In the current cloud era, digital transformation is enabling companies to develop and deploy new business models to maintain their competitive edge. The traditional finance function, which focused on report generation and budget creation, needs to evolve into something more modern that can meet the challenges of the constantly shifting modern business landscape.
Finance departments must transition away from just bean-counting and instead work in tandem with other internal stakeholders to add value across the enterprise. They must be capable of agile planning and be able to recognize and exploit potential new business opportunities.
For some, this is a significant shift, especially when compared to what came before. If so, it will require a similarly radical change in long-term mindsets – not just within the finance team, but throughout the entire organization. If this change in approach can be achieved, then the finance office can begin to make use of advanced data analytics solutions, thus enabling businesses to make changes that embrace these new models, delivering major benefits.
The Covid-19 pandemic has shone a light on the existing capabilities of organizations, and has exposed the cracks in processes, systems and business models. For example, larger more traditional organizations have, for the most part, been shown to be less agile, especially if they are using complex legacy ERP systems and fragmented business processes. In turn, this has acted as something of a catalyst for digital transformation, speeding up the adoption of digital initiatives.
We have witnessed more changes since the beginning of the pandemic than we had seen in the previous half decade. For example, effective cash-management has been core to the survival of many businesses, and has resulted in the transformation focus no longer just being about the front office – there is now a greater interest in remodelling the back office as well.
However, it is wrong to think that these changes can just take place immediately. As such, there are five key shifts that an enterprise must make to enable it to transform from a traditional finance office to a digital office of finance.
Monthly reporting out, real-time decision-making in
In today’s business landscape decisions have to be made rapidly using accurate, timely data, and the monthly and quarterly reviews of old are no longer fit for purpose. When it comes to making sure that a business is capable of achieving success, both accuracy and speed are of the utmost importance. Therefore, it is necessary for a business to invest in real time solutions, so that reviews can take place weekly or even daily, and detailed information is readily accessible when required.
This enables organisations to quickly act upon insights regarding the business’ performance, enabling it to rapidly understand what is involved in a new offering as well as how to improve both customer satisfaction and profitability. In addition, more advanced tools such as business intelligence (BI) and artificial intelligence (AI) can provide trends and predictive capabilities to enhance your decision making even further.
Rolling forecasts as the new norm
With finance offices now switching to weekly and daily forecasting schedules, there is a need for technology to support them in their adaptation. Modern forecasts need to account for constantly evolving sets of variables, in addition to a number of different business models and the use of new technology like BI. Organisations must ensure that a plan can be enacted in case of business risk scenarios, from price wars to the current COVID-19 pandemic.
Enterprise-wide knowledge in finance
The modern-day finance leader must demonstrate an understanding of KPIs across the business – not just financial metrics. Whilst financial numbers remain of vital importance, they must develop their knowledge of the entire company and the key value drivers, from customer experience and satisfaction to employee retention rates. Nowadays, the focus is no longer just on the financial and operational aspects of an organization, but also on the creation and maintenance of strong and healthy relationships with customers. This presents a major difference from accounting teams of yesteryear, with the modern finance leader having become a major stakeholder in the business.
A keen focus on customer success
With the growth in the services economy and a mixed model there is a growing need for businesses to redouble their focus on customer experience. Finance leaders must understand and involve themselves in operations relating to the customer, so as to ensure both customer retention and satisfaction. They must get closer to sales, service delivery, customer success and support in order to enable better decision making that will fully meet customer needs.
Shifting from financial analyst to business model strategist
For businesses to gain an advantage over their rivals and to remain a step ahead of them, they must continually be looking for new revenue streams and new, innovative offers for customers. To deliver these new approaches, an organization requires flexible business processes and access to high quality, real-time data. These will provide insights into which products and services are the most successful, what is the true cost to deliver the service, and which offerings deliver the highest margin. Pinpointing the top performers gives businesses vital information when it comes to maintaining a competitive edge.