As technology and tech-related processes continue to improve through the 2020s, modern finance departments are vying to make the most of the tools they have available to improve efficiency, accuracy and decision-making.
While businesses have now achieved integration of technology into their day-to-day process and systems, simply adding technology into the mix is only the start of the journey. While the days of pen-and-paper working are now behind us, stakeholders are keen to further integrate technology into business operation – a process generally known as transformation.
Finance teams are one key area in which transformation can have the biggest effect, from improving the volume of processed data, to better modelling, and even AI-driven insights. But for CFOs and Finance Directors to getting the most out of transformation – and drive real value – they need a keen focus.
What is Finance Transformation?
Transformation for finance teams means better integration of technology within finance systems and processes, accompanied by a change of approach that seeks to utilise more efficient systems throughout finance operations with the goal of better optimising the finance function towards achieving both departmental and business goals.
This could result in processes being reduced in complexity, streamlined for less manual work, or embedded with new tools that improve quality of analysis or decision-making.
Some examples of systems and processes that can be optimised through finance transformation are:
· Financial Planning and Analysis
· Financial Close and Consolidation
· Accounts Payable and Accounts Receivable
· Enterprise Resource Planning (ERP) and Corporate Performance Management (CPM) systems
Why is Digital Transformation Key for Finance Teams?
Transformation is an essential process for all facets of a business, but it is critical for allowing finance teams as many of their methodologies and day-to-day processes can directly benefit from the continued injection of technology.
Data processing and manipulation is amongst the most critical of these areas, especially with the sheer volume of both structured and unstructured data that finance teams need to handle on a daily basis. Transformation through software can be revolutionary in improving the capacity, speed of data manipulation, while the introduction of AI can power faster analysis with more attention-to-detail than when performed by regular users.
Alongside data is the effect transformation can have on improving compliance. With both global taxation and financial compliance becoming increasingly complex on local and global scales, utilising transformation tools can automate compliance facets and improve transparency.
An additional driver for finance transformation is the interconnectivity of finance departments within businesses – often being connected to all other areas of the business through shared systems and software. Enabling finance transformation means enabling digital transformation across the wider business.
How Can Key Stakeholders Ensure Finance Transformation Drives Value?
While finance transformation is a popular topic for business stakeholders, there are growing concerns around the risks carried by carrying out transformation processes.
While many CFOs and VPs push for increasing digital influence in their finance functions, this can occasionally be implemented in the face of uncertainty over which technology is right for the business in question – as well as fears over competitors achieving transformation quicker and gaining an edge. This can result in a rushed and unplanned transformation processes that leave finance functions in an unoptimised state
· The best-fit technology or software for the business is not chosen, leaving room for further improvement.
· Onboarding is not organised effectively, leaving teams unprepared for the technology they must now use.
· Transformation is completed unevenly with tech stacks simultaneously containing both cutting-edge and outdated technology which can’t work harmoniously.
Ensuring finance transformation drives value requires a clear, long-term strategy of what transformation needs to achieve for the business. This strategy must align with how the business will scale, and it must also contain a consideration for choosing the right technology solutions for the business size, teams, and existing or future technology integrations.
To drive the most value, stakeholders must also identify of which parts of the finance function can benefit the most from transformation.
Ensuring finance transformation drives value requires a clear, long-term strategy of what transformation needs to achieve for the business. This strategy must align with how the business will scale, and it must also contain a consideration for choosing the right technology solutions for the business size, teams, and existing or future technology integrations.
To drive the most value, stakeholders must also identify of which parts of the finance function can benefit the most from transformation.
Where can Finance Transformation Drive the Most Value?
Better financial planning through modeling and forecasting
Planning is a critical element of the finance function that can be driven to provide further gain and insight through transformation. With advanced financial modeling capabilities and features such as custom model drivers and scenario planning, as well as novel techniques such as rolling forecasts, financial planning functionality can be dramatically improved through transformation. With more accurate and reactive planning, businesses can react more quickly to market shifts better align stakeholders to the strategic vision of the business – driving value right through the core of the business.
Utilising more data, faster
Modern software is able to utilise more data than ever before without losing any time for this. Improved data consolidation facilities in new software and technology stacks can gather data from vast data lakes for visualisation and apply to visualisations and representations for use by stakeholders. By using more data, decision-makers can act more confidently with faster, better-informed decisions to drive future value to the business.
Faster analysis through AI
The introduction of AI into financial function software has further enhanced capabilities, namely providing in-built analysis and insights. While all analysis takeaways should be backed by experts, AI insights and intelligence can help stakeholders reach eventual decisions quicker by providing baseline assumptions which can then be iterated upon – saving valuable time and resource.
Quicker collaboration, faster processes
Introducing collective-based systems that can be accessed simultaneously by different teams enables better cross-team collaboration across workforces. This leads to faster processes and less time spent on details that aren’t driving value to the core business.
Transformation through Planning and Analysis Software
One of the most effective ways to achieve value transformation is through the introduction of financial planning & analysis software. Tools such as these contain a number of value-focused functions from better planning and modeling capabilities to collaboration tools to improve finance functions from planning and budgeting to headcount management and even investor reporting. Explore more about how tools such as Abacum are driving value for businesses with more data, better decision making, and more.
