Beware The Top 3 Obstacles To Modernizing Finance Departments


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Complacency in business will land you in the company of the video rental stores and camera-film makers—now just distant memories to customers and sad case studies for MBA students While shifting and evolving your company’s focus and business model is critical for survival, doing so simply isn’t possible if your operations are outdated.

A new study by the American Institute of Certified Public Accountants and sponsored by Oracle finds that finance leaders whose organizations are agile are far more likely than those that aren’t to have fully implemented cloud enterprise performance management (EPM) and enterprise resource planning (ERP) software. They’re also more likely to have set up centers of excellence for financial planning and analysis, and they’re more effective at doing forward-looking analysis that identifies new business opportunities.

However, only 30% of the nearly 500 CFOs who responded to the AICPA survey say their finance organization provides the support their businesses need to operate with agility. The obstacles in their way fall into the following three categories:

1. New Skill Sets Needed

“Business leaders want finance professionals to interpret data within their unique business context,” says Ivgen Guner, senior vice president of Global Business Finance at Oracle. “They are asking us to come with recommendations tailored to their business issues, so it’s critical that business partners understand the strategy of the business, what metrics are most significant, what the competitive landscape looks like, and then advise leaders accordingly.”

But it’s harder to identify these “soft” analytical and communications in job candidates than it is to evaluate straightforward finance acumen.

Closing that skills gap is the biggest challenge finance organizations face, according to the AICPA report. More than 40% of survey respondents say their finance organization needs more people comfortable with delivering forward-looking analysis, and 36% say they need more people expert in multiple disciplines.

2. Outdated Systems

Many finance organizations are trapped with inefficient, siloed processes that their outdated and disconnected systems were customized to support. It’s a vicious circle: Those customizations make system updates a nightmare, which is why companies put them off.

The AICPA report finds that leaders of agile finance organizations are far more likely than others to have fully implemented cloud EPM software (51% versus 17%) and emerging technologies such as robotic process automation (44% versus 12%). They’re also far more likely to have fully implemented cloud ERP for standardizing their accounting processes (45% versus 17%).

The reason is simple: Those modern systems usher in best practices, rather than perpetuate customized, disconnected processes and workflows.

“Finance is doing things that it never could before thanks to digital technologies,” writes David Axson, managing director of Accenture Strategy, in Finance 2020: Death by Digital. “End-to-end multidimensional data access is enabling total visibility into both enterprise and customer data. The finance organization will evolve from an expense control, spreadsheet-driven accounting and reporting center, into a predictive analytics powerhouse that creates business value.”

3. Cumbersome Structures

One-third of respondents to the AICPA survey say the structure of their organizations is too complex. Because data is held captive in silos, it’s hard for the finance team to get the information it needs in a timely fashion.

Only about a third of the finance organizations represented in the survey have fully implemented shared services or centers of excellence, a structure that improves efficiency and facilitates standardization on best practices. And a similar percentage have fully moved to a cross-functional team structure, whereby finance professionals support C-suite and line-of-business decision-makers. Sixty-four percent of companies have made changes in those areas to some extent, but not fully.

“Too often in universities, we think that too many things and business processes we do are unique when in fact they’re not and should be common,” says Brett Sweet, CFO of Vanderbilt University. “How you pay employees, how you book travel, how you pay vendors, how you report taxes, how you do your financial reporting should not be unique. We have far too many layers and too much organizational complexity. That’s a barrier to change, a barrier to capability and recruiting the best talent.”

Margaret Harrist is director of content strategy and implementation at Oracle.

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