We’ve reached a new era for top performing finance departments. No longer is finance solely viewed as an operational function that serves the specific purpose of managing transactions, reporting, and compliance. Instead, the role of finance is now as a valued partner in strategic decisions as well as a potential source of efficiency, cost savings, and profitable growth. With this enhanced role comes a variety of challenges. Finance organizations must step it up in order to meet the needs of the rest of the organization while continuing to run effectively. But don’t take my word for it. Let’s take a look at some of the how’s and why’s of financial transformation that organizations report.
My recent Excellence in Financial Management study asked survey takers to indicate the top challenges facing them today (Figure 1). Finance is under significant pressure to deliver financial information to key stakeholders both internally and externally. On the one hand, many employees outside of finance finally understand the importance of its function and the information it can provide. Unfortunately, enabling collaboration while completing financial processes is easier said than done. Due to changing regulations, increased amounts of data, and organizational complexity, varying financial processes are too long and resource intensive. This brings increased cost and puts the organization at risk for inaccurate information and the negative effects of noncompliance. Clearly, more importance than ever is being put on the finance function. In order to keep up, this function needs to improve the way it operates. There is an opportunity to make intelligent changes that will make these challenges into attributes.
Figure I: Top Challenges in Finance
In response to these pressures, 86% of Best-in-Class organizations have ensured that they have executive commitment to financial transformation (Figure 2). This commitment needs to come from the top of the organization in order to ensure that it is driven down and executed both inside and outside of finance. But what does financial transformation mean? It means altering the processes and technology that typically make up finance. This transformation must address the pressures noted above in order to induce collaboration, enable data reporting and sharing, and facilitate and remove the costs from financial processes. Ultimately, top performers accomplish transformation by changing the way things work today.
Figure 2: Best-in-Class Commit to Transformation
Aberdeen has uncovered a series of best practices that help organizations to completely transform their finance departments (click here to see an infographic highlighting this research). This blog is the first in a series that will help you to determine the best course of action as your finance department embarks on this journey. Next time, we will uncover the technologies and capabilities that organizations that commit to financial transformation have implemented. In the third entry, I will illustrate some of the tangible benefits that organizations have experienced as a result of transformation and summarize a series of recommendations. Check back here throughout this series, and share it with the rest of your department to encourage and embrace financial transformation.
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