The field of marketing scientifically examines influences on the rate of adoption of products, services, and technology. Everett Rogers, a business researcher, developed his Diffusion of Innovations model with five categories of adoption: innovators, early adopters, early majority, late majority, and laggards. Which category best describes many organizations, especially CFOs, with respect to adopting integrated business planning with its methods and analytics?
I see most organizations falling into the laggards category. One might presume that laggards are at the tail-end of the distribution curve. However, I view the distribution curve as being similar to cyclists in a race. There are high-performing cyclists out in front, and then much further behind is a large pack of riders – called the peloton. The distribution of cyclists doesn’t follow a bell curve, but rather one shaped like a camel with two humps: a short one followed by a broad, tall one with a long tail.
I mentally view and classify accountants, including CFOs, along a similar distribution curve spectrum as applied in marketing. There are leader and laggard CFO functions.
A technological revolution for planning and decisions
It has been my observation, which I am sad to report, that the distribution curve is similar to the cyclists’ peloton and not the classic normalized bell-shaped curve (for example, the height or weight of 10-year-olds). The curve is skewed to the left side, meaning a higher population of laggard and less progressive accountants compared to a smaller number of early adopters located in the right side of the curve. I refer to those on the left side as “bean counters” and those on the right as “bean growers.”
A combination of technology (in-memory microchips), cloud-based computing, and business software can shift accountants to the right side of the curve. But before describing that combination of three enablers, let’s better understand the issues with less progressive accountants.
Accountants as Homo accounticus
I enjoy maturity and evolution models of all kinds, especially for business. There are stages of maturity models for information technologies and others such as for sales teams and their customer relationships. What I like about stages of maturity models is that they provide confidence that, regardless of someone’s stage, low or high, there is a next step further up that can be attained in an evolutionary way.
In biology there is an evolution of humans that has, in earlier stages, Australopithecus, then Homo erectus, then Neanderthals, and our current stage, Homo sapiens. Examples of important changes are brain size, hand grip, and a larynx for speaking.
Just for fun, I will take the position that some accountants are primitive Homo accounticus. Just as with humankind, there are overlap periods where primitive accountants co-exist with more sophisticated ones with more capabilities and skills. This implies they have evolutionary steps in their future. A stereotype of an accountant is as a “bean counter.” These are the Homo accounticus. In the evolutionary ladder, they can become “bean growers.” They can add value beyond just reporting to assisting their organization to gain insights and make better decisions.
In defense of “laggard” accountants and CFOs
My intent is not to shame accountants and CFOs (although a few do deserve it). Without advanced business software, accountants regrettably have little or no time to be progressive. Their accounting consolidations for the period end are cumbersome and slow. Some have had the number of their staff reduced to the bare minimum. Many of them are on a hamster wheel. They take a deep breath after their period-end accounting close and before the next month’s financial accounting cycle begins. They have no time to shift their emphasis to management accounting with progressive financial planning and analysis (FP&A) methods.
The distribution shift toward “leaders”
Here is how a combination of technology and business software can enable accountants and CFOs to become “bean growers”:
- In-memory chip technology – The speed and capacity at which microchips can store and process data has rapidly advanced. In the past, data that was being analyzed had to be stored on a device that was physically separate from the processor. This was because the processor was limited in its ability to hold data, and even then this type of memory was very expensive. The disadvantage of this design is that it required data to be constantly written to and from memory, which incurs a time penalty. This resulted in analysis that took hours to run. The new in-memory chip technology replaces the need for a separate physical disc, which in turn eliminates the time required to read and write data. The result is vastly increased response times and systems that are able to support real-time processing of massive amounts of information. The implications are significant. Drill-down queries and refreshing of models become nearly instantaneous. For analysts, investigations and explorations of multiple “what if” scenarios can be processed at the speed of thought.
- Cloud-based computing – The attractiveness of remote computing power and storage over on-premises computing, the maintenance benefits, and the ability to easily extend use to enterprise users are commonly accepted today.
- Integrated business planning software – IBP software seamlessly integrates user interfaces and workflows. IBP links strategic, operational, and financial objectives and plans to improve employee alignment with the executive team’s strategy and financial performance.
CFOs as strategic contributors
Many magazine articles proclaim that the CFO has expanded to a role of a strategic adviser. However, there is insufficient evidence to support this assertion. With in-memory chip enabling cloud-based computing for planning, there will be much more evidence. The reputation of the CFO’s function will be enhanced.
To learn more about how finance executives can become “bean growers,” review Thriving in the Digital Economy.