Part 1 of the 4-part “Transformation Ahead” Series
As the world transitions to the digital economy, corporate finance organizations are beginning to experience a massive change in the way they work. Despite the certain resistance to this change, the result will be a positive shift in the way that finance performs its function.
Two major factors are driving this transformation: demand from the business and disruptive technologies.
From the business perspective, the digital economy is enabling a variety of new models that create change. Companies are introducing models that break down traditional industry barriers, allow them to expand into new markets, introduce new pricing and service models, or digitize products and services. Each of these changes require radically new levels of strategic insight, increased operational flexibility, and faster response times from finance organizations.
On the technology side, continue to expect an unparalleled degree of change. For decades, we’ve seen very little substantial change in the technology that finance professionals use to execute daily tasks.
But now multiple technologies are arising that individually support substantial change. Think of technologies such as in-memory databases, artificial intelligence, blockchain, predictive analytics, Big Data, and cloud computing, just for starters. When combined, these technologies will allow CFOs to completely reimagine how finance organizations will add value to the business – and how they will operate in the future.
Trends demanding CFO attention
Based on conversations with experts at SAP and throughout our ecosystem, I anticipate 10 major changes that will affect the finance profession by 2025, which I’ll explore in this series of four blogs.
I’ll begin with one of the most prevalent trends I am seeing: the evolving role of finance in supporting and executing business strategy.
Leading CFOs recognize the connection between collaborative finance teams and business growth. In fact, a recent Oxford Economics study found that high-performing CFOs are more likely to require collaboration between finance and other business functions. In the fastest-growing companies, 87% of finance teams collaborate effectively with IT (compared with just 65% in low-growth companies), and 75% work with research and development (compared with 54% in the slower-growing firms).
By 2025, if not sooner, finance organizations will focus on supporting business model transformation, M&A activity, and other major capital investment decisions. We can see this happening already across the business landscape.
On the front end, finance will act as a strategic partner by modeling changes and helping the business develop optimal approaches for each business scenario. At the back end, finance will specialize in rapid execution and reporting methodologies that will help ensure efficient execution of the business plan.
In my next blog, I’ll look at three more trends that will have a big impact on our lives.