Andy Bottrill, Regional Vice President of financial automation company, BlackLine
Despite the number of innovative technologies available to small and large businesses, it is unsurprising to see financial departments still relying on the traditional methods of spreadsheets and manual processes. These departments are somewhat stuck in their ways, making it difficult to innovate. In spite of this, now is the best time to transform back-offices from 20th to 21st Century practices with the opportunities available to better business and workers.
Embracing disruptive technologies in the back-office is the springboard businesses need to deploy them throughout the rest of the business; if administrative teams can simplify processes with innovation, ultimately it should help other departments with day-to-day activities too.
As the number of ERP software solutions and processes becoming available is increasing, and the technology maturing, along with the tools needed to leverage them, what is holding back financial departments?
Challenges to Finance Departments
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Lack of motivation to deploy innovative technologies isn’t in short supply, however the follow-up commitment is one of the biggest barriers holding back firms.
FSN’s Innovation in the Finance Function Survey 2018 found that despite 88% of Chief Financial Officers (CFOs) keen to adopt innovative solutions, only 12% have actually implemented any. In addition, one of the biggest barriers to innovating back-office process was cited to a lack of commitment to investing, with 65% of finance professionals admitting to this.
Workers cited a lack of time, funding or support from board level executives as a barrier to adopting new solutions by 54% of respondents, and more than one in 10 admit innovation is “rarely discussed and they don’t have time to devote to it.”
Having a lack of direction and commitment from the board coincides with the long-standing challenge of moving workers away from 20th Century legacy systems and into automated, 21st century processes; as departments have become fixated on manual and traditional methods despite the amount of evidence demonstrating new innovative processes bringing benefits to businesses.
Lack of Commitment or Direction?
FSN’s survey may have found workers place the blame on CFOs, but the findings also revealed CFOs mirror this thought back to workers, stating that a lack of expertise in departments is holding back innovation; with almost half of CFOs blaming a lack of tech-savvy talent as a major blocker to transforming the back-office.
This brings into question, are workers becoming the biggest barrier to innovation; and who is to blame for the failure of skills and deployment?
Research from FSN in 2017 found only 6% of CFOs truly understood the technologies available to them today, with a quarter taking time to look into how innovation could support business operations. It’s clear CFOs must shoulder at least some of the blame for lack of innovation in businesses and, although a huge barrier, lack of skilled workers is only a piece of the picture.
Other challenge areas seemingly holding back business transformation are external factors, such as the implementation of new regulations and privacy legislation like GDPR. Businesses have cited concerns over digitising vast amounts of data from traditional storage methods to new processes such as cloud.
Focus for Innovation
Many finance departments hold a customer-centric focus when it comes to innovative technologies. Just under half (49%) of businesses openly admit their strategy for innovation is first and foremost aimed at improving the experience for the customer. Though this is an important component to business, more focus must be placed on back-office processes to ensure the business as a whole can run efficiently.
Transforming to a digital working process is more than just introducing new applications, however, such as involving the migration of entire processes from on-premises to the cloud and introducing the use of ERP software as opposed to traditional spreadsheet methods.
The levels of innovation will range from business to business; from using real-time advanced analytics to introducing AI and deploying robotic processes to fill out spreadsheets and time sheets. Each can be used to process reconciliations and bring information up to date at a much quicker pace, making business operations more efficient.
But it is almost a no brainer for businesses to innovate. It’s understandable that changing from something that has worked for so long may seem a daunting prospect at first. The benefits gained from innovation will be much greater than the short term hump workers may have to overcome.
With a more efficient workforce costs can be driven down, and automation of mundane, repetitive tasks like data entry reduces the risk and number of human errors. It also enables employees to focus on more fulfilling tasks.
FSN’s research revealed that those early adopters of innovation in the finance function found tangible benefits almost immediately. These finance departments were able to reforecast within a week (66%) and close the books within three days (30%).
The resources and opportunities available from vendors today give businesses a better ability to innovate than ever before. CFOs and board level members now need to bite the bullet and put their trust in 21st Century technology.