The growing role of Finance and Accounting in Digital Transformation and business success.

It is becoming more obvious that finance and accounting be part of the business value-creation process and provide business advisory solutions on top of debits and credits, knowledge of accounting standards, and financial management.

Successful companies expect the finance function to do more than just the basics and to develop business partnering capabilities.

Finance & Accounting teams are expected to;

1. identify value-creation activities (What kinds of activities create value and what activities don’t?);
2. develop future strategies (Where should the business be headed?); and
3. suggest ideas to execute and drive those goals (How can the business achieve its goals?).

However, many Finance & Accounting departments fall short as advisers. Two common features prevent them from doing so: being backward-looking and relying too heavily on spreadsheets.

• Backward-looking F&A. In many Finance & Accounting departments, there is much criticism that the function was backward-looking and thus didn’t add any real business value. The F&A departments provided past-month historical reports and explained what happened in the past month versus last year and versus budget, financial ratio, and so on. Variance analysis explanation is based on what already happened. It’s like reading last month’s newspaper today.

• Overreliance on spreadsheets. Spreadsheet programs like Excel are very powerful and user friendly. However, when all of a company’s financial information is compiled using Excel and spreadsheets are used to consolidate business results, employees have to spend a lot of time sieving through data and performing regular reconciliation to check for possible errors. And these Excel files tend to grow in size and complexity as the business grows.

If F&A departments are to spend a huge amount of time compiling historical financial information using a clunky and ineffective method, it is just a matter of time before existing competitors or new entrants eat up the differentiated value created by the business.

Understanding these problems, how does one transform traditional F&A into a function with business-partnering capabilities?

Dive deep to understand the value-creation process.

Examine the internal value-creation process of the organisation. You need to understand who the customers are, the key activities to generate customer value, and how the business delivered such value to its customer.

Gather information and build trust and empathy.

The next step is to collect information from other internal stakeholders and build trust and empathy in those relationships. This information collection exercise can help to identify fresh issues.

In many organisations today, the F&A function is very tied up with daily routine tasks using spreadsheets and constantly preparing many reports. There is no time to invest in improvement projects. F&A also don’t generally have the right tools to reduce these daily workloads. There is a general fear of job security as well; if spreadsheet work were to be automated, would some staff be retrenched?

Overall, the general readiness to embark on a finance transformation journey is very low.

Look beyond internal business model and value creation.

It’s important to look externally beyond the business model and the value-creation process of the business. In any digital transformation project it is valuable to compare business models and value-creation processes of direct competitors and top global companies to identify emerging trends. This helps identify where the organisation has done well and where there are opportunities to improve. Knowing emerging trends will help raise discussion pointers as a finance business partner and key considerations for the business in its strategic plans.

What doesn’t work.

Many textbooks and models advocate for going after the “low-hanging fruit”. However, the idea of going after the easiest option and hoping to produce results rarely works. Many such options do not bring significant enough impact to the business and move F&A closer to being a finance business partner.

Finance transformation projects are really change management projects that will not yield results if you’re working on an easy option. Finance transformation projects are multifaceted, and a project manager must first secure senior management support, plan the implementation in phases, and ace the people factor that comes with project implementation.

Mandate from the top.

Support from the top is crucial to kick-start a transformation in F&A. The background research and preparation using the three strategies above need to be in place, and when the right time comes along, you will be ready to present your ideas.

The concept of low-hanging fruit does not work in practice. Tailoring finance transformation to what the business wanted, especially to powerful stakeholders in the organisation, will ensure success.

Final word on the people factor.

Building relationships with internal customers and gaining their trust is crucial in getting buy-in for any transformation. Such projects must create value and provide services to solve their pain points, in the same way any business provides products or services to their customers, before internal stakeholders see the benefit of a finance transformation.

One way to respond to managers who need to see how a finance transformation would benefit them is to show them the possibilities for higher efficiency. You could identify a more powerful IT tool besides spreadsheets that will help reduce both routine and ad hoc report preparation workload.

Thanks to digital transformation technologies like real-time data analytics, robotic process automation (RPA) and artificial intelligence (AI), financial management is no longer about looking back. It’s all about looking forward, with predictive insights that yield positive business outcomes at scale. While our industry has undoubtedly been disrupted, it’s also been dramatically improved.

These changes (and their benefits) are flowing far outside of the finance department too: Executives and department heads — CPOs and CIOs included — no longer have to repeatedly report back to the CFO. Today, with intelligent tools at their fingertips, they can easily access, share and analyze critical organisational financial data.

The foundation of an intelligent finance operating model is rooted in integrating talent with applied intelligence, unique approach to combining AI with data, analytics and automation under a bold strategic vision to transform business — not in silos, but across every function and every process, at scale.

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