Industry for industry, Business 4.0 is impacting all key organizational stakeholders. Chief Financial Officers, in particular, are under pressure to transform their own function when, ironically, these same actors have been allocating budgets to Chief Information Officers to drive digital transformation while neglecting their own.

Traditionally, finance has been responsible for ensuring the books are in order, closes happen on a monthly, quarterly and yearly basis, audit and compliance are happy and regulatory reporting and filings are up to date – a typical back-office function.

Interactions with other departments have been largely limited to controllership functions, line of credit discussions or budget approvals and so on, while supplier relationships have once again been neglected.

But this is changing. Increasingly, finance is viewed as a business partner able to provide real-time business insights and support growth.

Source: TCS CFO survey

Digital technologies such as cloud, the internet of things, automation and analytics are increasing the speed at which companies do business and driving seemingly ever-greater customer expectations. This puts an immense burden on the finance function, as they now not only need to “run the show”, but also be agile and support the organization and its stakeholders to keep up the pace.

A new study shows, however, that CFOs face challenges in adopting this role.

Barriers to change

Source: TCS CFO survey

In order to understand this phenomenon in greater detail, TCS surveyed more than 600 CFOs and senior finance executives across Europe and the US to understand the typical challenges they face and the digital interventions they are looking to drive within their functions.

Roughly half of the respondents (47%) said they are challenged with gaining the insights they need to develop new strategies, connect them with topline growth or shape new business models.

The importance of this cannot be discounted – particularly so in this age of rapid technological development. Blockbuster offers a salutary tale of failure to study the competition from Netflix in the same way Kodak overlooked the digital sensor revolution.

About as many respondents (45%) were concerned about finding the right talent. Traditionally, finance has been run by accountants trained on specific tools and ERPs for years until they become experts. As digital interventions proliferate, digital-savvy millennials take the reins and the means of interacting with systems and data change, you get a perfect storm for finance leadership.

Close to 40% of the respondents would like to move away from monolithic ERPs to cloud-based solutions. They no longer want to deal with managing and maintaining legacy systems and infrastructure. These solutions are enabling new and flexible ways of working and collaborating. Further, the ability to add or remove specific capabilities on the fly further optimizes resources and operating costs while improving agility, performance and predictability.

Let data lead the way

Close to a third of respondents wanted to evaluate leading-edge analytics and automation to drive more insights, effectiveness and efficiencies in operations.

Every organization is in the race to automate their processes. Finance is an easy pick to be automated since it comprises so much mundane manual work and finance leaders want to use intelligent process automation (IPA) to push the boundaries of efficiency and effectiveness.

Moreover, data available from systems and automation software can being used to track performance in real-time while bringing in a new level of transparency, visibility and predictability through analytics.

If we were to take a step back and reflect on these responses, it becomes apparent that the underlying transformative driver in finance is data. The finance function sits on a treasure trove of information: employee data, supplier data, customer data, sales data and more. Understanding this, the answer is to move from a process-led approach to a data-driven one.

Traditional transformation initiatives focus on the three pillars of people, process and technology. This paradigm needs to shift, and data should become the core of any business transformation. The type of data you have combined with the outcomes you want to track should determine what processes need to be followed, which technologies to use and the skill-sets of people needed.

Furthermore, agility and proactiveness can only be achieved if organizational data-silos are broken, data is integrated to provide enhanced analytics and insights and resources are moved to the cloud to be consumed on a case-by-case basis – all of this obviously within the framework of security, compliance and GDPR.

Digital possibilities

A data-driven approach will unleash the possibilities provided by digital technologies such as machine learning, automation and AI to solve specific finance challenges, while exploring optimal solutions for maximum business impact.

For example, big data and analytics can help make informed decisions on matters of risk and competitive advantage in the marketplace. For its part, AI-driven budgeting can augment or replace manual budgeting and forecasting activities while improving working capital management.

Similarly, intelligent process automation or cognitive robotics can help drive faster and more accurate close, leading up to a scenario for perpetual soft closes and a two-day hard close, while supporting inter-company or joint venture accounting and rapid decision making.

The bottom line is that today’s finance functions spend an inordinate amount of time on repetitive mundane tasks, sifting through endless spreadsheets, navigating legacy systems and reporting.

Digital interventions like automation, the cloud, AI and analytics, on the other hand, can free the potential of data trapped within the finance organization to drive real disruptive transformation.

This will not only improve efficiencies in terms of productivity and speed but also deliver tangible business value in terms of improved working capital; quicker, accurate and perpetual closes, or reduced DSO (daily sales outstanding).

Fundamentally, digital finance enables organizational growth at a near zero marginal cost.