Finance Technology 2020

Transcription

1 Finance Technology 2020 New Approaches to Solving the Four Biggest Challenges to Finance Technology Success in 2020

2 FINANCE MEGATREND 1: DRIVE TO GUIDANCE Policy Enforcer Accounting Auditing Statutory reporting Cash management Policy formulation and documentation Cost of Finance Governance Service Provider Management reporting Budgeting Forecasting Enterprise planning Operations Decision Support Partners Capital budgeting Risk management P&L analysis Customer profitability analysis planning Guidance Enterprise Decision Support Partners Business development Competitor analysis M&A support Pricing strategy Product development Growth of Finance Responsibilities and Requests for Finance Support Growth of Finance Budget Finance Function Maturity Finance teams must deal with more risk in reporting and controls and help the company meet targets in a tougher growth environment. To do this, Finance teams need to balance efforts across both the Governance and Guidance mandates. 2

3 FINANCE MEGATREND 2: SERVICE MODEL EVOLUTION Business transformation is driving structural changes in the function. Business Strategy: Super Efficient Overhead Management Business Strategy: Focused Growth Investment and Performance Management Shared Services Accounting Tax Reporting Global Business Services Technical Finance Corporate Planning and Budgeting Line Finance Internal Reporting FP&A Line Finance Analytics Center of Excellence Finance Trend: Consolidation of End-to-End Governance Teams Finance Trend: Growth of Specialized Guidance Teams 3

4 IT MEGATREND 1: THE DIGITAL BUSINESS DIGITIZATION OPPORTUNITIES PRODUCT Using data and technology to enhance existing products and services User-customized products Automated data discovery Smart sensors Open platforms Launching new products or services beyond the core business portfolio Serving cars, not selling cars Selling wellness, not medical treatment SALES, MARKETING, CUSTOMER SERVICE Improving channel coordination and performance E-commerce platform Multichannel marketing Mobile customer service Social customer service Transforming channels to match customer behaviors and preferences Omnichannel marketing Just-in-time customer service FUNCTIONAL OPERATIONS Improving productivity or optimizing enterprise activities and processes Digital workplace Dynamic resource reallocation Predictive analytics Robotic process automation Making broad improvements in one or more corporate functions Continuous accounting Supply chain digitization Enhancement Scope of Change Transformation 4

5 IT MEGATREND 2: BUSINESS-LED IT Used Narrowly (Local, BU, or Functional) Typically Retained by Corporate IT The Blurry Boundary HRIS Expense management Customer analytics Risk analytics Talent analytics Finance analytics and reporting Team collaboration Traditional Business-Led IT Digital marketing Customer effort reduction R&D platforms Process control Additive manufacturing Technologyenabled products Used Enterprise- Wide Servers Network Integration ERP Transaction processing Cross-silo information sharing (EDW) Technology Foundations Process Automation Information Sharing and Analysis Customer Enablement Products and Services Proximity to Customers and the Product 5

6 FOUR CHALLENGES FOR THE SUCCESS OF FINANCE TECHNOLOGY IN Distributed Technology Finance needs to own its technology planning and investment decisions. Risks Scope and role ambiguity Shadow technology teams Opportunities Less horse trading with revenue-generating IT Flexible technology 2 The End of Traditional Hierarchies Traditional IT and Finance hierarchies are defunct structures for finance IT activities. Risks Diffuse accountability for IT Process and control weaknesses Opportunities Flexible roles and employment models Growth of collaborative service models 4 3 Total Data Reliance Digitization equalizes data domains in enterprise decision-making. Risks Security risk of data graveyards Cost proliferation Opportunities Enterprise data integration Development of analytic culture Tech Skill Premium Finance s activities increasingly dependent on embedded technology skills. Risks Tech talent shortage Lost focus on core technical finance skills Opportunities More diverse career paths New opportunities to attract university graduates 6

7 NEW APPROACH: FINANCE-LED TECHNOLOGY PLANNING Distributed Technology Distributed Technology Challenge Finance needs to own its technology planning and investment decisions. Action Finance uses business goals to level-set technology planning. Instead of starting with process owner interviews, which often lead to isolated investments and a proliferation of applications, finance technology leaders ignore applications until leadership agrees on capabilities. Result Finance cut redundant applications by 40% and moved a majority of its non- ERP based applications to the cloud. The function also increased focus on emerging finance technologies, opening capacity to conduct industryleading proof-of-concept with blockchain and robotics vendors. Finance-Led Technology Capability Planning Process Business Goals Minimize Compliance Spending and Risk Increase Innovation Clock Speed Reduce Administrative Complexity Finance-Supported Capabilities How We Will Support the Business Efficient accounting standard transitions Scale end-to-end statutory control and reporting Support new-to-company business models Increase speed of M&A support Assimilate multiple legal entities Reduce manual business processes Technology Capabilities What We Need to Do It More flexible, stable ERP Fast-cycle application refresh Provide ondemand decision data Reduce data gathering time 7 The End of Traditional Hierarchies Tech Skill Premium Total Data Reliance

