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Master new finance technology or get left behind

Nov 24, 2019

A new survey has found that the correct use of technology in finance functions can massively impact your business. Ignore it at your peril, says Kieran O'Brien.

Rapid technological advancements, regulatory changes, big data and a heightened need for analytics are placing new demands on the finance function. However, with the right operating model, tools and talents, these challenges can be used as opportunities to carve out a more prominent position in the market.

Accordingly, the latest KPMG Future Ready Finance Survey compiled the views of over 850 finance function leaders across the globe to learn what high-performing organisations are doing differently and the results are clear – to establish a competitive edge in the market, finance functions must not only adapt to this new operating environment but learn to thrive in it.

It’s all about data

Organisations too often look for quick fixes from their technology solutions but avoid the ‘heavy lifting’ necessary to properly address the quality and consistency of its data. While technology can enable better business outcomes, if you don’t get data right, nothing else matters.

Finance functions can enable better decision-making by providing accurate, timely, and high-quality data analysis, which will also support improved planning and forecasting capabilities. To achieve this, however, data quality is critical.

KPMG’s survey shows that data quality is the single greatest challenge to improving analytics capabilities for many companies, followed closely by difficulty integrating new analytics tools with legacy systems.

Get tech-savvy fast

CFOs are being asked to innovate and further upskill in areas of new technology. Acronyms like IA (intelligent automation), RPA (robotic process automation), CC (cognitive computing) and ML (machine learning) are now common vocabulary in finance.

The survey results show that the most forward-thinking finance functions are mastering the current environment of technological change to drive revenue growth and profitability by combining agile service delivery models, extreme automation (using cloud and emerging technologies) and advanced analytics.

The highest performing finance functions have five key core capabilities:

  1. Agile operating model: agile operating models promote collaboration and blurs the distinction between finance and other business functions;
  2. Predictive and prescriptive analysis: predictive and prescriptive analysis and insights guide forward-looking business decisions, rather than simply measuring past performance;
  3. Automation: automation, specifically of data management, transactional processes and other activities of low strategic value, can free finance staff to focus on higher value-added activities;
  4. Innovation: high-performing finance functions also show strong capabilities in supporting, and in many cases leading, enterprise-wide innovation through dynamic capital allocation that balances investments in core areas with known technology with riskier, new-to-the-organisation or sector technologies; and
  5. Talent: the best finance functions ensure access to high-level analytical, design-thinking, and technological skills that will be needed in the future.

The next steps

CFOs can take a number of steps to future-proof their functions and professions:

  • Don’t just focus on Excel
    Data management in Excel is a cost-driver through heavy manipulation of data with questionable accuracy. With all the tools organisations now have access to, there’s simply no reason to perpetuate inefficient and unreliable practices.
  • Think like a venture capitalist
    Create a separate agile programme-funding mechanism that balances investments in core areas with riskier ones and relies on forward-looking investment criteria that goes beyond pure return on investment to measure success (e.g. customer satisfaction, higher quality analysis, etc.).
  • Take a comprehensive, flexible approach to talent
    Focus on developing staff with high-level ‘enabling’ skills (i.e. highly productive speakers and writers, influencers, relationship managers) that can adapt to the changing technological landscape. Build, buy and borrow skills as needed.
  • Lead in driving the adoption of advanced analytics and automation technologies
    Finance should place an even higher priority than executive management on using automation and advanced analytics to increase the quality of analysis and insights needed for the business.
  • Establish a digitally enabled service delivery model
    Do not optimise finance processes in isolation. Instead, design operating models that enable end-to-end processes that transcend functional silos and promote self-service within the organisation while ensuring a strong focus on the customer.

Finance needs to move away from being perceived as a transaction-heavy function reviewing historic performance to a trusted business partner which is uniquely placed to drive and deliver strategic outcomes. The good news is that success is achievable: finance functions at high-performing companies have not only been able to adapt to this new environment but to thrive in it.

Kieran O’Brien is a Partner in KPMG.