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Finance is no longer a back-office function. More than 80% of the 30 senior finance executives that participated in the recent Capgemini-supported HFS digital roundtable ranked “enabling enterprise top-line growth” as the #1 objective for their finance departments going into 2021 (see Exhibit 1). Driving operational cost reduction is still important (ranked #2 by the roundtable delegates), but there is consensus that the role of the smart CFO is evolving from being the bottom-line and compliance enforcer to a trusted business partner driving profitable growth (see Exhibit 2). Finance executives have the opportunity to use the initial pandemic shock this year to re-design how the finance function runs and contributes greater business value to the organization.
Exhibit 1: Participating enterprises represented multiple industry verticals and geographies
These shifts have been percolating in the F&A world for several years now, but the pandemic shock has finalized an irrevocable transformation in thinking about finance’s role and value. Ninety-five percent (95%) of the roundtable delegates say the pandemic has changed the way they operate F&A. Many leading-edge enterprises have stopped looking at cost savings or greater transactional throughput as the sole markers of F&A success, expanding the definition of success to include achieving specific business outcomes like top-line growth and stakeholder experience enhancement.
Ninety-four percent (94%) of the roundtable delegates desire a future state of F&A where accounting transactions run like “tap-water” and finance professionals focus on driving strategic objectives. However, very few have realized their ambitions, their attempts marred by the persisting friction points of legacy technologies, cultural silos, talent shortage, and inaccessible data.
“We are unlocking frictionless finance with our D-GEM platform to re-energize enterprise business processes with an AI augmented workforce to enhance sustainable and tangible outcomes for our clients”
David Lumley, EVP, Head of Finance Transformation, Business Services, Capgemini
Exhibit 2: Finance is no longer a back-office function. The role of the smart CFO is evolving from being the bottom-line and compliance enforcer to a trusted business partner driving profitable growth.
Sample: 30 F&A executives attending HFS Digital Roundtable
Source: HFS Research, 2020
A major software firm and roundtable participant has been on a 10-year journey to decrease transactional costs with various strategies like outsourcing and automation. It is now driving cultural change in F&A to take on bigger assignments like global forecasting across a range of services and products. This mindset shift supports the business more in areas that count and drives outcomes associated with investment allocation and working capital optimization.
Another initiative is from a major European wireless provider focusing more on data analysis and performance management overall. It is building a cross-functional tool and platform supported by management reviews across markets, based on advanced analytics and leveraging the Google Cloud Platform for application processing and storage. The company thinks this marks a milestone for advanced technology use within the market. F&A plays an important role because data collection and analytics must be market-specific, and the F&A organization aligns to this goal around data. Automation plays a role as the ultimate silo smasher.
The goal of F&A is to deploy emerging digital technology and, through its use, discover non-conventional outcomes. One issue is that non-conventional outcomes analysis must be performed by non-conventional F&A staff. The analysis requires people with skills and understanding that go far beyond the boundaries of traditional accounting and finance and into the realms of mathematics, computer science, and business intelligence disciplines, along with more problem-solving, creative thinking types that can work across the organization for better business partnering.
A major European automotive manufacturer is evaluating how the finance function can help the company gain greater insight into its dealer network. The goal is to move beyond using historical financial data to using dealer data to forecast specific business outcomes, including the effectiveness of technology investments. The company is beginning to think of data as a strategic asset, and it believes it needs partners who will act decisively based on the new insights.
As companies move to the use of platform ecosystems more broadly, they need to think in different ways: it is all about merging data and technology. F&A organizations are taking steps to reframe their operating models to address these new requirements and strategies, with a first step being fewer siloes of activity—removing the friction of data and technology that organizational boundaries set.
Challenges to overcome: Data fragmentation, data governance, cloud enablement, data strategy, and hybrid working
The Bottom Line: We will never get another opportunity to do what we always knew we had to do. Let’s get going.
Success in our new virtual finance and accounting world will demand breaking down barriers and reducing friction. We must address these challenges now to prepare organizations for the new operating models of the post-pandemic world.
Change is on the menu for 2021!
Exhibit 3: 2021 will be the year of _______________
Source: F&A executives attending HFS Digital Roundtable, HFS Research, 2020