As the old saying goes: Necessity is the mother of invention.
In the business world, nothing proved this more than the pandemic. Companies that were unprepared to adapt went under virtually overnight, while those that shifted their mindset and resources were able to survive. As it turns out, finance leaders say they’ve done a pretty good job at instituting systems in several foundational areas that would be essential when it comes to adapting to swift change. For example, 71% say their organization has mostly centralized their financial data with very few silos remaining. That’s according to a recent report by CFO Dive’s studioID with Tradeshift, “Building for Change: How CFOs Priorities Are Shifting from Efficiency to Creating Long-Term Value.”
Having seen firsthand how the proper use of technology provides efficiency gains, finance leaders are now looking to build on that foundation by recasting the role of the finance department along more strategic lines. This includes capitalizing on data in a way that allows finance teams to remain fluid and prepped for change.
So, what does a finance department that’s built for change really look like? Here are a few characteristics.
They use automation to open the doors to more strategic roles
As the role of the CFO grows, leaders struggle to achieve the right balance across an expanding list of priorities. Only a little over half say they’re spending the right amount of time on essential things like data and IT governance (58%), business development and revenue generation (55%) and corporate strategy and planning (54%), while 35% say they spend too little time on talent development.
“The CFO used to be very tactical in nature, but that’s changed,” said Yoana Land, CFO Transformation North America at L’Oreal. “The pandemic has ushered in a much more digital world. That’s unlocked a huge wealth of data that CFOs now need to harness and take back into the business.”
The proper use of automation can help with this shift by taking on an increasing number of low-value, manual tasks that previously kept finance teams mired in tactical work. Now, “finance practitioners, freed from the lower value, manually intensive activities, can focus on value-adding activities, whether that’s analyzing business performance, or developing data driven insight,” said Philip Peck, VP Advisory Services and Finance Transformation Practice at Peloton.
They recognize that next-level finance is as much a mindset shift as it is about technology
The most forward-thinking finance departments recognize that technology is only the catalyst and enabler for change. The real transformation happens within the teams who are using these technologies daily.
Finance leaders of today are presented with increasingly more sophisticated data they need to use to form business opinions that they can defend. “For many organizations, the mind-shift required to embrace, adapt and adopt new capabilities available to them can be a 180-degree directional shift,” said Philip. “Helping employees to cross that chasm often starts with a simple explanation of, ‘What’s in it for me?’”
Perhaps that’s why over four in 10 (45%) CFOs report that talent acquisition and retention is a major area of concern on their radar for the rest of the year. “For finance professionals today, knowing accounting and understanding finance is no longer enough,” said Land. “More and more, they’re going to have to possess strong digital skills and IT knowledge. There’s a lot more we should be doing to cross-pollinate the functions across finance, IT and data intelligence.”
They measure success on the level of effort required for the outputs they seek
While it’s true that technologies like automation and AI can help businesses reduce the costs associated with day-to-day operations, companies should see pure cost-savings as a by-product of transformation, rather than the primary objective. “Find KPIs that are simple and easy to measure,” said Land. “If change is constant, then you need to set KPIs that are going to be just as easy and relevant to measure in five years as they are today.”
To that end, finance leaders should be constantly evaluating the accuracy of data and information that informs their decisions making. After all, time spent fixing errors and cleansing data is time wasted. Sadly, many CFOs report having issues with their current financial data, including 37% who say they lack the internal expertise to properly analyze their financial data and 35% saying they don’t have the technology in place to gain strategic insights from their financial data. With access to better data, finance leaders and their teams will be able to put forth less effort for more gain.
They create a culture that embraces change
Finance leaders need to shake the mindset that if things aren’t broken, they don’t warrant any attention.
Linear thinking is the number one enemy of transformation.
Although events like the pandemic are rare, it’s increasingly clear that near-constant and seismic change is not only common in today’s world, but that it also has the capacity to upend traditional norms. Businesses that hope to thrive should be constantly thinking about what they need to do today to be ready for tomorrow. Getting individuals to see and understand the bigger picture is one of the most fundamental building blocks for any large-scale transformation initiative. “Never lose sight of your North Star vision,” said Peck. “It guides decisions, it guides your change management programs and it guides how you measure success.”
To learn more about how CFOs are handling their evolving roles — and how they’re using technology to help — access the full report by CFO Dive’s studioID with Tradeshift, “Building for Change: How CFOs Priorities Are Shifting from Efficiency to Creating Long-Term Value.