Part 2: Say Goodbye to the Finance Function
Written to inspire new and different thinking amongst finance leaders, this is the second in a three-part series addressing how finance leaders can accelerate their digital agenda. Additional topics cover “Lead or be led” and the upcoming “Practice Applied Intelligence.”
Forty-eight percent of CFOs surveyed by Accenture Strategy believe that digital technologies will fundamentally change finance.1 As finance organizations begin this digital transformation, most teams are contemplating their future. While few have surmised the total impact of change to the function, Accenture Strategy experience suggests that 80 percent of traditional finance is at risk. Today’s process-centric organizations are on the verge of obsolescence with procure-to-pay (P2P), order-to-cash (O2C), and record-to-report (R2R) becoming irrelevant.
Traditional Finance Operating Model
Within traditional finance operating models, most companies have implemented first if not second generation Shared Services focused on standardizing common, repeatable and highly transactional tasks. Corporate Centers have largely focused on consolidations and management reporting activities, while other finance teams responsible for planning, forecasting, and basic business decision support reside in Centers of Excellence (CoEs) or are embedded directly within the Business Unit (BU).
The truth about these models is they are overly burdened with legacy issues.
Over the next 24-36 months, a new kind of finance operating model will emerge. This digitally-driven reinvention is underpinned by three (3) profound changes.
Future Finance Operating Model
Profound Change #1
The concept of shared services will remain. However, the number of full-time equivalents (FTEs) required to support shared service activities has the potential to decrease by 50-60 percent.2 Capturing nearly two-thirds of the cost reduction opportunity in finance, P2P, O2C, and R2R processes will become highly automated3
Similar to a metal chain, these end-to-end finance processes represent a serial assembly of connected pieces, or links, done uniformly. Today, each finance professional is focused on executing tasks specific to their link within that chain. For example, journal entries in support of period close.
Tomorrow, as most links have the potential for automation, processes that were once supported by accountants or financial analysts will now be supported by bots, machine learning techniques, or Artificial Intelligence enabling the finance professional to reskill/ upskill in support of higher value work. For example, moving from processing payables to deriving insights from spend analytics.
Profound Change #2
Finance shifts from service provider to enterprise enabler with the emergence of three new capabilities. Working on horizontally structured teams, finance professionals will drive business outcomes for the enterprise.
Profound Change #3
As boards continue to increase the level of scrutiny and oversight of management, CFOs need more than ever to focus on board interaction. Imagine as the CFO walks into a board meeting shifting the conversation from updates on tactical, cost management initiatives toward ROI performance supporting multi-million-dollar profitable growth programs. Nothing in the company is off limits. The record needs to show Finance has evolved from skimming the periphery of the business ecosystem to a permanent force at its core.
While there is no exact blueprint for success, there are many examples that offer insight into the approaches and actions CFOs are taking. Finance teams will be rewarded less for providing a service that fills transactional requests, and more for their effectiveness and discernment. The Finance organization will enable the activities that differentiate a company in the market, and find new, comprehensive ways to deliver innovative solutions and incremental value to the business. CFOs are poised to take center stage.
1 Accenture Strategy Digital Adoption in Finance survey, September 2016
2 Accenture Strategy, CFOs: The digital kingdom’s new ruler, 2017
3 Accenture Strategy estimates based on insights from client experience