I know this is a finance blog, but I’d like to talk to you about CMOs for a moment (bear with me, there’s an interesting parallel). A lot has been written in the media recently about how CMOs are now able to step up to be transformational agents of change. Their new found value and strategic insight is made possible largely due to advances in technology, enabling marketers to move away from standalone systems and databases to a dedicated business platform.
Suddenly – and probably for the first time – CMOs have access to real business insight and analysis.
CFOs on the other hand have always been expected to be “strategic”, and have always been surrounded by enterprise technology in one form or another. But in the same way large areas of the marketing function have spent years swimming in the shallow end using disparate systems that performed tactical tasks with mixed results, many finance teams have been tolerating the inefficiencies that stem from trying to control a myriad of standalone finance systems and process.
The main difference is that finance systems have usually been around for longer, which in reality means they’ve often been built up piecemeal over the years. It’s hard to deliver strategic direction and bottom-line performance when you’re bogged down by administrative tasks or fire-fighting tactical issues – not to mention a waste of your best people. Clearly, the question is no longer about whether the finance function should become a more strategic partner to the rest of the business, but rather how to get there.
A new study from CFO Research found that the two primary challenges finance operations staff experience are poor processes that create inefficiencies, and information systems that are difficult to use. In a slow growing business environment, profitability and cost pressures are increasing for many large companies and for some, growth opportunities are becoming harder to find. Companies simply can’t afford not to integrate and streamline the many different systems and processes required for transactional, reporting and compliance related activities. In fact, the research found that an overwhelming 79% of CFOs believe that addressing this issue should be a top priority.
However, while finance executives clearly understand the strategic potential of finance operations and have recruited and built strong teams, more than 50% say those teams are often overwhelmed by the demands placed upon them by disparate systems reliant on manual intervention to be effective. In other words, many finance teams are too busy coping with the low level inefficiencies to focus on delivering actionable insight – assuming that insight is even possible given their technology constraints.
For those companies that have already upgraded their information systems, almost 70% of finance leaders report that they have already seen process improvements – so much so that 50% are now considering even further upgrades or additional process improvements to gain even greater benefits.
It’s time finance gave the same equal weight to strategic analysis as it does to tactical transactions. The finance function’s analyses are not meant simply to let management know where the company has been, but also to help determine where it will go next. We should not simply be behaving as data aggregators, but rather as effective analysts adding value to the business.
The need for more strategic value from the CFO as a leader of change has never been greater. Finance leaders have been talking about expanding their value-added role and raising the strategic profile of their teams for many years. In order to solidify that role they must transform their finance operations from a collection of discrete processes and systems into a connected link operating in a networked value chain.
I would love to hear your comments in the box below. You can also take a look at the below research from CFO on this topic
Elena Shishkina – CFO, SAP UKI