THE VALUE OF MODERNIZING FINANCE FOR CFOs
In today’s economic and business climate, it’s more important than ever to anticipate change, adapt to fluctuations in customer and market demands, take advantage of technology advancements, and quickly react to global trends. In the previous post of this series, I discussed why finance modernization was an imperative for creating and supporting such business agility and what it might look like. In this post, I will focus on the value CFO’s and their teams can realize from a modernization initiative and the steps they can take to making it a reality.
First, let’s focus on the benefits that modernization can bring to finance executives and their teams – in addition to the very significant benefits modernization brings to the business as a whole.
Increased productivity and more time for analytic and predictive activities: By automating the “traditional basics” of finance, you eliminate the hours of tedious, manual work and free your team for analytic and predictive activities. Automation can also yield drastic improvements, such as reduced close cycle times, better automation of the balance sheet and operational reconciliation functions, and productivity improvements of 20% to 50%.
Fewer errors and reduced risk: No one likes to make mistakes. But manually intensive work invites mistakes, even among the most diligent. Increased automation reduces the potential for human error associated with manual data entry and calculations, managing multiple spreadsheet versions, and making last-minute changes.
Increased motivation and satisfaction among team members: Most team members will quickly appreciate the investment the business is making in them and will welcome the opportunity to do more challenging and satisfying work. Plus, we’ve found that team members enjoy – and often brag about – working with the “coolest” software.
Expedited deliverables: Modernization will expedite the delivery of internal and external reports and eliminate hours of nail biting over deadlines.
Increased stakeholder satisfaction and confidence: Perhaps most importantly of all, senior executives, business owners, and other stakeholders will have increased confidence in the accuracy of the information you present. Additionally, they will appreciate the new levels of detail you bring to reporting and the accessibility to timely, relevant data whenever needed to obtain actionable insight into the business and operating results.
All of the above benefits contribute to transforming the role of finance from traditional number crunching to a focus on strategic leadership, insightful advice, and meaningful business partnerships.
So, how do you get from where you are today to a modern finance organization? The roadmap will definitely differ from organization to organization. But there are a few key steps that every organization should take to ensure that the modernization journey takes you to the desired destination.
Step 1. Assess your current finance maturity with attention to these areas:
- Data: How easy is it to collect the financial and operational data needed? How much of data collection is automated? Are there issues with consistency and standardization? How can you ‘master’ the usage of data?
- Processes: How defined are your processes? What controls are in place? How much is automated and how much is manual? What kind of innovation is needed to streamline and refine core finance processes?
- People: Do you have a talent strategy? Competency definitions? Performance measurements?
- Strategy: Do you have a defined vision of modern finance for your organization? Senior executive buy-in of that vision? An understanding of unified technology and modern applications?
Step 2. Identify the areas needing improvement/transformation. You may find it helpful to categorize potential work into these main areas: financial and operational insights for business partnering, process improvements, forward-looking activities, and compliance.
Step 3. Prioritize work based on most urgent business needs and greatest potential value. Some organizations might need to focus on a major compliance deadline. Others may put highest priority on replacing static budgets with rolling forecasts. Still others may need to put predictive forecasting and analytics at the top of the list.
Step 4. Based on the identified priorities, begin detailing the specific work that needs to be done, the resources and technology required, and its impact on existing processes and technology. Incorporate this work into a modernization roadmap.
Step 5. Develop a timeline.
Just as Rome wasn’t built in a day, finance modernization won’t happen overnight. For most organizations, a modernization initiative will take several years. But, the payoffs will be real and significant. Your business will be more agile and competitive; your team will be more productive and engaged; and your stakeholders will have a new appreciation for finance work. And you will be the strategic leader and advisor who can help your company quickly capitalize on opportunities and guide it through any challenges ahead.