Say goodbye to transformation, and hello to readiness.
The concept of finance transformation has been around for decades, as CFOs and their teams have sought to improve the efficiency, effectiveness, and value of their function. Often driven by major changes in technology, regulations, markets, or business models, finance transformation projects have aimed to align the finance function with the strategic goals of the organization and enhance its capabilities to support decision-making, performance management, and risk management.
However, today we operate in a rapidly evolving technological landscape, with ever-increasing options available to finance teams. As such, finance transformation is no longer a one-time event, but a continuous process. The rapid evolution and adoption of new technologies, such as cloud computing, artificial intelligence, big data, and blockchain, have created both opportunities and challenges for finance leaders and their teams.
Teams and Organizations are Behind and Need to Adapt
On the one hand, these technologies can enable finance to automate, streamline, and optimize processes, reduce costs, increase insights, and create value. On the other hand, they also require finance to constantly update, upgrade, and integrate systems, data, and skills, while managing the risks and complexities of technology implementation and adoption. We know that finance teams and organizations are currently behind, as execution risk is on the rise as CFOs embark on new technology initiatives without the right skillsets.
This shift from transformation to readiness implies that finance leaders need to develop a new mindset and skillset for themselves and their teams, one that embraces change, agility, and continuous improvement as the norm rather than the exception. Rather than viewing technology as a discrete project with a defined scope, timeline, and budget, finance leaders need to view technology as a strategic enabler and an ongoing investment that requires constant monitoring, evaluation, and improvement. This means that finance leaders need to adopt a more proactive and collaborative approach to technology selection and implementation, working closely with IT, vendors, and other stakeholders to identify, prioritize, and execute technology initiatives that align with the business strategy and objectives.
Moreover, finance leaders need to ensure that their teams have the necessary skills, knowledge, and competencies to leverage technology effectively and efficiently. This includes not only technical skills, such as data analysis and specific technology/platform knowledge, but also soft skills, such as communication, stakeholder marketing, collaboration, and change management. However, current finance function dynamics are working against teams, with 42% of mid-market CFOs expecting workloads to increase in 2024.
Specific Skills in Focus
Maximizing readiness requires critical skillsets for finance leaders to focus on and deploy. These include:
- Marketing Initiatives to Stakeholders Based on Their Individual ROI: The CFO is now a primary marketer to internal and external stakeholders. This involves clearly communicating the benefits and value proposition of various initiatives to individual stakeholder groups, such as senior management, business unit leads, customers / suppliers, boards, and investors in a way that demonstrates how they will enhance their performance, efficiency, and profitability. Finance leaders need to be able to articulate the individualized and organizational return on investment (ROI) for each initiative and get the respective buy-in to move forward.
- Leading Change Management for New Processes: Change can be hard. Finance leaders must lead and facilitate the adoption and implementation of new technology-enabled processes within the finance function and across the organization, with compliance being a major barrier to long-term success. To be effective, finance leaders must understand individual pain points in legacy processes, assess the impact of new processes on the existing workflows and responsibilities, and design and execute a change management plan that addresses the needs and concerns of the affected employees. Incorporating feedback from to-be-impacted individuals, throughout the process, also goes a long way to showing care toward the organization.
- Managing Team Development While Getting the Day Job Done: CFOs and finance leaders are now responsible for creating cultures of learning and development for their teams. This creates momentum around self-directed training efforts for teams to acquire and update the skills, knowledge, and competencies required to advance, while also ensuring that the team delivers on its core responsibilities and commitments. This includes identifying future capability needs, assessing the current skills and related gaps among the team, and designing training and coaching that are relevant, engaging, and accessible. You can access a great planning resource to this end via the First Water Finance Resourcing Roadmap.
- Investing in “Last Mile” Skillsets: Technology and systems don’t get teams and organizations all the way there. This means that the teams need other skills and process capabilities to take information from its repositories and deliver it to dialogue. By mastering these skills, finance leaders can open up more optionality in their technology roadmaps, not having to rely on upgrades to be functional (and improve) and extend the lifecycle of existing tools and solutions before they become organizational pain points. Like the concept of last mile delivery, the final step to a package’s destination is usually the hardest to manage and has the most variability. For FP&A, we wrote about this in detail in Last Mile FP&A: Skillset Success Beyond the Systems.
Adopting a State of Readiness
Finance leaders need to invest in training, coaching, and mentoring their teams, as well as creating a culture of learning and development within the finance function. Additionally, finance leaders need to foster a culture of innovation and experimentation within the finance function, encouraging their teams to explore new ways of using technology to create value and deliver results. Like Google’s original “20% of your time on innovation” mandate that spurred many of the company’s greatest product successes, finance teams must make room for exploration.
By adopting this readiness mindset and skillset, finance leaders can position their function as a strategic partner and a value creator for the organization, rather than a transactional processor and a cost center. Finance leaders can also empower their teams to be more adaptable, resilient, and responsive to the changing needs and expectations of the business and its stakeholders. Ultimately, readiness is not about the end of finance transformation, but the beginning of a new era of finance excellence.
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First Water Finance (FWF) is a finance solutions platform supporting finance leaders, business owners, and capital partners through FP&A, Corporate Finance, and Community. FWF has supported over 100 management teams and sponsors, concentrated in emerging and mid-market enterprises, professionalizing and accelerating the finance function in pursuit of growth, acquisition, and/or sale objectives.