How finance teams must lead the charge to future-proof their organisations

By Chris Argent, Managing Director of Generation CFO

During my time as a Divisional CFO I became pretty frustrated about the value that the team was bringing to the business. I felt that through a combination of poor reporting and forecasting, bad technology, poor data and poor ways of working we weren't really delivering. At that time, this was very much seen as acceptable for siloed traditional accounting and finance functions to actually operate like this!

So, I took the decision to set up a LinkedIn Group - Generation CFO - to try and find a few like-minded people in the finance community; to try and have conversations about the situation and how we can improve what we do. Unfortunately, at the time, most of the technology change projects were led by IT and run by external consultants. Things changed following the release of an Oxford University research paper - ‘The future of employment and how susceptible are jobs to computerisation.’ The aim of this was to assess each job profile, in terms of tasks and skills, and to estimate the risks for each of these. Qualified accountants were 95% at risk of being automated, with Finance Managers at 97%. The media reported this as the death of accounting and finance, and that we needed to be doing much more in accounting to have a future. The LinkedIn Group subsequently grew massively. 

What is clear from this is that leadership teams have started to understand that digital transformation is relevant to them now, and that all businesses, to a certain extent, are technology companies. Most CFOs and finance professionals are also starting to acknowledge that there's a need to be a strategic business partner, and not just the “steward of reporting.” And if CFOs are signing money off against projects and investments, they have to understand what value actually looks like.

Establishing a digital finance function
A digital finance function offers CFOs a way of delivering on ever-increasing expectations and provides the kind of real-time financial insight needed in today's complex and increasingly competitive business environment. CFOs who take time to understand digital finance's potential and use this to help plan their way forward, will provide their organisation with a competitive edge. 

Identifying the best digital projects
As a finance professional, understanding what value means is the vital first step. If a CFO needs to invest thousands of pounds into a digital transformation project, the value of the project needs to be clear. For example, if you only focus on cost drivers, the project will likely fail. Whereas, if you look at it as a value-adding exercise and an investment – making funds available to create an asset which then generates income – you start to have a different dynamic and a very different discussion.

Focus on intangible value – data is now an asset, infrastructure is now an asset, and so on. And “digital” is a core business asset like no other, and its finance’s responsibility to safeguard it, to manage it and to help grow it. 

Finance as a business partner       
Digital transformation requires areas of the business, such as Finance and IT, to work in lockstep. Each of these functions has to be aligned to the business, and the goals fully understood, so that departments don’t just focus on their own agendas. Finance is best placed to do this as it has the relationships within the business and every budget holder wants its support. If you're trying to create this digital finance function and trying to set an agenda for it, you already have the relationships in your business partnering team.

Challenges to change         
A key challenge to transformation is bringing traditional and digital functions together. The focus needs to be on understanding this change, so that strategies and business priorities are clear and accurate. For example, a traditional hierarchical approach with the CFO at the top doesn’t work in an agile digital finance team, so cross-functional discussions to work on the priorities of the business is a must.

People don't change overnight, but a new agile mindset is needed, and they need to understand the opportunities provided by new technology. The reasons why projects fail is often nothing to do with the technology; it’s the lack of adoption or lack of understanding that is often the problem, so communicating the value available from automating POs, for example, is key. Focus should also be on people’s skillsets. In order to automate and bring in digital finance, there'll be a talent shift, and helping people up-skill will be a huge step towards project success. 

Strategy is a must, but culture also plays a huge role. Ben Horowitz, a successful investor in some of the biggest companies the world, such as Pinterest and Slack, focusses on culture because he knows that even in such hyper-tech companies, the difference between success and failure is the culture. Leadership needs to set the tone, the ways of working, how things are done, and communicate that regularly alongside the strategy, so that people will make the change. 

In summary, it's not the strongest species that survives, nor the most intelligent, it's the most responsive to change. If you can adapt, if you can bring in managed learning over time, if you can get your teams on board, your digital finance journey will succeed.

Proactis can help you achieve your compliance, visibility and efficiency goals through digital Finance Transformation.