Transformation is the driving force of our times. The pandemic has sharpened the imperative for businesses to embrace agility, rethinking processes and services at pace and at scale to keep up with changing market circumstances and evolving customer preferences. In this era of disruption, the finance and accountancy profession has a critical role to play.
For too long, businesses have languished in industrial-age thinking, prioritising incremental, step-by-step change over a flexible and adaptable approach to the challenges and opportunities of the present.
A new report ‘Transformational Journeys: Finance & the Agile organisation’, launched to coincide with the ACCA’s Accounting for the Future event, sets out how financial professionals can meet the challenges of this moment and lead the transformation agenda in their organisation. I am delighted to be speaking at this event with a panel of industry experts to explore ‘Finance in an Agile World.
Finance teams are taking on a much broader role, with responsibilities for managing operational, climate and non-financial data. To retain the function’s value and purpose in the organisation of the future, financial professionals must work to align with organisation goals and help drive transformation.
The report points to how “companies of all sizes and all finance professionals are at a crossroads”. As we emerge from the pandemic, businesses need be strategic and embrace the technological and culture change that is essential for long-term success.
Understanding transformation
Many organisations come unstuck before they begin with a misguided view of transformation. There are many definitions out there, but in essence, transformation is a reimagining of the way in which an organisation operates, including which services it provides and how it provides them. It is both about ensuring an organisation is adaptable to the challenges of the present, and future-gazing to look at where the business wishes to head against the background of its market, or markets, of operation.
Crucially, transformation is not the same as digitisation. The digitisation of process is certainly important and can be a catalyst for transformation. The introduction of data analytics, for example, can be hugely transformational for businesses. One estimate suggests 7.5 septillion (7,700,000,000,000,000,000,000) gigabytes of data are generated every single day in 2021. Organisations that are able to analyse and interpret this explosion of data will be at a huge competitive advantage, equipped with value-added insights to operate in near real-time.
But digitising an inefficient status quo will only, at best, lead to short term gain. Technical change is only one part of the puzzle, and must be accompanied by process change and cultural change.
With this understanding in place, businesses are well placed to start to de-risk the transformation process. Success here requires a close partnership between finance professionals and technical and development teams, capitalising on developments in cloud-native technologies and robust financial governance and performance tracking.
How finance professionals can take action
Putting these principles into action requires a finance profession with the ambition and diverse skillset to ensure organisations can capitalise on all the opportunities available in today’s fast-changing world.
Here are five key areas to take action on in your organisation:
Guide the necessary cultural change by assisting non-technical talent in finance in moving up the value chain from transaction and reporting, and gain skills like low code development and analytics – vital for the digitisation of the workplace.
Set aside small amounts of budget for R&D, providing cross-functional teams with tools and systems to scope out new approaches and drive continuous improvement across the business.
Adopt a future-thinking mindset for transformation. Led by data analytics, the finance function should become an enabler for transformation, providing the review, audit, analysis, and rapid decision making to move from just assessing past performance into forward thinking assessment of transformation activities. Businesses that go on this journey will turn finance into an enabler, rather than a blocker of transformation.
Finance professionals need to stay attuned to the latest developments in technology, ready to start scoping out opportunities for investment and application in the business. This could be cloud-native strategies for transformation, right the way to opportunities for the application of artificial intelligence and machine learning in reporting.
The pandemic taught businesses to expect the unexpected. Finance and accountancy professionals need to take on the mindset of embracing change that crystalised in the pandemic, and build a mindset predicated on technology decision making without being an IT specialist.
The business value case
At the heart of this new agenda is a fundamental transformation in how the finance profession assesses performance in an organisation. For too long, this process has hinged around a business case that centres only on financial performance measures. This is increasingly shifting towards a ‘business value’ case that assesses how contribution to overall strategic goals measured against a range of business-specific value areas.
This is proving particularly impactful around Environmental, Social & Governance (ESG) goals. Sustainability is a critical part of business performance, both to safeguard a business’ future against climate change and to stay in step with customers. Finance professionals can help embed this into the organisation, whether it is developing ‘green’ financial tools like carbon pricing calculators and a taxonomy for classifying sustainable activities for investment or driving investment in renewable energy for the business.
By bringing in these changes, the finance and accountancy profession can carve out a clear reason to exist and help drive forward business success in the post-pandemic world.
To discuss this all in more detail, I hope you will be able to join me on 23rd November for a panel discussion on ‘Finance in an Agile World’, alongside Krishnan Subramanian, CFO of Wipro, Jo-Ann Pohl, CFO at Ayco, and Chris Argent, MD at Generation CFO. You can sign up here.