By Mathea Beck, Partner, Finance Transformation, PwC Australia and
Sam Lobley, National Leader, CFO Advisory, PwC Australia
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In the past 15 months, finance teams across the world have leapt into action to steer their organisations through an incredible period of uncertainty. Dramatic lurches in market and community demand have seen traditional finance paradigms tested, tweaked and, in some cases, totally re-designed. While an extreme example, the pandemic is one of the many types of disruption finance teams have to deal with. Global megatrends, task automation, emerging technologies and changing demographics are all disruptors that play a significant role in how businesses - and their finance teams - operate.
While some may be daunted by the prospect, most finance professionals we speak with are relishing the opportunity. During this period of uncertainty they’ve been able to deliver greater value to their organisations and want to keep pushing harder to make a greater strategic contribution. This was illustrated perfectly in the recent ‘Future of the Profession: Finance Transformation’ webcast*, a collaboration between PwC and the G100. We reflected on how much finance has changed and will continue to do so. And the conversation reinforced the importance of three pillars for successful finance transformation: performance, process and people.
Modern-day finance functions are equipped with advanced technologies with the days of manually trawling through data behind them. The real skill for finance professionals is understanding what the drivers of business performance are (often described as ‘the metrics that matter’).
Finance needs to translate data into actionable insights that will steer the organisation in the right direction. That means being crystal clear which KPIs align to the organisation’s strategic goals, then measuring and reporting these in a way that decision makers can understand and act on.
Market volatility during the pandemic has already rendered a lot of historic data (e.g. prior year performance) as unreliable at best and irrelevant at worst. Finance teams are becoming increasingly adept at taking short-term trends and modelling different scenarios to provide more reliable indicators of future performance.
In the absence of traditional metrics, finance teams need to use the technologies at their disposal. External data points should be combined with internal data to ensure the organisation is making informed decisions. What signals are coming from the market? What does the competitive landscape tell us? How might further volatility impact future performance? Answering such questions can help illuminate the way ahead.
Global process ownership is not a new concept for finance teams, but its potential benefit has multiplied thanks to giant leaps in Business Process Management (BPM), technology, tools and insights. It’s now possible for global process owners to gain data driven insights into the performance of the end to end value process chain. Where inefficiencies are identified, finance leaders can make evidence-based decisions to drive business outcomes.
This isn’t a single ‘reset and forget’ step. New technologies will keep emerging, allowing finance teams to continually improve processes and extract more value from their systems. And this can’t be done in isolation from the broader enterprise resource planning (ERP) journey. Many on-premise ERP systems are reaching end-of-life and the business case to move to the cloud grows more compelling by the day. Finance leaders need to articulate this to their executive teams, finance teams and stakeholders across the organisation.
Used to maximum potential, cloud ERP solutions offer higher value insights and reporting, not to mention better budgeting, planning and scenario modelling capabilities. This shift to the cloud does not have to rely slavishly on one system but, rather, can be created from a platform of finance systems. This is one reason why processes should (where possible) be implemented using a fit to standard approach, to keep things simple and allow teams to focus on the areas of greatest value-add. The quality of data is crucial so that it can be connected across systems to deliver the greatest insights.
If the pandemic has shown employers anything, it is that their fortunes are inextricably linked to those of their employees. So, as we continue to transform our finance functions, it’s worth remembering we’re also transforming our people too.
Upskilling and reskilling the existing finance team should be seen as a long-term investment. Finance leaders should refer to their organisational vision and objectives and then consider: If our organisation is heading in this direction, what skills will my finance team need in future? Then look at today’s team, identify the capability gaps, and address them.
Finance professionals need to be more than just ‘business partners’ (a term we are all now familiar with). It’s essential that the finance team pivots to becoming a strategic business partner and leads from the front to drive change. They must be able to tell the story of how an organisation is tracking and where it’s heading. To do this, finance teams need to be digitally enabled.
By understanding the principles and potential of technology, finance colleagues (including leaders themselves) can tackle the tough questions that organisations face today: How can we do more with less? Where are the opportunities for profitable growth or better community outcomes? How can automation make the organisation faster and smarter? How much risk are we willing to take on?
As well as focusing on capability, there is a cultural conversation to be had within finance teams. The old myths about stale, grey finance teams and the people in them are just that - old myths. For the first time in history, we have five generations co-existing in the workforce. Finance colleagues are more diverse than ever before. When leaders celebrate and mobilise this diversity, it strengthens teams’ collective ability to solve problems. And when they back that up with a comprehensive wellbeing agenda, team engagement can soar.
Strike the right balance
Finance transformation will vary depending on the size and complexity of the organisation involved, but the key components of all projects will be performance, process and people. The skill for finance leaders is to get the balance right. We might flex the emphasis in one or two components, depending on the organisation or the stage of the transformation. But all three require attention for a finance function to succeed in this new era of continual change.
*PwC Australia is collaborating with the G100 to deliver the Future of the Profession series to help organisations on their digitisation journeys. Over the course of the series we’re taking deep dives into a range of topics designed to arm CFOs and their teams with the tools and knowledge to adapt and upskill, recruit skilled talent and transform the finance function.
Partner, Finance Transformation, PwC Australia
Tel: +61 477 359 811
National Leader, CFO Advisory, Melbourne, PwC Australia
Tel: +61 401 814 721