The “new normal” for today’s strategic CFOs is a volatile business environment marked by rapid digital transformation and fierce global competition. But to become an intelligent financial enterprise, executives must find creative ways to efficiently and effectively allocate and use precious resources.
For the last decade or more, the global business services (GBSs) approach has helped companies optimize resources, becoming an essential part of the modern operating model. By centralizing services and sharing them across the business, GBS organizations automate and streamline many transactional financial activities.
To address current business challenges, however, enterprises need to expand and scale up their use of these services. Sharing people, capabilities, and resources is still at the heart of these operations. But the earlier focus on cost and labor efficiency is shifting to knowledge-centric activities, automation, and harmonization. The net result: higher process quality and effectiveness.
Leading companies are already developing centers of excellence in areas such as procurement, supply chain management, controlling, financial planning, and analysis. Using innovative technologies such as robotic process automation or machine learning, they can free workers from rote data processing activities to focus on higher-value tasks. These technologies also improve analytics processing, enhancing decision support.
In a recent radio show, “The Heart of Intelligent Finance: Share and Share Alike?,” I discussed research from The Hackett Group with Robin Bau and Oliver Schoenborn of SAP and Arjun Krishnamurthy of Deloitte. This research discovered that expanding the scope and scale of GBS offerings can help enterprises raise their efficiency potential by 20% to 35%. The overall benefits depend on an organization’s existing process maturity, standardization levels, and automation. Average companies, with only limited standardization and automation, can realize efficiency increases of up to 35%. World-class companies that already excel in these areas can improve efficiency by 20% or more, reducing process cost and working capital.
Developing the talent needed for digital transformation
It’s important to note, however, that digital transformation is changing the shared services environment. Although sophisticated technology is widely available, many financial leaders struggle to staff their initiatives. In a recent survey, only about one-third of shared services leaders agreed that they have the right people in place to use digital technology to create value for the business.
That’s why GBS organizations need to intensify their focus on talent. Recruiting recent graduates and experienced people with a variety of backgrounds, or partnering with digital natives such as start-ups, helps build the diverse skill sets that will be needed to compete today – and in the years to come.
Shared services organizations also need to develop and upskill their existing workers. These people may need additional technology training, but they possess years of valuable knowledge about the business. Development may include training in new technologies as well as methodologies such as design thinking, scrum, and agile development.
Finance executives should also work to bring people together across multi-functional areas. Many companies are still operating in silos by organizational function. Eliminating these silos allows people to think in terms of end-to-end processes, bringing together know-how from each group that can benefit the business. Centers of expertise and digital hubs can help companies bundle their digital transformation activities.
Coordinating change, before someone else does it for you
Digital transformation is a massive project that requires many of the same change management approaches as other critical initiatives. Executives need to understand where digital transformation can help them improve business processes, data management, and decision-making. They must explain market trends to workers, creating an urgency about the need for change.
From there, success depends on the ability of business leaders to take control of change management processes. For example, many shared services organizations still use people to handle data-intensive tasks. Robotics can easily automate many of these jobs, reducing the amount of tedious transactional activity handled by human workers.
But introducing this shift is certain to create anxiety in employees worried about job security. Savvy leaders will step up and conduct change management discussions that help workers understand how they are needed for more valuable tasks, such as controlling robots, adding experience-based intelligence to the process, and streamlining processes. By explaining how the shift to digital transformation will help employees contribute to company success and make their jobs more rewarding, financial executives can accelerate the transformation journey.
The responsibilities are daunting, but the alternative isn’t pretty. We have already seen a few cases in Europe where outsourcing companies are petitioning CFOs for an opportunity to provide services that internal GBS organizations have not yet delivered. By stepping into the driver’s seat and owning the digital transformation journey financial executives can protect their own futures – and position the company to excel in the “new normal.”
To learn more about the transformation of financial shared services, listen to “The Heart of Intelligent Finance: Share and Share Alike?,” on the Internet radio program, “Financial Excellence with Game-Changers.”