Tomorrow’s Business in Finance’s Hands: Four Key Trends Set to Accelerate Finance’s Ascent to the Driver of Business Value

By Aiden Heke, CEO, Decision Inc. Australia, and Mark Woodhouse, Finance Transformation Advisor, Australia, NMW Consulting

Aiden Heke, CEO, Decision Inc. Australia

Finance will always be a steward; custodian of the organisation’s assets, responsible for translating business events into consistent financial statements delivered to stakeholders. But it is these core accounting skills that place finance in a unique position to define the levers that will have the greatest impact on business value; shifting the emphasis from traditional statutory profit-and-loss structures, useful for reviewing historical performance, to insights into what might happen in the future.

By implementing new technology, revealing insights from data, creating efficient processes and adjusting behaviours, Finance can transform its business to focus on the actions to drive value.

But what is next for Finance? It feels like only yesterday it had to adapt to the pandemic and fundamentally shift how it worked and operated, but as we adjust to the new normal so too does the expectation of tomorrow. With that in mind, four clear trends have begun to emerge which have the potential to have a significant impact on the way finance professionals evolve to become the builder of business value.

The “Information Architect” and the emergence IR4.0

The Fourth Industrial Revolution (IR4.0) is altering how we live, work, and communicate; it is also likely to change the things we value and the way we value them. We are already seeing how these disruptive forces are changing business models, and at the heart of this revolution is data.

Data, and the insights and actions it can unlock are driving change at an unprecedented pace. We are seeing an acceleration in building data platforms, remediating source systems, and streamlining architectures. Yet the results are mixed. A recent McKinsey survey found only seven percent of Australian organisations rated themselves as ‘very effective’ at reaching their primary objectives in data and analytics.

Finance can significantly increase this success rate and become the architect of the lineage of data from events and translations of actions through to the drivers of shareholder value. This architecture provides a framework to isolate and secure structured data providing the organisation with a lens on the key performance indicators of growth. With a fixed set of value driving measures aligned to growth the shift from reporting and analysis into insight is unleashed as the new breed of data scientists, data mining tools and AI trawl the oceans of data to find the causes of trends across these key performance measures.

Finance is well positioned to lead a successful digital transformation by shifting the focus from data to insight through the lens of shareholder value.

“From Scorekeeper to Partner”: AI, Machine Learning, and the Human-Centric Organisation

The application of artificial intelligence and robotics into ‘jobs of the head’ where judgement and knowledge are key seems inevitable and will have a profound impact in releasing the human capacity to interpret and act. For finance this should spell a welcome pivot into administering and managing automation; switching the focus into using insights to create the narrative for finance business partners to engage the business in focused conversations on business performance, opportunities, and risks.

But there is an even bigger opportunity. In the past, Finance has been guilty of diverting valuable business resources in planning, budgeting, forecasting and performance reporting processes that are ill focused, ineffective, disjointed and often arduous for all. But these are the most valuable processes to determine direction, allocate resources, identify the ongoing need for course correction as well as the management of opportunities and mitigation of risks.

Finance has the opportunity to bring technology and access to quality data to bear in more meaningful ways. It must integrate data across the organisation, channelling insights to the right individuals and decision makers, becoming part of the process of governing the effective delivery of the business value chain. In this role finance moves from scorekeeper to a partner and builder of shareholder value.

Keeping Up with The Pace of Change

We only need to look back over the last few years to see the importance of agility, given almost all of us had to change the way we lived and worked. However, agility is useless unless the subsequent action is well informed. Scenario and event modelling in a global marketplace where supply chains are so interdependent has never been so important.

For finance this means integrating operational and tactical planning data into financial outcomes to create access to instant financial forecast updates. This snapshot view becomes the “BAU” (Business As Usual) starting point to work with the business to challenge assumptions, understand options, and evaluate interventions. With access to a broader range of internal and external data, Finance has a valuable role in bringing a risk-intelligent approach to weighting and evaluating scenarios and actions, translating these into outcomes that can be reflected in updated operational, tactical, and financial outcomes and forecasts.

Societal Responsibility and ESG Reporting

Governments and businesses around the world are stepping up their response to the climate crisis and stating their intentions to become carbon neutral. As a result, sustainability reporting is becoming increasingly important with most of the world’s largest companies now producing sustainability reports on which auditors provide assurance.

Finance has two critical roles to play here.

For one, it has the skills to provide stakeholders the assurance it is meeting the standards adopted by governments and regulators. In addition, it has the opportunity to architect and curate this data into reports that Executive teams and Boards can have confidence in, and act on.

In these roles the capture, storage, and integrity of ESG data, as well as the translation into the impact on shareholder value, will be key and should follow the same governing principles as any other financial and operational data. This may involve the capture of new data and development of new processes and controls not previously necessary.

Finance: the engineer of tomorrow’s business?

Key to these trends bearing fruit for Finance is the ability to create the architecture for the flow of information delivered through a laser sharp focus on shareholder value.

However, real transformation will be achieved when finance steps up and into the role of partner and builder of value by inserting itself into processes and decision-making forums, curating insights that lead to agile informed actions.

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