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Slay your legacy dragons and cultural silos to create the Finance OneOffice experience
Musings from the HFS F&A Leadership Roundtable
In June 2019 we held an HFS executive roundtable, supported by WNS. London’s Chartered Accountants Hall served as a “safe space” where finance and accounting leaders from multiple industries gathered with HFS analysts to discuss their experiences and learnings on the journey to the Finance OneOffice.
The Finance OneOffice is where processes across customer impact functions (formerly the “front office”) and operational functions (the “back office”) are unified to help enterprises to stay ahead of their customers’ needs and outstrip their competition by creating a compelling customer, partner and employee experience (Exhibit 1).
Exhibit 1: The HFS OneOffice Experience
Source: HFS Research, 2019
HFS’ recently published Why transactional F&A must be “invisible” to elevate finance as a strategic partner underpinned the discussions at the roundtable. HFS defines “invisible F&A” as the state of an F&A function where accounting transactions run like water and finance professionals focus on driving strategic objectives.
Exhibit 2: 10 Critical Success Factors of “Invisible F&A”
Source: HFS Research, 2019
Here are some of the nuggets of wisdom that emerged throughout the day:
- The “why” of finance transformation is clear, “what” is emerging, and now it’s time to focus on “how.” The role of the smart CFO is evolving from being a bottom-line and compliance enforcer to being a trusted business partner driving profitable growth. Finance must form part of the OneOffice, not the back office. The days of finding cheaper labor and better packaged software have passed. Offshoring has lost its mojo, and emerging technologies such as robotic process automation (RPA), artificial intelligence (AI), cognitive assistants, smart analytics, and even blockchain are captivating CFOs’ attention. Finance executives want continuous accounting requiring no waiting to close books, effortless payables and receivables with near-zero cycles, and real-time analytics enabling proactive decisions. However, hardly any have realized their ambitions.
- The silos and legacy dragons need slaying. Complex and deficient legacy IT and cultural challenges emerged as the biggest barriers to change (see Exhibit 2). Many organizations have not yet made the decisions that form the backbone of IT strategy —from basic decisions regarding cloud strategy to which suppliers are preferred. Is legacy technology here to stay? What are the options moving forward? When the basics are fuzzy, buying decisions are difficult. Standardization is still lacking, and the movement toward mass personalization should be underway by now, too. Silos stand in the way of end-to-end processing. Collaboration is great, but it can be very hard to do sometimes. Mindsets, deeply engrained in corporate culture, need to be shaken up.
Exhibit 3. Barriers holding F&A to reach the Finance OneOffice goals
Source: Inputs from HFS F&A Roundtable participants
- “Invisible” transactional F&A is the desired outcome, but it is not here yet. There was a broad agreement at the roundtable with the vision of invisible (or “silent”) finance that allows for more focus on strategic elements, but no one has reached it yet. Some good news: almost all organizations are on the journey and driving meaningful initiatives across HFS’ 10 critical success factors (see Exhibit 4).
Exhibit 4: Relative priority of the 10 critical success factors of “invisible F&A”
Source: Inputs from HFS F&A Roundtable participants
- Invest in talent and technology for the future. Talent and integrated technology emerged as the biggest areas of investment on a relative basis, which is not surprising given the challenges with legacy IT, corporate culture, and a lack of internal capability.
- Find a way to incentivize outcomes that work. Once you identify the outcomes, the next step is effectively incentivizing your workers. On the route toward the OneOffice, also encourage a cultural shift to OneTeam, ensuring people are incentivized to pass the ball to get a better overall result. Incentivizing outcomes for your third-party BPO relationships is equally important, yet FTE-based pricing rules the roost.
- Figure out who your F&A “customer” is. On one end of the spectrum, you can view customers as only those that are paying for goods and services that the company produces commercially. A broader view of the customer exists, and it encompasses partners and employees, too. HFS favors ease of use as the end goal for all users, internal or external. Many processes relying on ERP systems are (too) “clunky,” and millennials and Gen Z-ers have high expectations for ease of use.
- Get to hyper-automation, but don’t automate a mess. Hyper-automation is powered by the Triple-A Trifecta (automation, AI, and analytics). But “don’t take a garden fork and then look for things to fork.” It’s tempting to take this approach, especially in the excitement of getting a shiny new toy. There was unanimous agreement that a wise gardener would think about what needs doing first, then figure out what tools best fit the job. Think “toolkit,” and find the right use case for applying each tool you choose. Center tool selection on the needs of your customer, and remember that stable and standard processes are key pre-requisites so you don’t “automate a mess.”
- Manage change. It’s constant, and it’s here to stay. A lack of change management effectiveness is at the heart of many disappointments.Organizations frequently underestimate it, viewing it as a nice to have or fluffy part of project execution. Enterprises need to invest more in transformation skills, communications, and culture to oil the wheels of progress and change people.
- Support the team that is working through change. It’s new, it’s scary, and the team has to take risks. People have to put their necks on the line and expose themselves to the risk of failure when they are genuinely innovating. Make sure your teams have the support, especially from the senior ranks, to dare to try new and different tools, methods, and processes. There is no guaranteed easy, safe, and straightforward way to navigate uncharted territory—only the brave try. You must accept failure as a natural outcome; it needs to be supported and learned from, not just tolerated or hidden.
- Position F&A as the arbiter of data for the enterprise. The F&A function must step up and lead data governance initiatives for the enterprise. Our new research shows data governance is the key critical focus for enterprises, and no function has greater access to intimate company data than finance. Having a OneOffice focus brings the data flows from customer to operations together, and the CFO must be the executive to take ownership on governing the enterprise data
The Bottom Line: Act now! If you’re beating or maintaining pace with disruption, where will that leave your organization? And, more importantly, where will that leave you?
We all have choices. Doing nothing and hoping it all works out ok is a choice—it’s choosing inaction, but it’s a choice. Beyond inaction and reaction, there is also the option of taking action—driving change, fighting for change, following a leader of change, or becoming a leader of change. Even in the absence of a clear top-down mandate for change, think about how working to just keep the lights on is going to play out. You might achieve some cost savings, but even if cost savings are impressive, how are they going to impact the top line in the long run? What happens to FTE hours that are “saved?” Are they reinvested in growth or cut away?
If not you, who is focusing on the growth and evolution of business models in the face of disruption? Is there a joined-up approach? Is it enough? What’s going to be on your CV in five years?
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