It’s finally 2021, and the promise of a new and less chaotic year looms large. For Finance, the new year offers an unprecedented opportunity to grab a tighter hold of the corporate reins and continue driving digital transformation and other initiatives to improve results company-wide. To keep you current, below are a few insights into how Finance and FP&A leaders are moving forward. We’ve found these articles helpful, and we hope you do, too.
Digital transformation involves the entire organization, yet the CFO is often left out. That’s a mistake, and not only because Finance is the one group that needs all organizational data to do their job. The CFO brings unique insights on risk, cross-organizational needs, timelines, ROI, and, obviously, costs, that no other role would have. It’s this holistic view that can make or break your digital transformation. “The CFO is the conductor that enables the disparate digital instruments to play together as an ensemble.”
A “2021 Outlook” survey released this month found that most mid-market companies expect 2021 revenues to increase. Behind that optimism is broader economic growth and the expected benefits brought on by the pandemic’s turmoil. Those include accelerated digital transformation, new product and services opportunities, and newly-opened markets. Benefits of digital transformation alone are, according to respondents, faster decision-making and remote work flexibility. But, they also expect to continue investing in transformation to expand these benefits. “Rather than hunker down and endure, middle market leaders endeavor to move forward to refresh strategy and enhance agility.”
Research by APQC found that the median cycle time to produce period-end management reports was 12 days. That’s more than two work weeks, and for monthly close, nearly 30 weeks of annual FP&A time dedicated to nothing other than producing management reports. Solutions for reducing that burden include clarifying roles and responsibilities and preparing reports in advance. But, any mechanism for ensuring good, “system of truth” data will also help speed reporting cycles. “An efficient and accurate process also means fewer work spikes at the end of the period and more time for activities that help drive the business forward.”
AI in Finance
Deloitte / WSJ: How CFOs Can Lay the Groundwork for AI
While artificial intelligence (AI) may still sound like a futuristic technology, Deloitte says it’s moving out of the “early adopter” phase and into the mainstream, especially for Finance. In fact, a survey found that 47% of executives say their use of AI is in the “skilled” territory, with the biggest benefits being improved decision-making and more efficient processes. For FP&A to take the lead, however, means seeing beyond just the planning and analysis benefits and looking towards cross-functional benefits while confronting the instinctive fear of AI. “That’s why it’s so important for CFOs to approach AI projects with humility regarding the company’s talent and technology.”
CPA Practice Advisor: Are CFOs the New CEOs?
CFOs are being pulled into a larger corporate role at many companies, which is forcing them to adjust their leadership styles and move from risk mitigation to overall performance optimization. Of course, data plays a role in every CFO’s decision-making process, but as their role expands, it could lead to time wasted collecting, consolidating, and analyzing company-wide data. AI offers clear and immediate benefits to accelerate data analysis, but it’s critical for CFOs to first get their data infrastructure organized. “While many finance professionals recognize the inherent value in and the predictive capabilities of AI, they do not yet feel adequately equipped to launch a comprehensive AI strategy.”
CFO Dive: 5 CFO trends to watch in 2021
A review of CFO surveys and opinions uncovered the top trends expected to define 2021 for the Office of Finance. These include increased pressure to measure social and environmental metrics, the shift away from LIBOR, and finding a balance between remote and in-office work. But, CFOs are also looking to AI, analytics, and real-time data access to speed decisions, increase forecast accuracy, and eliminate manual data collection efforts. “Sixty-eight percent of the CFOs surveyed believe AI, machine learning algorithms and a range of real-time data sets are essential for improving data accuracy and refining forecasting models.”
This year presents a greenfield opportunity, especially for CFOs who want to take a more proactive role in company direction. Digital transformation, exploring new business models, and a renewed focus on growth are all areas where Finance can take an obvious lead. But, the softer side of the business, from team and culture to diversity and inclusion, are also areas where CFOs should focus their efforts, especially if they want to be seen as future-ready leaders. “The struggles of 2020 have taught us all many hard lessons, and these lessons will be used by elite CFOs to create a faster, more flexible, more competitive, and ultimately more profitable organization.”
Stay Tuned for More Useful FP&A Content
Check back for these occasional resource roundups with links to timely, helpful, and thought-provoking content for FP&A and CFOs. If you have comments, questions, or suggestions, please engage with us on Twitter, LinkedIn, and Facebook.