What do Steve Jobs, Jack Welch, and Bono have in common? Well, according to three thought leaders featured on the Financial Excellence with Game-Changers radio show produced by SAP’s Bonnie D. Graham on Feb. 23, 2016, they all have a message for the digital finance professional. (Listen to the episode.)
Steve Jobs said, “innovation has nothing to do with how many R&D dollars you have or about money; it’s about the people you have, how you’re led, and how much you get it.” His quote was chosen by Srikanth Tamma, senior manager of the Technology Practice at Deloitte Consulting LLP, to introduce his point of view on the episode topic.
So why did Srikanth pick this quote? “Talent can lead and execute on the growth opportunities for corporations in the digital economy,” he noted. But he also counseled that CFOs will have to think carefully about how they attract the best people, particularly as a recent Deloitte survey shows that CFOs are expecting shortages of talent.
Translating learning into action
For his opening quote, panelist Nick Castellina, research director of the Business Planning and Execution Practice at Aberdeen Group, turned to Jack Welch, who is best known as chairman and CEO of General Electric. Welch famously said, “an organization’s ability to learn and translate that learning into action rapidly is the ultimate competitive advantage.”
What does this have to do with finance? Nick suggested that technologies like advanced analytics will mean that finance organizations can rapidly “look at things in ways they’ve never been able to in the past, which will completely change effectiveness across organizations of all types.” As a result, they will be able to improve operations and lower costs in ways that weren’t possible before.
Panelist Neil Krefsky, senior director of product marketing for Finance LoB Solutions at SAP, chose a very different source for his opening quote, the singer Bono. “What turns me on about the digital age, what excited me personally, is that you have closed the gap between dreaming and doing,” Bono said. “You see, it used to be that if you wanted to make a record of a song you needed a studio and a producer. Now you need a laptop.”
How is innovation in the music industry relevant to finance and CFOs? In Neil’s view, if digitalization can enable music to be recorded on a laptop, it also holds enormous possibilities for CFOs to change how they operate. In his view: “Burning the midnight oil, cranking all types of things out” will become a thing of the past. In the future, financial closing, for example, will be “in the moment, done from home, much faster than by traditional means. And it will expand the traditional financial role.”
Digitalization or digitization?
So when it comes to the new technologies, should we be talking about digitization or digitalization? On this point, the panelists were unanimous. The answer is both. According to Neil: “Digitalization is really about people, businesses, networks, and communities always being connected so that they can do business in the moment and leverage the latest innovations and technologies.”
Digitization, as described by Srikanth, “is the conversion of analog information into digital information,” for example, moving paper-based processes into computer applications. It’s a part of a wider digitalization that uses technology to make our lives and jobs better.
The panelists were also in accord when it came to how digitalization is changing the speed at which information is available. In the past it took time to process information, meaning it was often out-of date by the time it was available for decision-making. As Srikanth pointed out, “Today, information is captured, flagged, and moved into transactional and information systems as it is happening.”
But, according to Nick, it’s more than just having the data. “Just having the data doesn’t do the job,” he remarked. “Companies need tools that that can help them consume that data effectively. Then they can make decisions based on financial data that would never have been available in the past.”
And Neil concurred. “Digitalization finally enables finance to be more of a strategic partner to the business. Now it can provide board members with enterprise-wide information in the moment and the tools they need to answer any question. They no longer have to send questions back to finance for further analysis and information.”
Finance in the cloud
The panel addressed finance concerns about cloud computing, which is also having a big impact on finance.
As Nick commented, “there was a lot of wariness about putting financial information in the cloud due to security and downtime concerns. But those concerns have been met. Finance is starting to realize that cloud solutions are just as secure, if not more so, than the applications they’ve had in the past. Not only that, but they’re more usable, functional, and constantly being updated with no disruption to the business.”
Neil agreed, but was quick to point out that companies need to ensure that they don’t compromise compliance and reporting, which are core functions of the finance function. As he put it, “finance is not going to adopt any technology that is a trade-off between innovation and being able to comply and report on the core finances.” It’s just too important.
The millennial mix
Millennials are starting to enter the financial workplace. How will this younger demographic change the dynamics of the finance function?
According to a recent survey carried out by CFO.com, 73% of finance executives believe their companies will be pressured to bring enterprise information systems inline with personal technologies.
Neil pointed out why. “Millennials can go to the Internet, see a tweet, and follow a link to a story. They don’t want to wait for tomorrow’s newspaper to get yesterday’s news,” he explained. “And that’s what they expect finance to be like. The old green-screens are no longer acceptable.”
Nick agreed. “Technology can’t be difficult to use. Today’s consumer technology is very intuitive; you don’t have to figure it out. And that’s the way millennials expect business-to-business technology to be delivered as well. For those companies that can get it right, it will be an incredible recruitment tool.”
“It’s more than a recruitment tool,” he added. “If your systems aren’t based on personal technologies, you won’t even be in the game. The new millennial generation will not accept the old way of doing things. They don’t work that way and they don’t understand it, because there’s an easier way to do it.”
What are the panelists’ predictions for the digital finance professional in the future?
Srikanth sees finance having fewer systems to go to get information – less duplication, less redundancy, and fewer spreadsheets. He also sees finance as being “advisers to other functions within the organization, predicting future performance rather than just reporting what happened in the past.”
Nick thinks the future is “pretty bright” as finance organizations take on broad cloud solutions that are “more usable, more functional.”
Neil believes digitalization will allow finance professionals to be “in the moment and more connected to every aspect of the business. As a result, it will empower them to be pioneers instead of the traditional scorekeeper.”
This excerpt from Financial Excellence with Game Changers on the Voice America talk radio network Feb. 23, 2016, was adapted for the Digitalist Magazine. It is available on demand.