While the survey results show that success in executing Finance’s most important initiatives is elusive at many organizations, they also show that it is more than possible to prosper in achieving next-generation priorities. A small group of high-performing companies significantly outperform their peers, harnessing extreme automation and data and analytics (D&A) to drive better business performance. While these organizations, defined as ranking in the top 16 percent on a combined measure of revenue and profitability growth, are more concentrated in industries such as financial services and technology, they span all regions and company sizes.
What makes high-performing organizations different is not their priorities. What makes them different is that they are dramatically more successful at executing on those priorities. High performing companies enjoy a success rate of 50 percent or more on almost all initiatives, while the rest typically have a success rate of 25 percent or less.
High-performing organizations enjoy the greatest relative advantages in critical areas such as using extreme automation to reduce costs and drive better analysis, utilizing cloud-based systems, and optimizing service delivery models (SDM) to be more agile.
Another area in which high-performing organizations1 excel is in deploying agile operating delivery models to adapt to changing business models and taking advantage of new technologies. Their success in this area compared to others once again confirms that while execution is critical, it remains a challenge for most finance teams.
In the past, Finance has sought to balance the benefits of centralization – such as the ability to enforce a consistent strategy across the enterprise, reduce costs through economies of scale, and leverage scarce skill sets – with the flexibility and local responsiveness of decentralization. Centralization will still often prove to be an important element of future operating models. The impetus of these centralized models, however, are expected to increasingly shift away from cost reduction, with digital technologies and the availability of data making value creation the primary focus of operating model redesign.
COEs will also play an important role in the Finance delivery models of the future. As more sophisticated systems are able to extract key data for analysis, Finance will not need to embed as many staff in business units and geographies. These COEs, equipped with intelligent automation (IA) and concentrated expertise in analytics, should help guide the business in such areas as forecasting and capital allocation decisions.
As the function continues to evolve, Finance organizations will likely grow smaller, with a primary focus on governance and exception management. As automation becomes more sophisticated, even exceptions should be rare as predictive analytics will increasingly be able to minimize them. Reporting should be real-time, self-service and flexible enough so that users can get to the level of detail they need to support decision making. Global teams should be fully supported by a service catalogue, with standard KPIs focused on operational excellence.
Footnote: High-performing organizations are defined as ranking in the top 16 percent on a combined measure of revenue and profitability growth
Partner, Global Lead Financial Management