Industry Trends

Four Ways Finance Leaders Can Take the Lead in Their Organizations

This is a guest blog post by Naved Qureshi, Associate Partner, Global Business Services, at IBM

These days, many companies are facing digital disruption from sometimes nontraditional competitors or unconventional business models. For example, people don’t normally think of farm equipment manufactures as providing a customer experience or a service. However, by curating information through a combination of cognitive applications, big data and the Internet of Things a farm equipment manufacturer can also compete as a service provider to help optimize the agricultural process.

To defend and, more importantly, take advantage of this trend, leading finance functions are taking significant steps to enhance their capabilities and leap-frog their finance maturity. Here are four ways your finance organization can take the lead.

Solidify the foundation

Leading finance organizations have already established enterprise-wide information standards, common data definitions and data governance, and standardized end-to-end processes and chart of accounts. These actions many times are the result of integrated target operating models that include centralized processes, single-instance or rationalized ERPs, and Global Process Ownership. With these practices in place, organizations can execute finance operations efficiently and at a lower cost than their peers.

Increase business insight

Efficient finance operations allow finance organizations to invest more time and resources to offering enhanced business partnering to business units. Leading finance organizations excel at operational planning and forecast capability, and use common planning platforms (such as Workday). In addition, they develop their talent to take on these new roles with required skills — for example, statistical analysis, advisory and enhanced business acumen, including an understanding of both core and competitor business models.

Spending more time on analyzing information and less time on gathering data allows finance professionals to offer advanced business insights. Specifically, top finance organizations spend more time on action planning, profitability and economic analysis, pricing, demand planning/forecasting, product/services development, and mergers and acquisitions.

Jumpstart the journey

A good way achieve a digital-ready finance organization is to start with a digital finance strategy that aligns with corporate value drivers and strategic intent. Key aspects that should be assessed include the future-state operating model, processes, technology, data/analytics and people. This assessment will allow a roadmap and business case to be developed to obtain investment funding and initiate actions. The assessment should also use innovative techniques, like Design Thinking, that focuses on the user experience and personas that, for example, can help establish design principles and align on target capabilities.

A Design Thinking session can be used to establish an analytical agenda that identifies areas that may benefit from digital technologies and advanced analytics and can outline areas for proof-of-concept and expedited development.

For example, to support new capabilities, leading finance functions are increasingly adopting new accelerators such as Cognitive Process Automation (applications with the ability to understand, reason, learn and interact). Some organizations are realizing efficiency and costs savings of between 40–60% by adopting these applications to enhance key finance processes, such as the financial close process and account reconciliation.

Another example is Blockchain — a shared ledger technology of linked transactions visible to all parties that facilitates end-to-end transparency and process simplification. Certain finance organizations have seen 50% reduction in cycle times and 30–40% reduction in cost.

For advanced analytics, tools such as Cognitive Forecasting Dashboards elevate management reporting from rear-view to predictive by integrating unstructured data with the existing structured data. These capabilities include driver-based scenario analysis and dynamic drill-downs that automatically display the most important information to focus on at a given point in time, all without the use of excel and displayed in an intuitive way.

For example, incorporating unstructured weather data or social media information with driver-based advanced analytics will likely decrease forecasting cycle time and increase accuracy. This will lower the overall level of effort and allow more time for action planning. With cognitive applications, the algorithms that develop these forecasts can be automatically adjusted with machine learning and grow even more accurate over time. With minimal data latency, leading indicators can be developed to alert business users (via iPad, text or mobile alert) to patterns that predict a supply shortage or potentially missing targets based on increased commodity prices.

Focus on your talent

Finance talent is also a vital area to optimize. It starts with targeted, high-potential recruitment (for example, using programs with fast-track expectations). Put these employees and selected others into rotational programs with other functions and business units. This builds line of business, finance and cross-functional acumen, as well as teaming skills.

Offer transparent, compelling and documented finance career paths and competency models, expected career promotions and established optional landing zones (horizontal and vertical career paths). This helps build a motivated workforce and supports high-quality retention. And of course, support this with training and continuous learning programs to keep up with leading-practice adoption of capabilities and tools.

Initiating next steps

As CFO organizations look to take on the challenge of digital disruption, they should assess their current capabilities and digital maturity and target a future state that supports corporate business strategy.  This will help identify enhancement areas and reveal opportunities for accelerated, short-efforts like proof-of-concepts.  Realizing gains from quick wins like these will build momentum and motivation to continue the journey and achieve a target future state.

As an Associate Partner in IBM’s Global Business Services, Naved Qureshi leads and manages strategic and digital finance transformation improvements across industries.

To learn more, check out IBM’s Global CFO Study.


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