving to the cloud, yet so much more could be achieved if cloud implementation is coupled with an in-depth overhaul of underlying processes.
May we take this opportunity to wish all members of the FSN Modern Finance Function on LinkedIn, wherever you are in the world, a wonderful festive break and a peaceful & prosperous New Year!!