With new technologies and collaboration opportunities looming, Gary McGaghey encourages CFOs to rethink their finance and reporting operating models.
With new technologies and collaboration opportunities looming, Gary McGaghey encourages CFOs to rethink their finance and reporting operating models.
As the advent of new technologies and the rise of internal and external collaborations continues to disrupt companies and create superfluid markets, CFOs must be confident that their finance operating models fit the shape of our technology-driven, connected future. Here, the divisional and group CFO Gary McGaghey explains that such a finance operating model is essential to flourishing in an extended ecosystem, keeping up with the pace of technology, and making the most of domain experience and strategic providers’ services.
The digital era is seeing new virtual markets emerge as platform-based giants that seamlessly link sellers and buyers. Gary McGaghey notes that the companies succeeding here are using new technologies to reduce or even eliminate traditional market frictions and autonomously connect with prospects. These companies make the most of the fact that they can rent almost anything as a service and that excess capacity is likely to fade away.
Gary McGaghey explains that CFOs can reframe their finance and reporting operating models by balancing requirements like priorities around cost-efficiency, adding value, and managing risk. When CFOs have a solid understanding of their priorities, they should find it easier to identify gaps in their current operating model and its ability to perform well.
In 2020, EY’s Global Financial Accounting Advisory Services (FAAS) Corporate Reporting[CM1] survey demonstrated that finance leaders were already anticipating the shift to an open, smarter finance operating model. The survey respondents provided their perspectives on the following possible technological developments.
Gary McGaghey emphasises that the demands of the COVID-19 crisis shouldn’t distract CFOs from their long-term perspectives and that finance leaders should take a strategic approach to their reporting and forecasting capabilities. Such a strategic approach may require finance teams to embrace new technology solutions and/or approach their data differently. The EY survey highlights the actions that finance teams can take to adopt fresh ideas and perspectives and suggests that CFOs could take further steps to improve their innovation cultures. During the survey:
Gary McGaghey adds that if CFOs are to build an innovation capability, they must define a vision that aligns with the company’s wider enterprise strategy and use KPIs to measure success. They should also identify how important players from the finance team and in-house functions like IT will collaborate with external providers and the wider innovation ecosystem.
Finance and reporting often face heavy pressures that span from demanding stakeholder requests to growing expectations for finance to play a key role in the company’s long-term value strategy. Meanwhile, the weight and distraction of complex legacy responsibilities, the need to rewire finance technologies, and challenges surrounding talent recruitment see many finance teams struggle to overcome these pressures.
However, CFOs looking to overcome these challenges can use managed services as a strategic weapon. Managed services can enable CFOs to maximise innovation and unlock value because they offer regulatory credibility and understanding, global reach, domain experience in finance, and the potential for an advanced technology stack that influences both new technologies and common data sets. These services can leave CFOs with the time to lead in-house finance capabilities. EY’s 2020 DNA of the CFO survey [CM2] revealed that 76% of 800+ CFOs and senior finance leaders from around the world planned to partner with external parties to provide specialist finance processes or activities.
Data analytics and cloud computing will likely prove essential to managed services strategies. Cloud computing provides the space for financial digital transformation and the framework for providers, employees, and customers to connect their ecosystems. Cloud providers are also investing heavily in security to protect data and apps, which is more important than ever given the rise of cybercrime. Such data ecosystems are set to become invaluable as companies need to manage risks when sharing business information across internal boundaries.
Gary McGaghey emphasises how important it is for today’s CFOs to reconsider their finance and reporting operating models. Adopting open approaches that embrace innovative provider strategies and technologies can future-proof your company for a technology-rich, interconnected future and put you on the path to achieve your financial goals.
Learn more finance strategies from Gary McGaghey.
Gary McGaghey is a chartered management accountant and CFO who is well-known for the impressive financial successes that he has enabled for a variety of private equity, listed, and privately owned companies. He is currently the Group CFO of Williams Lea Tag, a €1.3bn end-to-end marketing production and business services group, and the non-executive director of Fitmedia UK, a children’s fitness analysis and testing provider.
[CM1]Suggested link: https://assets.ey.com/content/dam/ey-sites/ey-com/en_gl/topics/assurance/assurance-pdfs/ey-2020-faas-survey.pdf
[CM2]Suggested link: https://www.ey.com/en_uk/assurance/how-can-the-cfo-evolve-today-to-reframe-finance-for-tomorrow
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