Modern finance should be automating for insight as well as productivity. The ability to do this is within our gift but many finance professionals fail to deliver on the promise because they have not joined up their ‘front office’ (customer-facing systems) and their core financial systems in the back office.
Front-to-back office integration really matters
Put in a nutshell companies are capturing huge amounts of data about customer behaviour, web traffic and social interactions but fail to use this to inform their pricing structures, product bundling, commissions policy, loyalty schemes and decision-making.
Yet recent research looking at the Future of the Finance Function which surveyed the FSN Modern Finance Forum identifies that companies that have managed to link these elements make better decisions and forecast more accurately. So what’s holding everyone back?
Front office innovation is ‘sexy’ but back office isn’t
You’ve heard it from me before….management likes to spend money on improving the “customer experience” over investing in core financial systems. But I’m now making a different point. Yes, it’s important to invest in customer-facing systems and yes, it’s important to invest in back office systems BUT it’s even more important to invest in linking the two!
It’s obvious that if you have a smooth uninterrupted process from your e-commerce site, your CRM or point of sale system all the way through to your performance management systems that you have the complete picture necessary to make good decisions.
Marketing spends too much in isolation
The Chief Marketing Officer spends more on IT than the IT function! But the spending is compartmentalised and generally focuses on the delivery of campaign objectives, such as, business generation, relationships, profile, leads etc. Disappointingly, it rarely asks what data are we collecting in the course of the campaign that would be useful to others and how can it be shared across the organisation to make better business decisions.
Getting the resources to work for finance
Take a young software developer and ask them “would you like to work with the latest web technology, create customer-facing Apps or work on the interface between our front end systems and our financial management system?” That’s the problem…the best digital resources want to work on the latest gizmos not on ‘dry’ accounting systems.
So what can be done?
1 Create a virtual digital team dedicated to harnessing the full capabilities of digital technologies and skills across the entire organisation
2 CFOs, CMOs and CIOs must meet together to ensure that projects do not end up in functional silos and that data is shared across the organisation
3 Build career structures that incentivise scarce ‘digital’ talent and encourages it to work across business functions.
And finally, what comes first…investment in back office or front office? The reality is that it doesn’t matter. Some organisations have approached it from the back office but the majority have understandably instigated major process change and innovation in the front office. The key point is that driving insight needs to be given the same emphasis as driving productivity. Smart CFOs know that the two endeavours must be brought together.