4 minute read 6 Jan 2019
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How to pull the right levers to build an agile finance function

By

EY Global

Multidisciplinary professional services organization

4 minute read 6 Jan 2019

Adopting a comprehensive approach is essential for CFOs seeking to build agile finance capabilities.

Becoming truly agile requires more than just embracing new tools and technologies. CFOs also need to review their organization and talent model to build required capabilities. For example, in the EY DNA of the CFO survey, 65% of the respondents said that building agility into processes would be a significant priority for tomorrow’s finance function. A further 67% said that improving business collaboration between finance and the business was also a major priority.

To that end, CFOs need to consider seven digital technologies (enablers) as they develop any transformation plan. This plan also needs to pay due consideration to four areas related to organization and people (see image). At the same time, the program must also strengthen foundational capabilities, namely program and change management as well as data management and governance.

Enterprise resource planning (ERP) applications have long played a critical role powering the finance function. While extremely powerful, traditional ERPs don’t have the flexibility or functionality to enable agile finance. Next-generation ERPs change all that. These systems offer capabilities to handle large amounts of data and provide real-time analytics and an enhanced user interface. They also offer a simpler data model and enable easier integration to help build agile finance capabilities. Many organizations are migrating to next-generation ERPs, like SAP S/4 and Oracle Fusion, to enable new business models and new processes to implement new operating models. For organizations embarking on this transformation, we recommend redesigning the processes and migrating to new systems rather than doing a simple technical upgrade.

While finalizing the ERP strategy, finance leaders should also look at intelligent automation technologies such as robotic process automation (RPA), machine learning (ML) and artificial intelligence (AI). These technologies complement and enhance finance applications to automate manual processes and embed intelligence. An end-to-end process design must include all relevant technologies. EY has helped multiple large clients use machine learning to improve their forecasting accuracy. At the same time, we have also performed hundreds of RPA projects to drive efficiency. A clear strategy for automation and intelligence should be defined, and finance should create a Center of Excellence (COE) working with IT.

Blockchain and Internet of Things (IoT) technologies are evolving quickly. Cloud technologies will continue to grow and drive faster adoption of innovations. CFOs should consider cloud solutions with open minds.

While blockchain will solve and automate processes that require multiple parties and transparency, IoT will have a major impact on revenue, inventory, cost and asset management processes in finance.

With so many "best of breed" and enterprise solutions to choose from, finance teams need to carefully consider which solutions to adopt. To that end, they may want to use criteria based on the total cost of ownership, which includes integration cost and sustainability as well as future innovation. For example, many leading RPA vendors may not currently be vendors but they do have the right products for implementation. Solutions such as SAP Leonardo, a platform for emerging technologies, could be a better fit over the long term for organizations that run SAP solutions.

With the growing importance of data, finance departments also need to assume greater ownership of data management, particularly for financial information. For years, finance has historically delegated data management tasks to IT. Going forward, however, finance teams will need to take a more proactive stance and take ownership of data strategy, data governance and management.

New technologies will also impact people and organizations. More automation will free additional resources, which means CFOs also need to develop a plan to retrain and re-skill people. That's why it is so important for CFOs to think about new service delivery and talent models. We also expect new roles to reside within the finance function, such as data managers and program managers for the automation and intelligence Centers of Excellence (COE). To that end, finance needs to develop a talent management strategy to re-skill workforce, staff new roles and create an inclusive and innovative culture.

Similarly, current service delivery models will need to be refreshed to align with the business strategy and take advantage of new technologies. Many organizations are already taking a close look at their shared services and outsourcing strategy.

As a final note, few people would buy a tool from a home improvement store without knowing what they would use it for and which project. We need to think the same way when it comes to using tools for finance transformation in the digital world. While it’s tempting to implement a new tool immediately, CFOs need to think carefully about their vision and required future capabilities. In other words, they need to step back and take the time to define the vision and goals before kicking off any transformation project.

Summary

CFOs seeking to build agile finance capabilities must adopt a comprehensive approach rather than simply embracing new tools and technologies. They must also adapt successfully to the ongoing digital disruption impacting their industries.

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By

EY Global

Multidisciplinary professional services organization