• Soukaina

Digital transformation in the CFO office - Status and next steps

Updated: Nov 13, 2019

Early 2019, Sia Partners interviewed a panel of Chief Financial Officers about the digital transformation plans for their function. The objective was to understand how current organizations adapt their finance function to cope in their respective industries with digital transformation, what key opportunities are they seizing and what challenges are they encountering.


Early in this study, a key finding stemmed out: among the interviewees, the transformation of their finance function was a Top Priority for more than 70%. Generally, the drivers for this call to action were either the necessity to cope with years of legacy financial systems and low automation levels, and/or to build a reliable financial platform to support future growth.


During the interviews, we went through understanding these organizations’ finance function current states, their agendas, their technology roadmaps and the role played by their respective Group/Shareholders.


Overall, for most of the interviewees, significant milestones had already been delivered in the last 2 years, with a focus on building a lean and efficient finance operations organization (see Figure 1. Where is the finance function on its transformation journey?). Transforming the Performance Management organization and processes was generally coming next, with some players having already made some progress. Finally, CFOs were actively looking at emerging technologies to further tactically enhance and optimize their operations (like RPA) or identify break-through use cases for Machine Learning and Blockchain for the Finance function.


Fig. 1: Where is the finance function on its transformation journey?


1. Finance Operations Optimization


For most of the CFOs interviewed, building efficient finance operations had been a critical priority for the last 2 years, with 2 main streams:

  • Challenge the organization, generally by setting up captive Shared Services Centers with limited scope (transactions processing, IT service delivery, …). We observed heterogeneous location strategies for these Shared Services, demonstrating on this recurring question that there is no one-size-fits-all approach: in proximity to the Regional CFO - generally based in Hong-Kong, in a close Asian country with the right talent pool (Philippines, Malaysia), or hybrid location models with China/India.

  • Automate transactions processing and workflows, by deploying the right ERP (Oracle, SAP, ...) – generally selected by the Group CFO Office – and peripheral applications for key processes like purchase-to-pay (Esker, Basware, ...), order-to-cash (Onguard, FIS, Esker, ...), travel & expenses (SAP Concur, Traveldoo, ...), embedding OCR and RPA technologies, and facilitating invoice processing, cost center allocation, digital workflows, multi-currency ledgers, etc. (see Figure 2 Significant Automation Opportunities within Finance Operations)

Opportunities within Finance Operations :

This first set of initiatives has helped the interviewed CFOs to generate substantial productivity savings (cost per invoice in/out, cost per transaction, labor arbitrage), harmonize processes and to strengthen internal controls (ITGC).


Fig. 2: Significant Automation


2. Performance Management Optimization


The second pillar for the interviewed CFOs were generally about strengthening the business partnering to better support – or even lead – the business transformation. It was translated to several initiatives:

  • Accelerate closings to develop faster corrective action plans – enabled by the first pillar on finance operations,

  • Promote data-driven cultures and decision-making processes, supported by Business Intelligence (PowerBI, Qlik, …) and Visualization technologies (Tableau, Tagetik). To achieve this objective, some intermediary milestones had to be achieved (single version of truth, training & change management, data quality, …) and were generally still under progress within the panel. However, some 60% of the CFOs had implemented or were planning to implement BI tools like PowerBI.

  • Reinforce the planning cycles processes, notably by deploying technologies favoring integrated planning and drivers-based forecasting (Anaplan, Jedox, Tagetik). This initiative – that was being kicked-off at the time of the survey among the CFOs’ organizations – was supposed to help CFOs to break classic forecasting silos problem. 18% of the participants had already adopted it, while 40% were considering it.

  • Reinforce local Finance Business Partnering by integrating into shared services the basic financial planning & analysis activities (financial & management reporting, forecasts/budgets consolidation, …) and refocus the role of country finance heads from full-finance scope to business partnering only, with a mandate to drive decision-making and foster efficiency.

Overall, we noted that CFOs were investing aggressively into Analytics capabilities, pushing their organizations from Tactical to more Strategic capabilities, in order to take advantage of their newly captured data (see Figure 3 The Analytics Maturity Model).



Fig. 3: The Analytics Maturity Model


3. Next steps


To the most advanced CFOs, we asked what was coming next on their agenda to take the finance function to the next level of efficiency.

Regarding their technology roadmap, they expected:


  • On a tactical, short-term perspective, automation of manual activities & tasks using robotic process automation (UIPath, Automation Anywhere, BluePrism), with some PoC ongoing for vendor account creations, sales commission computation, etc.

  • On a long-term perspective, Artificial Intelligence and its potential use cases within the Finance organization to take-off. However, for most players, Finance AI was still in preliminary stages : we noted some PoC beginning on fraud detection, process mining, internal finance chatbots. However, the likely most transformative potential use case within Finance – a real-time and dynamic automated forecast still looked far-fetched.

  • Low-to-no adoption of Blockchain for the Finance Function. Despite being often in the media spotlight, Blockchain was not looked at as a serious alternative for current finance operations processes.

Regarding their Finance organisation, further optimization was expected within the transaction processing departments (AR, AP, General Accounting, …), while the development of Centers of Excellence for Data Analytics, Technical Accounting, and Finance IT, should take-off. Finally, to cope with the increasingly complex business challenges (regulatory changes, new accounting standards, etc.) what we can foresee is the conversion of the Finance Project Managers that supported the digital transformation from a temporary task force to a permanent department – as the role and the agenda of the CFO is likely not to go down (see Figure 4. The New Finance Organization)


Fig. 4: The New Finance Organization


How Sia Partners can help you


Sia Partners offers tailor-made solutions to address your needs along with your Finance transformation journey. Depending on your current state; whether you are identifying a specific technology for the Finance Function; requiring a successful implementation on the selected solution; or quantifying the post implementation benefits, Sia Partners will adopt a holistic approach to address your needs.


Sia Partners delivers turnkey solutions via a mix of Finance function expertise backed with consideration for key transformation enablers like Technology. Analytics, Operational Excellence and Project Management capabilities. Our comprehensive Finance transformation services include but is not limited to the following:



Your contacts:


Vladimir Le Chatelier

Manager

+852 6332 6301

Vladimir.lechatelier@sia-partners.com


Trisia Yung

Manager

+852 9707 1957

Trisia.yung@sia-partners.com



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