Operating Model for Finance Leaders are changing! Have you relooked at yours?

The world we live in is changing everyday due to digital disruption everywhere. Organizations are forced to change and reinvent their business models, redefine their products and services to meet customer demands and ever-changing expectations. This wave of digitization is bringing lot of opportunities for Finance function.  The challenge is to design a finance function to meet tomorrow’s challenge

Traditional CFO & Controller’s used to spend most of their time analyzing prior period financial statements and results which in turn is used to identify areas of optimization to improve margin and cash flow analysis or to improve cost and productivity controls. Few years back we saw a wave of initiatives to support the above hypothesis by creating a end to end approach and then leveraging the shared services or GBS (Global Business Services) model to have better controls and drive productivity.

The model which is shown below is process centric and currently looks like this:-

To drive above model we required a process centric model with a Global Business Process owner to drive that particular CoE. workforce which understands the nuinances for finance and is highly skilled.

With the wave of digitization coming in the Operational part of Finance in future will take a dramatic change. Digital technologies will play a significant role in changing the way finance operate. There is no alternative to digital transformation.

Visionary CFO’s are carving out a model where system has the capability to perform a task , learn how to do it differently and analyze the data using external knowledge and make better decision .

This is the new operating model all CFO’s are working upon.

If you take a deep look into this model we have three main components here :-

A. Use of Robotics process automation to automate mundane task across different business units and ensure your repetitive, high volume task can be automated thus helping you to improve the accuracy of operation or rather focus on achieving Zero Defects in finance operations. Example of the task BOTS have started performing in most of the digitally advanced organization are Invoice Processing; JE Entries etc.

B. Manage the Data Supply chain with efficient Data lakes and effective MDM strategy along with good governance around data and its consumption in an enterprise to drive decision making

C. Use of ERP / Analytics Cloud and couple it with Machine Learning / AI algorithms in much more efficient manner to ensure data is properly gathered from the customers, internal data of the organization which is mainly hidden ( >80% ) is rightly interpret using appropriate tools like Microstrategy etc. to deliver insights which are useful to product world class products / services.

CFO’s and controllers around the world have started taking bold steps in adopting above technologies in a cognizant manner to make the IT organization work for them in a much more efficient and effective manner to ensure more value creation is there from the Finance department and also ensuring that it remain focus on providing accurate numbers to board members and investors and supporting organization growth journey.

Disclaimer: The views expressed are solely of the author , does not represent the organisation he is associated with .

Prateek Kapoor

Director Transformation & Automation COE @ Aon

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