Despite the huge interest in innovation and the thousands of column inches written in the media every day, innovation is one of those terms that defies precise definition. So rather than attempt to define it, FSN’s 2018 Innovation in the Finance Function research invited the global finance community to offer examples of what it thought constituted innovation in the finance function. The answers were as varied as they were surprising.
Over a quarter of the 1,063 survey participants claimed that they had initiated some form of innovation in the last 3 years and described actual examples of innovation in their businesses. The comments reflected the wide-ranging views of CFOs and senior finance executives at different stages of their journey to becoming modern finance functions with the research highlighting that innovation is very much in the ‘eye of beholder’. For instance, 35% describe even quite modest developments as innovation. These are the organisations shackled by legacy systems for whom innovation is limited to tinkering at the edges of their processes and of necessity, making marginal changes in automation and integration rather than wholesale change to completely new systems.
But it is telling that for 85% of CFOs the most pressing need is for innovation to drive better insights about the business. This of course reflects the changing nature of the finance function from accounting powerhouse to strategic leader. Finance sits at the confluence of all the business functions and is best-placed to offer the sort of insight that can give organisations a competitive edge.
Encouragingly, 20% of survey respondents gave examples of innovative projects designed to deliver management insight. The implementation of budgeting and planning tools featured prominently, as did business intelligence tools and dashboards. But the motivation in the majority of cases was the delivery of better key performance indicators and analytical capability.
Cloud implementation featured more strongly in this category than any other, perhaps because of the greater choice and popularity of cloud-based applications in the Corporate Performance Management space, or the relative ease of implementing management information initiatives in the cloud, compared with, say, ERP in the cloud.
For many organisations, the implementation of cloud-based planning, budgeting and forecasting (PBF) offers an opportunity to break free from legacy systems while swiftly demonstrating to the rest of the C-Suite the benefits of innovation, for example, improved speed of forecasting and forecasting accuracy that can be achieved by migrating to modern (PBF) applications in the cloud.
Newer technologies such as machine learning and AI (Artificial Intelligence) represent the next wave of innovation in the finance function and remain largely experimental at this stage. But FSN’s research already identifies these ‘green shoots’ and it is the CFOs that have successfully implemented PBF in the cloud will be well placed to convince the rest of the C-Suite to invest in these exciting innovations coming down the line.
Videos in the “Innovation in the Finance Function” series: