How can great finance teams survive and thrive during these most unusual times? I asked the virtual audience – and myself as well – this question during my keynote presentation at the recent SAPinsider 2020 Virtual Conference. My topic was how platform transformation is driving the next generation of finance. In particular, I spoke about the use of enterprise resource planning (ERP) platform solutions to serve as the “digital core” for the data and analytics used in decision support. The questions and comments submitted indicated that this topic is clearly something that many people are thinking about.
I’ve been working in finance transformation for close to 30 years now. Finance in recent years had already been going through a period of rapid evolution. Then the pandemic catalyzed and accelerated these changes, moving finance from a backward-focused to a forward-focused function. In addition, we are seeing the CFO take a lead role in business-wide transformation, enabling business strategy and working to drive enterprise value.
What has happened, simply put, is this: finance is basically about eight core activities – planning, transacting, accounting, controlling, complying, reporting, and then analyzing and advising. Now CFOs and their teams are looking to automate five of those activities (transacting, accounting, controlling, complying and reporting) to focus more on planning, analyzing and advising.
Why is this so important now? Because in these uncertain times, history doesn’t serve as our best guide for future decisions. Traditional planning models don’t always make sense; companies now must be able to digest huge amounts of data, convert that data into meaningful insights, and move quickly to make decisions and create value.
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The changing role of the CFO
During the conference, I talked about how the pandemic has served to accelerate a big change in the role of the CFO. New demands call for organizations to develop a more adaptable, agile and value-focused finance function. But the CFO often spent a lot of time serving as a kind of corporate historian.
To free up time and resources to focus on forward-looking activities, CFOs need to automate using technologies like machine learning and artificial intelligence. That is a work in progress – our research tells us that less than five percent of finance teams have made machine learning and artificial intelligence a central part of their finance capabilities – but we are seeing finance serve more and more as a catalyst for change. And the CFO is at the epicenter of all this.
Ultimately, finance should enable business strategy, and that means focusing on the planning, analyzing and advising aspects of the finance functions. As we have worked with companies through the pandemic, we’ve seen that those who are quickest to adapt to new circumstances are those who have done the most to automate basic activities so they can spend more time looking ahead. Digital organizations tend to be more resilient organizations, as well.
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With the right platform in place, it's easier to harness data to make better decisions.
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The importance of platforms
To help CFOs concentrate on business strategy, organizations need the right platforms at the enterprise level to support what we call their “digital core”. With the right platform in place, it's easier to harness data to make better decisions.
If platforms are the digital core of finance, then everything else gets wrapped around the platform. The platform (and here we’re talking about an advanced platform such as SAP® S/4HANA) integrates disparate components such as different data sets. But it also provides speed and agility. A sophisticated platform with in-memory computing collects essential information and makes it immediately available for planning, analyzing and advising.
The other key aspect of platforms is how they make everything usable and accessible. Well-designed platforms take interfaces with which we are all familiar – such as the smartphone – and adapt them to our work lives. This shortens the learning curve and helps give everybody access to the same information.
Why talent is crucial
Not enough enterprises recognize the importance of talent in making finance transformation a success. Look at the automation of basic finance activities: To automate something, you need someone who understands the process, and someone who works with the technology to implement the automation. That might mean hiring or developing someone as an expert in machine learning to teach the bots how to perform repetitive tasks.
The good news here is that the rising generation of finance professionals is tremendously excited about the possibilities associated with a career in finance. They see the potential to be a leader in the organization, to drive innovation, and to contribute significantly to the overall success of the enterprise.
Technology is essential to transformation, but ultimately everything hinges on people. The faster we recognize that, the faster we will progress to what promises to be a very exciting next phase in the evolution of finance.