With the growing complex and competitive business world, many C-suite executives have digitally transformed to drive business growth and stay competitive. Yet, the digital transformation for finance leaders is lagging behind other roles according to a recent Workday’s global finance leader survey.
The study, Finance Redefined, reveals that the efforts companies have made to digitally transform their finance function have not advanced enough. As a result, most companies are ill-prepared to manage new types of risks under changing business environments, integrate finance and non-finance data for data analytics, facilitate seamless collaboration between C-suite executives, and upskill their finance roles in the new digital economy. Finance leaders have to redefine their function in order to become more analytical and innovative.
Finance leaders are lagging behind “Finance department continues to lag behind other parts of an organization in terms of digital transformation in four areas—resilience, intelligence, leadership, and talent,” said Tim Wakeford, VP of financial management product strategy for EMEA & APJ at Workday in a media roundtable last month. These four areas are considered as the priorities for defining the future of finance.
On the resilience front, growing regulatory scrutiny and rapid technological change are the top risks for finance leaders. Only 39% of the respondents are highly confident about managing risks. “The growing regulatory scrutiny is the number one business risk,” said Wakeford. “Changes to accounting standard and laws in certain countries such as the new trade laws between China and the US, and the Brexit in the UK are impacting business environments.”
In the area of intelligence, the survey found that 35% of corporate finance teams are making extensive use of advanced analytics in key finance areas like planning, budgeting, and forecasting. Wakeford attributed this to legacy technology architectures or system inefficiencies where data is in silos, making it difficult for organizations to harness finance and non-finance data. In addition, some companies focus on intuition rather than data to make decisions.
On the leadership front, the survey found that only about one-third of finance leaders enjoy seamless collaboration with key C-suite peers, including CIOs and CHROs (chief human resource officers). There is limited collaboration because the executives do not speak the same language—terminology, jargon, and understanding priorities.
In the area of talent, 74% of the respondents said finance roles will need to be redefined in view of emerging technologies like robotics and artificial intelligence. Yet, a lack of relevant skills is a top barrier to driving finance transformation. “This skill gap is starting to hurt finance,” said Wakeford. “It’s not just about the hard skills around data manipulation or data science, but the willingness to change in an employee world.”
Aon: data analytics focus Rishi Mehra, financial controller of Aon Asia Pacific, said managing risks like regulatory risks and accounting risks is a key job of CFOs. These risks may impact the brand and reputation of a company. He believes technologies, standardization, and processes help CFOs manage risks so that they have more time to support CEOs in driving business growth.
“The more you have human interfaces, the more you have the control challenge,” said Mehra. “Once I have these three things in place, I as a finance leader will not be bothered about accounting, fraud or compliance risks. I am more on the side of CEO in driving decision making.”
Mehra cited Aon’s three primary services—risk management, reinsurance, and consulting to illustrate the importance of data intelligence. The company has different platforms for running these services and storing data such as revenue data. Its CEO needs to get insights from these different revenue streams.
By integrating finance data seamlessly with the right technologies, standardization, and processes, his finance team can break down data silos and deliver strategic insights such as having a revenue breakdown by types (recurring or non-recurring), customers or lines of business, etc. The finance team can then make use of the analysis to do forward-looking projections.
Mehra said Aon has a big focus on data analytics. The company spends over $400 million on data analytics every year. Its global center for innovation and analytics in Singapore has more than 100 data scientists and analysts to develop solutions for Aon and its customers. The company also works with partners explore AI, machine learning or robotic process automation (RPA) to enhance the efficiency of its operations and go-to-market strategies.
“If finance people don’t act now to increase the breadth of technology within your organization to become early adopters, they have a risk of losing their jobs,” said Mehra.