By Robert Douglas, Europe planning director at Workday Adaptive Planning
In the face of economic turmoil, agility has taken on a new meaning for organisations. For modern enterprises, agility has become a defining characteristic of businesses that can better anticipate what is coming, act quickly when faced with change, and more decisively respond to the demands of customers, market shifts, and competitive threats. Today’s finance teams are challenged to provide more guidance than ever before, with more accurate forecasts and reports in the face of unpredictable events. Traditional spreadsheets are no longer manageable at the pace business is moving, and, instead, finance teams are moving to cloud platforms powered by machine learning to help accelerate the planning process.
Since the COVID-19 pandemic emerged on a global scale in the first months of 2020, finance teams across the world have been put to a once-in-a-generation test. While many have been able to provide critical decision-making support leveraging new technologies and processes, many organisations were caught off guard. As a result, it has acted as a wake-up call for finance departments that, for various reasons, have delayed digital initiatives. According to a survey of CFOs conducted at the height of the pandemic, one-in-three CFOs (34%) report that they plan to prioritise digital finance transformation next year, compared to just 5% as the pandemic hit.
Getting people onboard
The reality is that even prior to the pandemic companies were struggling to put their data to work.
Finding ways of drawing complex insights about current and future performance with the help of machine learning (ML) and artificial intelligence (AI) has been on the radar for many finance teams. Yet, many have been slow to act. In the survey, only 18 percent report that they routinely use AI technologies to deliver prescriptive, personalised, and prioritised insights. As concerning, 30 percent say critical data is never available to them in real time, exposing the technology and process challenges for nearly one-in-three organisations. So, why haven’t organisations embraced new digital technologies?
Surprisingly, lack of budget was cited by only one-in-10 CFOs as an issue. The two standout reasons offered by CFOs for not updating their digital tools was lack of skills to use technology once implemented (34%) and internal resistance to change (32%). Both of these are completely within the CFOs’ control through hiring or upskilling and addressing the culture challenges within their organisation.
In terms of the skills currently desired by CFOs, the ability to carry out predictive modelling and scenario planning comes out on top, followed by the ability to identify, anticipate, and manage risk. Given this survey was conducted as the pandemic was spreading globally, the focus on scenario planning and risk management skills is no surprise. FP&A teams were frantically trying to keep up with forecasting, as conditions changed daily, with some teams reporting a 30x increase in forecasts and build-out scenarios than in a typical week.
CFOs across industries are currently taking steps to address any shortages of these skills in their departments. This requires a two-tiered approach, where new talent is recruited as part of digital transformation projects while current team members are trained or upskilled. Importantly, CFOs are also reconsidering their own roles and what will be needed of them in the future, whether that is undertaking a more strategic approach to how finance contributed to business transformation or working on becoming more transformational leaders. The latter is prioritised especially by those active in businesses whose focus in recent years will be to move from defence (budget management) to offense (top-line growth for the business) in the aftermath of the pandemic.
Building up confidence
The end goal of pursuing digital transformation in finance, and why it is so important for CFOs to work constructively with their teams as part of that process, is enabling greater agility for the organisation. As important, it boosts confidence in the business’ ability to weather crises and uncertainty and allows finance to meet the growing expectations of executives. Throughout this year, businesses whose finance teams had been transformed digitally—called “digital leaders” in the study—have also been able to perform better, with 73 percent of CFOs leading such teams expressing confidence about their two-year profit and loss forecasts, compared to just 43 percent of those who have not, according to the research.
As we head into 2021 and what is looking to be a lengthy recovery from the pandemic, finance leaders need to take inspiration from the confidence expressed by the “digital leaders” and consider how they can get their organisations to adopt more unified and intelligent planning technologies and processes. The tools are there, and, with the right approach to introducing them to organisations, finance leaders can take the lead when it comes to managing risk, responding to future crises, and enabling the level of agility that today’s companies demand.