The Evolution of Finance using Technology – Are We There Yet?
Research studies can be quite telling, providing insights at a particular point in time. What is often more interesting is to see how these results evolve over the course of time. Which leads to insights as to whether or not priorities that were identified in the past have actually been achieved.
Over time, we have often spoken about finance becoming a more strategic partner and advisor to the business, using technology as an enabling factor.
The question is – are we there yet?
Let’s take a look. For three years, from 2013 to 2015, SAP sponsored a research study with CFO.com to determine the activities of finance organizations, their needs and priorities, and how technology plays into accomplishing those needs.
Evolving Research of the Finance Function and Technology
In 2013, in the report “Shaping the Finance Function of Tomorrow,” 73% of finance executives said that long-term strategic planning was the largest area of new demand, and 86% confirmed that they will need to improve their capabilities for predictive analytics and simulations. However, only 19% of respondents indicated that that they spent the majority of their time on analytics.
Looking forward, 76% of CFOs saw a growing need to be more involved with operational business units. And 9 out of 10 finance executives prioritized Big Data, cloud, and mobile devices to help achieve this goal, but agreed that they needed to better understand these technologies.
In 2014, the report “The Next Stage in the Creating Value-Added Finance Function” took it a step further, where we saw that finance executives associated the use of technology not only to change the finance function, but also to impact bottom-line results. For example, 87% of finance executives say that the finance function will need to improve its capabilities and performance to support profitable growth. 87% also said that they need to analyze financial and performance data much more quickly – again, to meet targets for profitable growth.
At the same time, there were technology topics that finance identified to enable them to achieve these goals. 58% stated that their company’s line-of-business managers have difficulty using finance information systems to identify and understand the data they need to make effective decisions. And 83% of finance executives agree that better information reporting and data visualization capabilities would help line-of-business managers make better decisions. And as many as 91% of finance executive say that, to meet targets for profitable growth, the finance function will need to become better at providing managers with forward-looking, predictive analytics.
This brings us to 2015, where the report “Thriving in the Digital Economy: Four Reasons Why Finance is Excited about the Future” focuses directly on the transformation of the finance organization and the experiences of finance executives. As finance has expanded its role, 82% say that their career has exceeded their expectations for interesting, meaningful and valuable work, and 86% expect that trend to continue in the next five years.
Through the use of technology for automation, 72% of finance executives responded that they believe their role will become even more important within the organization. 71% say that they will become more involved with the operating or business units. And 69% indicate they will have significantly more time for higher-value work. Yet, still 79% say that their companies must develop or acquire capabilities in advanced analytics that they do not possess today.
What does that mean for the business? Asked to respond to what is important to their companies’ success, 85% say that it is adapting to rapid pace of change and greater business complexity. 77% highlight instantaneous access to a unified, comprehensive, and fully up-to-date set of financial and performance data. 84% say translating data into swift and decisive action. And 75% say making use of Big Data.
Innovations within SAP S/4HANA Finance
Let’s take a look at the innovations that SAP provides to help finance achieve these goals, including a central source of the truth, executive dashboards with drill-down capabilities, and integrated planning – which hits on the technology trends that we have heard finance find to be critical.
Where are We Now?
And here we are in 2017. To answer the question posed at the beginning regarding whether finance is becoming a more strategic partner – are we there yet?
Yes, we are – for leading finance organizations.
According to the upcoming SAP-sponsored research study with Oxford Economics, finance executives are truly involved in strategic decisions for the entire organization, with three quarters responding that this influence is growing. Technology is a key factor to enable finance, with the most critical aspects being the reduction of data complexity, management of “big data,” real-time analytics, and predictive capabilities.
Read this blog for additional details upcoming Oxford Economics study, register to receive it as soon as it is published, as well as a link to an interactive session at Sapphire on the topic.
Ultimately, what have we learned? Finance is looking at the same technologies across the years, and have increasingly adopted them. Analytics and predictive analysis continue to be the keys to better decision-making across the years. As these technologies are better understood, they have become more effective tools to allow finance to collaborate across the entire organization to guide their organizations.
So are we there yet? Some are, and many are getting much closer!
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