Our 2018 Key Issue Study asks finance professionals to share the impact of digital transformation on the finance function. It encourages them to list their major objectives for the year and what they most want to improve. It also performs a pulse check on the state of digital tool adoption. Year over year, as you may expect, finance doesn’t change dramatically. It’s a conservative function and moves incrementally. But we do see shifts in its priorities, and this year, one rose straight to the top.
The number-one enterprise-based objective for finance in 2018 is to support enterprise information and analytics needs. With the advent of digital transformation, competition is fiercer. Markets and business models change overnight. Disruptive technologies are quick to change the dynamics of the business environment.
Management and business leaders hunger for fresh insight so they can make decisions fast about how to survive and thrive in this fast-changing landscape. It’s no longer sufficient for finance to describe what happened last quarter. It needs to predict what’s going to happen next, and support decision-making at the highest levels with meaningful analysis. Meaningful analysis is analysis that’s put in a business context and can help drive practical business decisions that enhance enterprise performance.
Providing better analytics is also the top improvement objective on finance’s agenda. Our data shows that while that’s the top objective, it’s also the area where finance has the least mature capabilities. The mission of finance this year is to close that gap, through hiring new analytics-savvy talent – and through formal and experiential training for its staff.
When we asked finance executives in 2017 to name their most pressing training initiatives is in 2018, they put analytics-related training right at the top. Specifically, they said training efforts will focus on developing an effective business analytics capability, impacting the business with data visualization and financial analysis/critical thinking. Finance is clearly planning to take concrete steps to close the gap between is current and required capabilities.
In conversations with senior-level executives among our clients, we find that hiring top analytics talent is very hard. Often, finance teams compete for the same candidates with large tech firms and cannot pay as much. Location is also an issue. One suggestion from a Hackett training expert is to look for professionals with a social sciences background who used a lot of statistics in their studies and are accustomed to analyzing data to draw conclusions.
Acquiring new tools and methodologies
Finance is also planning to increase its adoption rate of analytics tools and related technologies. Mainstream or broad-based adoption of advanced analytics tools is forecast to increase 8.2X in the next two to three years. It’s accompanied by a jump in the adoption of master data management (MDM) technologies, which are fundamental to the use of any kind of analytics solution. Without agreement on common data definitions, how data is stored, and how it can be changed, there can be no data integrity. Without data integrity, the outcome of any analytics solution cannot be trusted, no matter how sophisticated. Finally, finance is planning to accelerate its adoption of data visualization tools. New analytics solutions that work with Big Data and patterns to come up with predictions about the future rely on interactive and advanced graphics for both discovery and display.
The advent of new technologies is also going to push finance up the analytics maturity curve. Our 2017 Digital Transformation Study reveals a significant increase in the use of predictive and prescriptive analytics techniques for both peers and top performers.
New tools. New methodologies. More training. Finance is going to do everything it can to develop better analytics capabilities in the months ahead. Superior insight will differentiate successful companies from also-rans. And the velocity of change means management and business leaders cannot wait long for finance to do its analysis and come up with insight and foresight. It’s incumbent upon finance to move on the talent and the technology fronts simultaneously.
For more insight on emerging technology in finance, see AI: The Potential And Implications For Finance Leaders.