By Nilly Essaides
Finance is facing four major challenges this year.
1. It needs to help the organization formulate strategy by providing better analytics…
2. while continuing to confront cost pressures.
3. It needs to handle the major impact of digital transformation on its performance and service delivery model; and
4. It need to reshape its talent profile to accomplish all of these challenges.
The 2017 Hackett Group Key Issues Study reveals that finance is at a crossroads. It faces big strategic asks from the enterprise and the prospect of dramatic change from digital transformation. Yet executives report they don’t have the capabilities to deliver on those “asks” today. And what’s worse, they’re not taking any urgent steps to develop them this year. Finance organizations that fail to move quickly to build the people skills and technological infrastructure they require to deliver top services to management and business leaders will hurt their companies’ abilities to compete in a market that’s increasingly driven by disruptive innovation and focused on growth.
As organizations pivot toward growth from margin improvement, finance reports that companies are expecting it to help support strategy through improved analytics and decision support (see chart below). Certainly, finance needs to help keep enterprise costs down. But the bulk of the “asks” are around strategic themes, not cost cutting.
Top Five Most Important Enterprise Goals That Finance Must Support in 2017
Source: The Hackett Group 2017 Key Issues Study
Finance itself is facing cost cuts in the coming year. It’s expecting its budget to decline of 3.8% and a reduction in headcount of 4.4%. It’s not surprising perhaps at the top of improvement initiatives for 2017 are efficiency related, or more of what we’ve seen in the past couple of years, i.e., moving more activities to the GBS and reducing cost. Finance does first what it knows best.
Closing the digital gap
The problem is those tried and true moves are not going to help it deliver what the enterprise needs and meet the challenges of digital transformation. And the latter are formidable. There’s almost universal agreement among study respondents that digital transformation will bring step change in finance performance and will have a significant impact on finance’s delivery model. Yet most finance executives attest they don’t have the capability to execute on these imperatives today nor are they taking meaningful steps to develop the necessary technological and talent competencies.
How to proceed?
- Come up with a digital roadmap. Devising a roadmap came up fifth on the list of technology initiatives, after activities like master data governance and rationalising finance applications. Yet the digital roadmap is the first step finance must take if it’s going to chart its course and figure out what it needs to do next.
- Identify critical new technologies. Adopting new technology was number six on that list of initiatives, with only 34% of respondents. New technologies are the lifeblood of digital transformation. Technologies like big data, predictive analytics, mobile, and RPA are the tools that will enable finance to win in the digital era. Our data shows that RPA is destined to grow from mainstream adoption of 3% to nearly 30% in 2-3 years. Finance teams that jump in early with get a leg up on the competition.
- Develop new skills and competencies. Finance realizes that digital transformation and enterprise demands require new skills, but this year it’s not planning any big steps. Only 22% are planning major changes to talent development initiatives and a mere 14% plan to change their recruiting and hiring strategies. If so few finance organizations are moving ahead in these key areas, how will finance revamp its skills set and produce analytically minded, intellectually curious, tech savvy and business partnering professionals?
Finance need to take bolder and faster steps to build up these technological process and competencies if it’s going to deliver on its promise to the organization and meet the challenge of digital transformation head on. You can download the full study report below.
Source: Generation CFO LI Group