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  • Writer's pictureCaroline Brie

Financial Transformation Is The Future

The last two years have been transformative–and not always in the ways we would have expected. Nevertheless, change gives rise to adaptation and innovation; it brings opportunity. Finance teams have a chance to play a leading role in building and sustaining a healthy trajectory for their company as organizations struggle to keep up with the pace of change.

At the end of the day, financial transformation is about gaining a competitive edge. It's about adapting to a quickly changing world, using data-driven insights to analyze the situation, comprehend the options available, and take the necessary action to prevail in an increasingly competitive global marketplace.

What is Finance Transformation?

Finance transformation, according to Gartner, is the process of "re-envisioning the finance function to align with the overall company strategy." The days of finance being solely responsible for recordkeeping are long gone. Finance is now more strategic than it has ever been. Unfortunately, not all finance departments are embracing that responsibility to the level that they could or should.

Going forward, finance departments must adapt to the new reality; finance transformation will no longer be optional. It’s imperative for finance leaders to fully embrace their roles as transformational leaders, or someone else will do it for them. For the businesses in which they work, finance transformation is equally vital. In the global marketplace, it will be the difference between winning and losing.

Deloitte released a report titled Finance 2025 Revisited earlier this year, in which analysts evaluated their projections from 2018, assessed progress to date, and stated their new predictions for the year 2025. Their remarks on the role of finance are especially noteworthy.

“Agility and adaptability separated the winners from the losers… Faced with the pandemic’s enormous challenges, some finance teams stepped up and others did not, but either way, business leaders going forward will expect Finance to be ready for multiple future scenarios. It won’t have the luxury of setting a single strategy and following a linear path irrespective of the world at large.”

Finance teams must be ready to seize the reins and lead from the start. They cannot just tabulate and report on previous performance; they must anticipate possible changes on the road ahead, assess several viable paths, and chart a course for company success. They must seek out and find value-creating activities, align financial realities with company strategy, and direct effective business execution.

This is something that many finance executives are already aware of. As technology-enabled automation and analytics have become more powerful and cost-effective than ever before, necessity has met opportunity. Looking ahead to 2022, finance professionals must use this opportunity to lay a solid platform for financial reform.

Establishing a Solid Technological Foundation

Finance teams, of course, play a crucial role in planning and budgeting, establishing meaningful organizational goals, and anticipating likely outcomes based on current conditions. They're also in charge of tracking and monitoring performance against budgeted goals and making sure the organization has the resources it needs to run smoothly.

Yet, when it comes to their strategic function within their organizations, many still fall short. Finance teams must move beyond statistics and into the realm of insights to operate strategically. While raw data and reports are still valuable, getting actionable meaning from them is even more so.

Unfortunately, though, finance teams are swamped with manual processes. They're frequently tasked with handling the mechanics of reporting and analysis rather than focusing their efforts on strategic tasks. To make that transition, finance teams need automation.

In 2020, many organizations implemented automation as a matter of necessity. According to Deloitte's Finance 2025 Revisited report: “Automation gains… generally helped a remote workforce keep the lights on, not produce predictive analytics (though that capability readily exists).” The authors of the report went on to say that “technology will… help Finance handle uncertainty and execute on its value proposition, as real-time information moves closer to reality and business analyses are generated on autopilot.”

One example many organizations turned to is DataRails, which automates Excel-based consolidation processes and aims to help you embrace optimization by significantly enhancing the way you work without asking you to change.

Enhancing the Value of the Finance Team

The fact that enterprise resource planning (ERP) systems have historically been poorly connected with external apps and analytics tools is a big part of the problem. The built-in reporting tools that come with most ERP systems are poorly suited to the kind of advanced analysis and real-time business intelligence that generates strategic value, and their budgeting and planning capabilities are generally relatively primitive.

As a result, most finance teams have come to rely on a jumble of manual processes, such as exporting data from the ERP system (and, in some cases, CRM or other software that stores important business data), importing it into a spreadsheet, reformatting it and building formulas, and producing reports that meet their exact formatting requirements.

Unfortunately, this comes with a slew of complications. It’s extraordinarily tedious and time-consuming. It's not a task that can simply be delegated to lower-skilled workers, therefore it takes up a lot of high-value time.

It also tends to bring inaccuracies into the final reports and analysis. Even the most meticulous users will occasionally overlook a formatting error or neglect to make a formula adjustment. When executives use the generated data to make critical business choices, the results can be disastrous.

Finally, the manual spreadsheet-based technique makes it impossible to see real-time information about the business. The majority of human activities must be performed to update a report with current data.

When members of the finance team spend so much of their time executing operations that could easily be automated, transformation is impossible.

As the authors of the Deloitte report pointed out, the technology is readily available, and automation and predictive analytics are critical to financing transformation and elevating finance to a position where they can generate strategic value regularly and consistently.

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