To get the most out of the data and turn it into actionable insight, today’s finance teams need ample analytical skills, too. That even high-tech industries like media and telecom struggle, with transformation success rates below 26%. Traditional companies have even lower success rates, with sectors such as oil and gas or pharmaceuticals falling between 4 and 11 percent. These figures are hardly surprising, given that many companies approach financial transformation as if it can be solved by simply inserting technology where once there were spreadsheets. Nonetheless, it’s a necessary soft skill that should become part of every finance executive’s repertoire. The most important trends and insights revealed in your analysis should resonate with management and your board beyond the financial statements. Scalable processes are solutions to satisfy necessary deliverables and workflows that can withstand the test of growth, potentially at a rapid pace.
What are the 3 basic functions of a finance manager?
The three basic functions of a finance manager are as follows: Investment decisions. Financial decisions. Dividend decisions.
It’s up to leadership to figure out what success looks like, how it will be defined and measured, and what teams should expect. Transformations require the widespread adoption of agile workflows, and this needs to be supported by leadership, training and straightforward, manageable expectations. Companies may even notice disparities between departments, with some teams exercising fully agile systems and reports and others lagging. For the transformation to be effective, you will need to plan to bring each department up to the same standard–making changes that everyone adopts rather than just a few digitally-enthusiastic finance team members. One solution to this is to throw more money at the problem and hire additional temporary staff. Instead of increasing headcount, organizations can reduce the amount of work their current staff needs to perform while still maintaining the control around the financial close with a risk-based approach to automation. Once the Record to Report process is standardized to ensure accuracy and consistency, world-class organizations can shift their attention towards gaining visibility into their numbers and workflows.
Build a comprehensive financial transformation roadmap with 11 best practices
If reaching your new targets requires additional resources or expanded responsibilities for those within your Finance Function, they must have defined structure to work within. Structure is the key to maximizing the potential of your Finance Function, and is precisely why we named one of our finance software solutions Foundation. If you think you are still wrapping your head around the scope of your transformation, you are not alone. According to EY’s Digital Disruption in Finance Survey, only 11% of finance leaders believe they are in the advanced stage of the digital transformation of their finance function.
They should pay specific attention to data governance, day-to-day workloads, and continually educate and train teams on tools and agile practices. Finance transformation should always be seen as a journey but one that should be started sooner rather than later to keep your organization from falling behind. Smart, timely investments and strategic steps lead to a much larger ROI and now more than ever the office of finance is looking for ways to be more efficient and effective. World-class organizations understand that not all accounts are equal, and thus do not require equal attention. This approach both reduces the spike of activities around the period end and also ensures that higher-risk accounts get the attention they need to be properly handled. There’s no point in introducing agile processes on the finance team without ensuring that all the processes that feed into finance are updated.
CFO transformation roadmap
The figure’s large central arrow represents the intersection of each Persona with the five-axis. Understanding what information and supporting data the business needs can be critical to realizing the new capabilities enabled by ERP and digital tools. As finance is about much more than numbers and results, it requires a great deal of people skills. FP&A tools and technology should be robust enough to expand the analysis of your data in a new light, without being complex enough that nobody on your team can use it. Change management might seem intimidating, but the ease of use and implementation of tools is not created equal. Some tools will appear to solve your problems, but will require lengthy and costly training and implementation that you simply don’t have time or resources to commit. This sample roadmap was developed for a company with a project scope that was limited to a planning system.
When various teams are responsible for collecting data and sending it to finance, errors occur. Managing data in disparate systems before consolidating it in reports creates unreliable insights based on often inaccurate information. Answering these questions will help your finance organization determine how to deliver value to your stakeholders. For example, a consumer product company focused on managing operating expenses may want to invest more heavily in standardizing and automating processes via robotic process automation. Alternatively, a technology company interested in expanding into new markets may want to invest more heavily in financial planning and analysis and predictive analytics capabilities to assess market growth potential. Unsurprisingly, some teams can spend so much time and energy implementing a financial transformation that many of the best practices fall by the wayside over the years. Leadership should prepare to continue driving change until all new processes are integrated into the workflow .
If we think about the arduous budgeting example, there’s hardly any control over the data or actual collaboration. This is the stage where many Finance Functions face the greatest uphill battle. Assessing the current state of your operation and defining necessary goals to achieve can be easily understood, but how you approach your transformation is what separates good from great Finance Functions. The workforce shifted from on-site process delivery to remote work delivery which prompted significant adjustments in data security and F&A processes.
- For this reason, the first step in an effective financial transformation roadmap is the standardization of templates and global policy.
- To create the finance vision, start with your organization’s strategy and the role Finance will play in enabling key business decisions.
- Not to mention the timeliness of all budget owners submitting their numbers varies, and rarely is everything completed on time.
- Although an overhaul might be necessary, your transformation doesn’t have to be a lengthy, multiyear process.
- The two z-axes are People and Process are the remaining components to digital transformation.
Helps finance departments step out of their islands and become strategic business partners that add true value to their business in today’s increasingly digital era. The roadmap consists of three waves aimed at raising the efficiency , effectiveness and added value generated by the finance function. That one of the issues concerning quick-fix solutions is that companies rarely look past their current year and work in a “hand to mouth” manner, fixating on annual budgets and performance. This kind of approach means they may fail to understand the long-term benefits of financial transformation and the ROI they can expect on more expensive, fully integrated solutions over time. Shifting the mindset can be as simple as remembering that any solution will be central to workflows for the best part of the next decade.