This is an article ‘Something Corporate: How To Revolutionize Finance Transformation’ by Marc Primo
Finance transformation is already a familiar thing for both stable and emerging companies. However, it has become a critical imperative for organizations seeking to stay competitive in today's changing markets. The traditional role of finance has undoubtedly evolved beyond merely number crunching and reporting. It now encompasses strategic decision-making, advanced analytics, and leveraging technology to drive efficiency and growth. But what are the key aspects that shape today's brand of finance transformation? Let's discuss the current trends and mine some insightful cases for practical tips that can revolutionize your organization's finance function.
In a nutshell, finance transformation is the process of reimagining and redesigning your business's finance functions to adapt to the ever-changing requirements. As an offshoot, practicing an efficient transformation can improve efficiency, enhance decision-making, and drive sustainable growth. In short, it involves aligning finance processes, systems, and talent with the organization's strategic objectives. But while it sounds simple enough, finance transformation can encompass various initiatives, such as digitalization, automation, advanced analytics, and organizational restructuring, which can give you a headache in no time.
Key drivers to finance transformation in 2023
To better understand finance transformation, let's examine some key drivers and challenges organizations can face in this journey from this year all the way to 2025.
According to a recent report by Deloitte, these eight drivers include the following:
Added customer value
Real-time data processing
Although no expert can predict the future of fintech with 100% accuracy, every company has to consider what is likely to occur and prepare for it. For the finance department, this entails taking action immediately to put the proper personnel and technological infrastructure in place to benefit from the impending disruption.
For one, recent reports are bracing for 73 million lost jobs in the US, no thanks to automation by 2030. That could likely happen without a clear vision and strategy for finance in a digital environment.
Leveraging on automated financial transformation without jeopardizing jobs
Considering evolving regulatory changes, cost pressures, business models, and the need for real-time financial insights. Challenges can also range from legacy systems and siloed processes to resistance to change and the need for talent with the necessary skills.
One significant enabler of finance transformation is technology. Adopting innovative solutions such as cloud-based platforms, automation tools, and advanced analytics can streamline finance operations, improve data accuracy, and enhance decision-making capabilities. These technologies enable finance teams to shift from manual, repetitive tasks to more value-added activities, such as financial analysis and strategic planning.
Organizations need to embrace the latest trends shaping finance transformation to stay ahead of the curve. As more businesses embrace digital transformation, finance departments automate repetitive tasks like invoice processing, financial reporting, and reconciliation. This reduces manual errors and frees up finance professionals' time to focus on more strategic initiatives. According to a pre-pandemic study by McKinsey, 23% of organizations considered early adopters of digital and automation initiatives say they are more likely to realize labor cost reductions. In comparison, another 38% expressed the likelihood of non-labor cost reductions.
However, with today's hybrid workplace scenarios in the post-pandemic new normal, people are more needed to ensure that financial automation systems are working correctly. As the Deloitte report pointed out, Data scientists, business analysts, and storytellers are valued highly in finance talent models, which are rapidly developing. For many finance businesses, this constitutes a significant shift. Companies want to ensure their current workforce is aligned with the finance transformation in the pipeline.
In addition to the technical skills required for particular tasks, important attributes include a solid commitment to providing excellent customer service, adaptability, and great teamwork abilities. Additionally, every member of a company's staff should be able to communicate effectively and have an impact on others.
Key areas in finance transformation
Companies looking to improve their systems can focus on three important facets that can revolutionize how they handle their finances: automation, the cloud, and data analysis.
Implementing automated financial reporting, for example, can deliver real-time forecasts rather than relying on longer monthly or annual reports. Automation significantly streamlines the reporting processes, reduced errors, and enhanced data accuracy.
And thanks to cloud-based solutions, companies can scale management systems and be more flexible and highly accessible without jeopardizing security and confidentiality. While cloud-based financial management systems enable real-time collaboration, today's third-party security providers boast highly secured data storage and simplified software updates for better cost-efficiency. By centralizing financial data in the cloud, organizations can enhance efficiency, reduce IT costs, and enable more remote work capabilities.
The explosion of data also offers immense potential for finance and marketing teams to gain valuable insights and make informed decisions. By harnessing advanced analytics tools like predictive modeling and data visualization, finance professionals can optimize financial planning, identify trends, and mitigate risks. Data-driven decision-making helps organizations adapt quickly to market changes and drive sustainable growth.
Ensuring an efficient and revolutionary finance transformation
Gaining a detailed understanding of the organization's desired results for finance transformation is always the first step.
What are the precise goals? Is it more important to improve financial reporting accuracy or make financial closing procedures more efficient? Alternatively, is the goal to lower operating expenses for the financial system?
These are only a few questions that must have clear definitions before the finance transformation journey can begin. But it's also helpful to look at other businesses in the same industry, with a similar size and scope, who have successfully experienced financial transformation. Use these organizations as benchmarks for your projects in finance transformation.
Specific and measurable metrics are essential to ensure accurate measurement of transformation outcomes. Examples include a decrease in the use of manual financial processes, increased forecasting and reporting accuracy, and shorter month-end close procedures. These indicators ought to be closely related to the objectives of the change.
While finance transformation is a critical undertaking for organizations aiming to remain agile, competitive, and data-driven, embracing these tips, along with the latest trends and technology, is vital to revolutionize your finance functions.