Finance has long been recognised as a driver of reducing costs within an organisation.
There are cost saving opportunities and performance efficiencies for specific functions within Finance, such as accounts payable (AP). A Hackett Group report¹ corroborates this: world-class financial organisations can deliver their services at 46 percent lower cost (as a percent of revenue) with 52 percent fewer staff.
But this same study also pointed to the ability of some organisations to provide more than just cost savings and faster turnarounds. In fact, many CFOs are now thinking about how they can better utilise the business information that flows through their department to provide strategic business insights and competitive advantages for the entire organisation.
Changing technological capabilities in digitisation, automation and big data analytics, as well as new service delivery models like cloud-based SaaS, allow CFOs to not only streamline operations, but help their organisations grow and become more innovative.
And Finance is proving, once again, to be a leader in tech adoption. When it came to the use of information technology, a Forbes Insights survey² of 312 top-level executive decision makers — fifty-three percent of them C-level — more CFOs identified themselves as “leading edge” than did CEOs, and CTOs and were far less “conservative” than CIOs and CTOs.
So how can Finance play a greater role in your business to drive innovation and growth?
The story of numbers
Finance has always been able to generate plenty of numbers: cost of goods, inventory valuation, units sold, revenue, profit margins, etc. And today’s complex, highly regulated and global business environment means that this flow of potentially valuable information will only continue to increase. These volumes of data and reporting requirements are challenging some Finance departments to simply keep their head above water as they struggle with preparing financial statements, the timely closing of books, tax preparation and audits, alongside financial projections and planning.
But the real opportunity for Finance lies in extracting useful, forward-looking information from all this financial data. Data-driven decisions are critical for successful innovation, and providing comprehensive, timely and accurate data helps executives make better business decisions.
Where Finance can also add strategic value is in the correlation of information across the organisation, to analyse it and — if not apply it directly — make it available to the right decision-makers at the right time. One CFO, interviewed as part of the global innovation report cited above, summed it well:
“Innovation is possible when we can look forward as well. What does this information tell me about trends? Do we speed up or slow down as an organisation? Do we identify opportunities to be more successful in the marketplace? Can we afford to be more aggressive? It’s about telling the story of the numbers.”
What stands in the way
According to an IBM Institute for Business Value study3 the two obstacles most frequently cited by CFOs preventing them from providing more useful insights are the integration of information across the enterprise and development of the right talent. The study draws upon interviews with 576 CFOs from around the world, and more than 23,000 previous interviews with executives stretching back to 2003. It is significant that these two specific challenges have risen to the top of their list.
Fuel real innovation
Working with the right services partner can help Finance overcome these hurdles by providing valuable business insights that fuel innovation. And by working with an experienced service partner, your business can see the significant inherent benefits of optimising information flows. These providers can:
- Help you look across information silos and re-engineer the flow of information to become more comprehensive and integrated. This is a challenge for any one department, even under the best of circumstances — an experienced partner is extremely valuable here.
- Quickly incorporate new technologies to intelligently capture, index and extract data for incorporation into digital workflows. It is likely service providers have made major investments in these technologies and have more working experience implementing them.
- Free up your resources to focus on analysis, finding the “story of the numbers” and driving more forward-looking initiatives.
A service provider also brings their experience working with different information processes within organisations — from digitising mailrooms to integrated customer service communications — as well as a valuable perspective in implementing proven solutions across industries.
Innovative ideas can come from anywhere. And who knows? Tapping into this wealth of experiential knowledge might just spark something ground-breaking for you.
But in the meantime, when considering the impact that Finance can have on your organisation, think beyond just the cost saving measures, and start thinking about how this department, often an afterthought when it comes to adding value, can start growing your business through innovation.
Learn how other CFOs are delivering strategic input and innovation across the entire organisation at RicohChangeMakers.ca
1 “How World-Class Finance Organizations Outperform: Improved Effectiveness, Half the Cost & Staff.” The Hackett Group, September 16, 2014. http://www.thehackettgroup.com/about/research-alerts-press-releases/2014/09162014-how-world-class-finance-organizations-outperform.jsp