According to a recent survey, 34% of finance functions are actively pursuing finance process innovation. But that still leaves 66% mired in legacy systems and unable to break out of the pack. The FSN “Innovation in the Finance Function” study, harvested the views of more that 1,000 senior finance professionals globally as it sought to identify attitudes to innovation, but it also helpfully shone a light on the barriers to innovation. Organisational culture, lack of time and an absence of agreed measures around innovation success all take their toll on new finance initiatives.
Attitudes to innovation vary markedly around the world and culture (both national and organisational) can have a profound impact on whether innovation gets out of the starting blocks. For example, 50% of European finance professionals consider that their organisations are too conservative when it comes to embracing innovation, compared to just 21% of their North American colleagues. North Americans it seems are more prepared to experiment with new technologies as they become available. One of the underlying reasons for this cross-Atlantic contrast in attitude is that Europeans are haunted by the fear of failure. Almost double the number of projects in Europe get shelved for this reason compared with the States. The study highlights that the 34% of successful innovators work in an environment that encourages and rewards innovation rather than punishing mistakes. These enlightened organisations see failure as a learning opportunity and an intrinsic part of innovation.
Successive FSN surveys have highlighted how the relentlessness of monthly, quarterly and yearly reporting leaves finance professionals time-poor and unable to pursue process improvement initiatives that would otherwise transform their performance. In fact, 54% of finance professionals say they would like to be more innovative but rarely get the time, and a further 11% say they rarely if ever discuss innovation and don’t have time to devote to it. But the irony is that the simplest of innovations, such as process standardisation and automation would yield time savings. But without any attempt at innovation, too many finance professionals find themselves caught by the law of diminishing returns, i.e. no time for innovation, so no opportunity for time-saving improvements, leading ultimately to a downward spiral of even less time overall.
Convincing the rest of the C-Suite of the need for finance innovation is also a formidable challenge but the inability to make a cast iron business case is one of the major stumbling blocks. 58% concede that they do not have an agreed method of evaluating ROI on technology driven initiatives.
Successful CFOs are not hindered in this way. These are the early adopters of technology, they encourage an active culture of innovation and they make time for it. They are not hindered by legacy systems and do not have difficulty making a robust business case and persuading the rest the board to invest in finance systems.
Nearly a quarter of this year’s survey highlighted their accomplishments in innovation and around 20% of those related to driving insight through the implementation of dashboards, better reporting and planning, budgeting and forecasting systems, especially in the cloud.
The final irony is that 58% of organisations claim they are hampered in their efforts to innovate by the lack of tech-savvy finance professionals, however, the research shows that modern finance functions that invest in innovation have no such difficulty. Smart CFOs know that innovation success, breeds success in talent acquisition.
Videos in the “Innovation in the Finance Function” series: