Innovation in the Finance Function

If you would like to receive the study “Innovation in the Finance Function” as well as a customised benchmarking report from Eight Advisory’s experts, click here!

The Chief Financial Officer (CFO) is confronted with an increasingly complex and turbulent economic, regulatory and geopolitical climate (Volatility, Uncertainty, Complexity, Ambiguity), so his or her brief is therefore packed with challenges: protecting margins in face of inflation, managing supply chain resilience, securing financing, promoting the adoption of ESG (Environmental, Social and Governance) measures, supporting strategic decision-making, and all this with increasingly controlled resources.

For any CFO, being successful in this climate requires a fresh and innovative approach. Our study explores 3 areas of innovation in the finance function: Digitalisation of the finance function, Performance Management and Innovative Organisation/Talent Management.

Valuable insights have been gained from the perspectives of Group CFOs, BU CFOs, Controllers, Finance Transformation Managers and Digital Transformation Managers interviewed as part of the study.

The 8 key findings of the study are:

1. The Digital Transformation Journey

There are 3 levels of digital solution adoption. The “core” solutions are highly digitalised (ERP, P2P, EPM, data visualisation, etc.). The peripheral solutions are progressing at a slower pace (Disclosure, Digital Closing). Last but not least, the adoption of new technologies (AI/Predictive Analytics) is increasing rapidly but is still under-utilised and is often limited to just being used as a “sparring partner”.

2. The budget is dead – long live the budget

The COVID crisis and the current period of uncertainty have demonstrated the difficulties companies face in creating and updating their budget targets as often as they might require. Despite this, 90% of respondents would like to maintain a traditional budgeting framework versus a Beyond Budgeting approach. The main obstacle cited is the cultural shift that such a move would require.

3. Generation BPA (Business Partner Augmentation)

One in two companies is dedicating at least 20% of its Finance function to the business partner role, coupled with a sharp increase in EPM, data visualisation and predictive analytics/AI solutions.

4. Spectacular shift towards data-driven entities

More Business Partners are being supported by data-driven entities, and this is set to accelerate sharply over the next few years within companies, for example the Reporting Factory (+20%) and the Data for Finance Centre of Excellence (+60%).

5. Jobs under high pressure/High Voltage Jobs

2 out of 3 of those surveyed concurred that it is difficult to acquire data and ESG skills (recruitment, retention and training).

6. Simplicity – the ultimate luxury

When it comes to improving efficiency, the survey clearly showed that simplification remains a challenge for 3 out of 4 companies, regardless of the subject concerned (business overview, reporting, budget and transactions).

7. High-value return on investment

Among the key drivers for transformation programmes, more than 2 thirds of respondents placed qualitative benefits well before a return on investment. This reflects a shift in finance transformation projects, towards a stronger focus on the value delivered by the function (as opposed to the cost of the function, after years of efforts in this area), and in particular to support management in a turbulent climate (augmented business partners, data-driven organisations, collaborative digital performance management solutions).

8. The butterfly effect of transformation

Digital transformation encounters operational difficulties for 3 out of 4 companies as they experience strong resistance to change. Three main factors were highlighted in the interviews: the fear that technology will “kill jobs”, lack of commitment to the vision and the effect of “transformation fatigue”.

To dig deeper, our study offers valuable insights on future trends, challenges and opportunities in the following 4 areas:

• Digitalisation: The level of maturity of the 13 main digital building blocks, digitalisation priorities, application of data analytics, digital maturity of processes, automation of business reviews, etc.
• Performance management: The use of management manuals, steering model review processes, simplification needs, budget optimisation levers, use of rolling forecasts, best business review practices, implementation of Beyond Budgeting, etc.
• Innovative organisation and talent management: The maturity and development of innovative structures, introduction of business partners, motivational levers for the finance function, talent management challenges, upskilling finance teams, upskilling non-finance function staff, dashboards to manage the finance function, etc.
• Transformation: driving forces behind transformation, stumbling blocks, assessment of post-implementation satisfaction, etc.

If you would like to receive this study as well as a customised benchmarking report from Eight Advisory’s experts, click here!