Why Finance Departments Fail to Become Strategic

But this role for Finance isn’t becoming reality in most businesses. The key to becoming a strategic leader is “Finance Transformation”. What is it? Why aren’t Finance departments embracing it? More importantly, what can be done about it?

What is Finance Transformation?

The Finance department must learn to move beyond simply processing transactions and delve into planning and forecasting.

Finance transformation is the ability of the finance department to be a strategic driver and player within the organization. It involves shifting the focus of the Finance department from simply processing transactions and creating budgets to more strategic activities that deliver a high level of value to their businesses. It involves looking ahead, being predictive, and developing prescriptive solutions.

What Hinders Finance Transformation? (Hint: You Don’t Have the Right Technology for Effective EPM)

If most organizations want Finance to be a strategic leader, and most Finance departments desire to fill this role, why isn’t it happening? According to Robert D. Kugel, the senior vice president and research director of business research for Ventana Research, the reality is that there is a disconnect between what Finance departments believe they are doing and what the rest of the company perceives that they are doing. Most Finance departments are too busy fighting fires — in other words, keeping up with transactions, creating reports, developing budgets, etc. — that they can’t get on top of strategic planning.

The Finance department as a whole is woefully slow to adopt new technologies, such as enterprise performance management (EPM) software. Historically, this industry tends to stick to what they’ve always been familiar with, which means that they resist more powerful tools to replace spreadsheets and have been among the slowest functions to adopt the cloud. The cloud can be important to achieving true Finance transformation, because it offers extremely affordable solutions, and the security concerns of years ago are no longer issues today. The cloud has proven to be a safe, reliable, and affordable solution for finance.

What Can Finance Departments Do to Foster Finance Transformation?

With the right tools, Finance has the time, data, and power to engage in true Finance transformation.

If your Finance department wants to be a strategic leader in your business, but just can’t seem to get there, what steps can you take to get them there?

• Learn to move away from manual, laborious, time-consuming processes like spreadsheets. Adopt the automation afforded by EPM software.
• Clean up the data. Data integrity is essential for leveraging data analytics, which is an important part of predictive analytics and prescriptive issue management.
• Get the right software tools. Many of the best tools are cloud-based, so the department needs to realize that the cloud is a safe, effective, reliable, affordable, and easy-to-manage solution for many of finance’s needs.

After taking these steps, you’ll find that your Finance department is more agile and able to adapt to changing circumstances. With the new software, tools, and automated processes, financial close times will decrease dramatically. The department will get more done with fewer workers. Most importantly, Finance can truly be a strategic leader for the organization because they will be armed with the data and other tools necessary for predictive and prescriptive planning.

To learn more about this topic, listen to a replay of a recent webinar featuring Rob Kugel titled: Why Finance Departments Fail to Become Strategic.

Rob Kugel Webinar Replay