In July, Workday released its global “Finance Redefined” study, conducted by Longitude, which surveyed more than 670 finance leaders across the Americas, Europe, Asia Pacific, and South Africa to get their vision and strategy on the future of the finance function and finance leadership.
Based on the result, Workday identified four priorities that have a major impact on the future of finance and its ability to support business needs: resilience, intelligence, leadership, and talent. Organisations will have to identify and overcome the challenges in the Digital transformation era, and the finance leaders will need to possess the essential skills to analyse the data and build risk analysis models along with a culture that focuses on data-driven risk analysis.
The finance leaders are familiar with the volatility in their industry, specifically the escalation of scrutinised and disrupted landscape. In order to deal with the constant change, organisations must leverage the data that is generated relentlessly through their operational activities.
The top risks for today’s financial leaders are listed as the growing of regulatory scrutiny, the pace of technology change/digital disruption and political risk and uncertainty. While these issues are highly notable, only 39 per cent of the respondents are fully confident about their ability to manage the risks.
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Large-scale organisations reported that the lack of meaningful data is the main blockage for them to improve risk management. The legacy systems and organisational silos are unable to provide valuable data, plus only a few organisations can fully access the data sources and combine with external data, build a data model and predictive capability that allows transforming risk management.
It is inevitable for the finance leaders to seek support from technologies. With the right solution, finance leaders can identify the key data, ensure it is of high quality, and get it into the hands of people who need to make key risk-based decisions.
Advanced data analytics can provide finance leaders with sophisticated and accurate revenue forecast and transform the entire core responsibilities for the finance function. Advanced data and analytics provide helpful insights and drive growth and strategy. However, it is reported that only 35 per cent of respondents are making extensive use of advanced analytics in key finance areas such as planning, budgeting, and forecasting.
The biggest challenge for finance professionals when leveraging advanced analytics is integrating finance and non-finance data. Non-financial information consists of many areas, from customer data to operational data, and is often unstructured or semi-structured compared to financial information. Therefore, the data requires significant transformation to be compatible to use. At the same time, many finance teams are still working with disparate systems and spending significant time aggregating and reconciling data versus analysis.
To solve the issue, the finance leaders need to ensure that their team plays a key stewardship role in their organisation data. This means collaborating with IT functions to identify the most valuable data, transform systems, remove barriers from organisational silos and legacy systems. Ultimately, with data intelligence, finance leaders are provided with reliable, robust data that can be used to redefine enterprise intelligence.
The pace at which the technology is evolving is extremely fast during the recent years, the role of traditional CFOs has also evolved significantly. CFOs play the strategic role in the organisation, deliver data-centric decisions across the enterprise. The finance leaders must define and build effective relationships with other members of the C-suite—from IT to HR, and Marketing to Operations. Specifically, collaborating with the Chief Information Officer (CIO) and Chief Human Resources Officer (CHRO) is highly advised for the finance leaders.
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According to the survey, only a few of the CFOs surveyed said that they have a seamless collaboration with key C-suite peers. Although two-thirds of the respondents noted that the cooperation of CFOs and CIO is critical for an organisation to yield digital innovation, this collaboration is encountering hard times due to some significant challenges. More than half of the respondents said that the main drawback is caused by the fact that IT and finance don’t speak the same language, leading to some IT executives are reluctant to collaborate with their finance peers.
On the other hand, only 31 per cent of finance leaders reported having a seamless relationship with the CHRO. Furthermore, the percentage for the CFOs who have a seamless relationship with both the CIO and CHRO shrinks to just 6 per cent. To transform the organisation’s digital strategy into reality, CFOs need to collaborate closely with CIOs to make the right technology investments while the CHROs can help in recruiting talent and work out a proper KPIs process.
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The final concern for CFOs to successfully drive digital innovation is to gather a team that can leverage that technology. In fact, both medium-size and large enterprises reported that a lack of relevant skills within the finance team as the number one barrier to finance innovation and performance improvement.
To address the issue, the finance leaders should consider two priorities: one, adopt a new view of what finance talent looks like; and two, putting a new approach in place for recruitment and skills development.
According to the survey’s result, data scientists emerged as the most important to the finance function of the future, followed by statisticians. Due to the shifting role of finance, we can see that the finance leaders are now focusing more on data-oriented expertise so that they can identify valuable insights, which eventually will yield growth opportunities and reduce the risks for finance function in a volatile world.
At the same time, the finance leaders also have to change the traditional recruitment approach. By expanding the sources of potential finance talent and address the skill gaps in their current team to ensure the finance team will be able to meet the changing needs of the industry.
The digitalisation of the CFOs is inevitable, and to transform the finance function thoroughly, the CFOs need to focus on innovation as well as bring together the people and capabilities to deliver strategic insight. By redefining resilience, intelligence, leadership, and the talent aspect within the organisation, CFOs can show that the finance function is determined to change and play its part in transforming the enterprise for the coming digitalisation era.
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