8 NEW APPROACH: OBJECTIVE-BASED FINANCE IT ORGANIZATIONAL MODELS Distributed Technology The End of Traditional Hierarchies Challenge Traditional IT and Finance hierarchies are defunct structures for finance IT activities. Action Finance organizes staff around its primary technology objective. Instead of using MBOs and business partnership to pursue finance IT objectives, finance leaders dedicate staff to isolated technology objectives. Result Standalone Finance IT Sub-Function: Finance cut its maintenance-related spending in its IT budget from over 60% to less than 45% and increased investment on transformation IT. Activity-Based Finance IT Matrix: Finance retired more than 300 legacy internal reports and replaced them with a self-service analytic data environment. New Finance Technology Organizational Models 1 Focus on Resource Distribution Finance IT FP&A CFO Accounting Tax and Treasury Standalone Finance IT Sub-Function Pros Easier to own end-to-end finance technology planning and alignment Enables process-it alignment at significant process handoffs (e.g., record-to-report, financial planning) Cons Cost to stand up new team and career paths Diffuse accountability for centralized applications like the financial ERP 2 Focus on Technology Maturity Applications Analytics & Reporting Discovery Data Management IT Support Activity-Based Finance IT Matrix Pros Provides responsibilities for strategic enterprise roles like a chief data officer Enables specialization in finance IT capabilities Creates collaboration mindset within finance instead of resource competition Cons Diffuse responsibility for finance technology planning 8 The End of Traditional Hierarchies Tech Skill Premium Total Data Reliance

9 NEW APPROACH: FINANCE-IT TALENT PUSH RECRUITING Distributed Technology Tech Skill Premium Challenge Finance s activities increasingly dependent on embedded technology skills. Action Finance looks internally for experience and interest in finance IT. Rather than using external hires or consultants, internal staff from Finance and IT are familiar with company processes and can work more effectively with business partners. Result Finance built a new finance IT career path in under nine months, and is hiring a head of finance IT to oversee the new sub-function s day-today activities. Internal Push Recruiting for Finance IT Roles Learn Ask Shortlist Finance Employees Resume Finance Experience: Expense Reconciliation Accountant Educational Qualification: CPA IT Projects: Worked on automating the expense reimbursement system IT Employees Resume IT Experience: Database Developer Educational Qualification: Computer Science Major Finance Projects: Database Maintenance, SAP Hana The End of Traditional Hierarchies Tech Skill Premium Interests: Basic Programming, Mobile Applications Interests: Equity Trading, Portfolio Management Total Data Reliance 9

10 NEW APPROACH: USING DATA LAKES TO DRIVE FINANCIAL DATA INTEGRATION Distributed Technology Total Data Reliance Challenge Digitization equalizes data domains in enterprise decision-making. Action Finance uses a data lake to augment enterprise data with financial data. Finance leaders stop pursuing one truth through centralized control and augmented financial data, instead focusing control on external financial reporting. Result Finance provides access to financial data at the transactional level in the cloud and self-service snap shot views of financial trends. Business leaders utilize more financial data to test micro-strategies around profitability. Data Integration Model Call Center Channel data Campaign metrics A C Hub D Social Media Affinity groups Chanel partners B Acct Eng GL Adjustments Expenses Financial Reporting A B C D Non summarized transactions Finance created data elements Transactional level Parent/child; keys Adjustments (journals) Non structured Non relational Non hierarchal Snap shot Finance created balances Expenses (allocated and direct) The End of Traditional Hierarchies Tech Skill Premium Total Data Reliance 10

11 KEY TAKEAWAYS 1 Challenge: Distributed Technology Finance needs to own its technology planning and investment decisions. Key Takeaway Avoid discussions about IT applications until finance and IT leaders agree on which finance capabilities the function needs to support business goals. 2 Challenge: The End of Traditional Hierarchies Traditional IT and Finance hierarchies are defunct structures for finance IT activities. Key Takeaway Use Finance s primary technology objective, such as better resource distribution, to organize staff around IT activities. 4 3 Challenge: Total Data Reliance Digitization equalizes data domains in enterprise decision-making. Key Takeaway Shift financial data strategy from one version of the truth to augmenting enterprise data with financial data through capabilities like data lakes. Challenge: Tech Skill Premium Finance s activities increasingly dependent on embedded technology skills. Key Takeaway Rather than using external hires or consultants to fill finance IT roles, develop a push strategy to recruit internal finance and IT staff who are familiar with company processes and goals. 11

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