Spotlight Feature: Finance Transformation
Chief financial officers (CFOs) face complex and contradictory demands as they strive to drive long-term value and find short-term cost efficiencies while reinventing the finance function. There are three fundamental paradoxes within the CFO role:
Creating long-term value while facing pressure to cut priority investments.
Managing risk while driving value through bolder and more innovative change within finance.
Succeeding as a strategic finance leader and achieving career ambitions when traditional finance skill sets do not provide the breadth of experience required for the role.
EY interviewed 1,000 CFOs globally, including 400 CFOs in the Americas, to identify the most important priorities to transform their finance function over the next three years. As CFOs are looking to build digitized finance functions to drive sustainable, long-term growth, unsurprisingly, technology transformation and advanced data analytics were the top two priorities for finance leaders.
Combining technology with the right skills is crucial in making the transformation real. Surprisingly, even today many transformations deploy technology changes with an attitude that workers are simply expected to attend trainings, then adapt and adopt. Often there is little consideration of the end user during the design phase, or how to engage with them in a way that helps them understand the changes and provide productive feedback on further product enhancements.
Taking an outside-in perspective of the technology design can help prevent extravagant groupthink among the project team in which creative sessions lead to overly complex requirements. Engaging the users earlier can lead to simpler processes where essential data gets captured to drive better customer, supplier, and employee experiences, rather than a model in which all possible data is captured and then an overly complicated system is designed to use it.
CFOs today are expected, from an internal management perspective, to provide real-time insights from data of all types, also increasing beyond the scope of purely financial insights. To this end, the finance function requires access to structured financial data as well as other structured company data and unstructured market data. Only by doing this can the finance function use analytics to map complex value relationships, influence their impact on financial ratios, simulate potential scenarios and reliably predict relevant market developments.
On the other hand, CFOs are under immense pressure to prepare information for a host of different external stakeholders, ranging from customers through to social influencers. As a rule, more transparency has a measurable effect on a company’s market position, image, and value. Strengthening the finance function so that it can prepare a factual basis for decision-making, namely through the optimal use of data analytics, is therefore vital. Multiple factors determine the extent to which companies proactively explore the possibilities of data analytics or adopt a wait-and-see approach.
These include the willingness to change, or the pressure felt by companies from external stakeholders and their analyses.
The requirements of CFOs and finance leaders is shifting, and with it the requirement to invest in talent, adopt advanced analytics, and implement technology that can support the increased reporting requirements and demands of the future.
The EY Financial Accounting Advisory Services Finance Optimization (FAAS-FO) team is here to help our clients achieve their short and long term goals by understanding their vision, strategy, and target operating model and designing and implementing effective solutions to help them achieve the ultimate end state. FAAS-FO can partner with the business to support your transformation journey from strategy development through to investments and enhancements in talent, processes, data, and technology.
Sam WhittakerAssurance & National Financial Accounting Advisory Services Leadersam.whittaker@ca.ey.com
Chris MadsenPartner – Financial Accounting Advisory Serviceschris.madsen@ca.ey.com
