Agility and the future of Finance
Traditional finance management is focused on safeguarding company assets, but modern finance is focused on sustainable growth. This is framed around customer engagement for growth and retention. To be able to serve customers well a business needs in order to both solve problems as well as address pain points and delight better than competitors in order to compete.
Finance who don't pay sufficient attention will end up with companies that cannot compete and are at high risk of disruption. This requires a new set of priorities and measures to stay relevant in today's business. Strategy framed around differentiating capabilities is key with integrated, agile teams as a vehicle to ensure that the finance can support business agility through the right set of measures and reporting insights.
Traditional financial reports can only validate the success of previous business decisions and actions, but the future finance function will have a more holistic set of measures to evaluate the emerging opportunities and risks.
1. What is agility?
Every day we see examples of businesses that are making rapid strides to being more agile. Small businesses have made agility part of their DNA as small shops that did not use digital channels to sell their products were forced out of business and large corporates, that used to use a rigid business model, are also now experimenting with new business models as a result of agile innovation.
Traditional business thinking has tended to focus on siloed, centralized organizations removed from their customers. All of this could be described as the progressive management style of the 1900s. This is starting to give way to business agility, a strategy that's faster, more flexible, and more focused on customer needs. It's a strategy where agility isn't just a buzzword; it is the basis for everything.
2. The future of finance
Financial reports is just one of many key areas that require a new approach for today's business to survive in the future. These changes include:
Customer focus requires having a robust set of measures to optimize customer experience. This will determine a company's ability to reach and service customers and to react when needed.
Consistency across the organisation must be maintained in order to achieve focus on the critical priorities.
To thrive in the future companies must invest more in their people, which requires a new set of measures around diversity and inclusion, health, diversity and inclusion, and individual, leadership development.
The individual ability and commitment to deliver growth depends on both the senior executives within a company and the key people within finance.
3. How to be agile in finance
Better data insights and being able to look ahead and provide more insightful and relevant data is an important skill for a finance team. In a data-driven world, data literacy is critical to provide the right information for stakeholders to make better decisions. A finance team needs to understand the data pipeline from the raw data sources through to the analysis or visualization tools and then communicate those insights.
Connected to the growing importance of managing the tech stack, analytics, as a part of digital transformation, needs to be integrated into the finance functions as much as possible. Leveraging the data collection capabilities from the non-finance systems e.g. CRM, Purchasing, Operations, HR etc. can help the finance teams identify the critical growth drivers to meet or surpass goals.
4. What do you need to know as a CFO?
Perhaps the most important change has been the introduction of digital products in finance to serve the business in a more efficient way. These products will provide insight into a wider range of data. For example, a technology product would enable CFO to create a dynamic plan of action based on specific data analyses.
This would be a relatively new approach for CFOs who's finance teams are dependent on ERP and Excel, but an area which the CFO can benefit from. The costs associated with customisation and integration is an obstacle but the rewards may more than offset the risks in the greater scheme of things when considering the benefits over time.
If a CFO can deliver the right tools correctly managed by skilled professionals, it could help to increase the overall time and cost savings as the products deliver reduced time to insight.
5. Know your customer’s pain points
Customers want faster, more integrated service. They don't want to wait. They don't want to struggle. They want results NOW and they demand it to be FIXED NOW. This new, customer focused organization demands cross-functional teams to respond to requests in real time.
The traditional finance function needs to learn how to respond to the needs of different types of customers and will need to evolve. The business doesn’t care what the Accountant, Bookkeeper, Accounts Receivable assistant, or Accounts Payable clerk does unless it impacts their stakeholders. Software vendors are coming up with technology solutions that require knowledge of finance and data in order to complete their work in an efficient and seamless manner.
6. Deliver on customer expectations
Integrated, agile business models involve a different set of levers to be pulling together in order to both remain relevant and deliver on customer expectations. This requires a new set of focus and activities to produce reliable, accurate and timely information and insights that businesses need to continue to operate. The future finance function will have a much more proactive role. Helping the C-Suite gain insights, understand critical issues and create actionable plans.
Today finance focuses on reporting and controlling. The future finance function will need to be involved in the strategic planning and decision making as well. It will need to work closely with the new C-Suite and business line leadership.
7. Know how to keep up with the latest trends
The modern finance function is structured around software. This means that it needs to be able to react quickly and effectively to new and emerging trends. It must be able to turn this information into insights to support business management decisions and change.
CFOs and finance need to be able to demonstrate that they can identify the impact of a product, service or change to an existing strategy. Another important element is the ability to develop innovation into business models. If a product or service works and customers love it, it will grow fast, but the business model behind it may not have been adapted to keep up with the pace. One example would be investing in a new scalable platform, such as the cloud, without having a specific product strategy in place.
Know how to change what doesn't work
Smart CFOs will know what skills are necessary to help deliver business outcomes. They will adapt their approach to the changing business, while making sure they can pivot to remain relevant in the business. If you are an executive with an uncertain future at a legacy organisation you will probably want to look at what you can change as part of your career and if you are able to choose a path that suits you best for the future. You may need to take action now.
With a backdrop of an increasing level complexity in the marketplace, the new CFO will have a much more holistic view of the company and its customers.
The important questions to be asked will be:
- "How well can my company protect and grow revenues in a digital market?"
- "How well can my company survive the possible disruption?"
- "How well do we survive future competition?" and
- "How does this have an impact on our strategy, products, services and how we do business?"
Those who successfully adapt to the new CFO demands will have a resilient and engaged leadership team, capable of successfully adapting to new technology in order to better serve customers.