We know that might seem a little off to you, but bear with us. The technologies we now have at our fingertips give us access to a detailed, ever-changing, real-time picture of a company’s finances. As a result, the finance function has to be able to monitor and respond quickly to the data they’re receiving. That’s why it must include elements of a best in class IT department.
From a technology standpoint, you’ll need to keep up with changes too. If you’re not aware of new developments and constantly looking for ways to improve and innovate, you can very quickly get left behind.
Thankfully, this new structure breaks the function out of the old cycle in which finance relied on IT to develop and support tools. In that old cycle, there was a gulf between skillsets – finance didn’t have the tech skills and IT knew nothing about finance. With new technologies, finance can learn enough IT skills to be able to break free of their reliance on other teams.
Here’s how all finance functions should be structured if they want to be truly digital in their approach:
Every finance department should have its own project manager who can bring IT-level project governance and vendor management to the portfolio of projects finance is delivering. They would look for constant iterative improvements in technology and processes and oversee the delivery of specific reporting projects, requested by key stakeholders within the organisation.
It is essential for FP&A teams to have the skills to maintain planning and reporting solutions within the team, and not outsourced to IT or an external provider. The rate of change will not slow in the coming years. It is crucial that the finance team keeps up with it. Rely on outside teams too much, and your solutions and systems will quickly date.
Finance teams need access to data science to identify any opportunities for the team to use predictive analytics or machine learning to automate manual tasks. A great example of this is tax reconciliation – systems can be trained to determine which spend items are tax-deductible. This has previously been a manual task. In situations where there are 10,000s of items, there are potentially huge time and cost savings to be made.
The ‘demand desk’ – kind of – this is the customer-facing side of the finance function. By talking to stakeholders within the business, the business partners get a firm sense of what questions need answering, and which questions are hardest to answer. This role is about finding the right questions to answer with analytics, managing demand, and operating as a business expert within the department.
Hopefully, you now understand what we mean by an IT department-like structure and what we call digital finance – the modern team takes on projects from stakeholders, works to deliver constant, iterative improvements, and offers support to other departments within the business. This is happening now in forward-thinking finance teams – it’s not the distant future. Start thinking about how you can adapt.
This blog is co-authored by Christopher Argent of GENCFO and Tristan Colgate of Fidenda.
Chris is the founder and MD of GenerationCFO.com and creator of the Digital Finance Function Model and a contributor to many articles on our platform. Chris focuses on the shift toward digital transformation in accounting and finance, shows you what good looks like, then helps to get you there!