The New Operating Model for Modern Finance

Businesses that thrive in the digital age are agile and can adapt to a rapid pace of change. For finance to remain relevant to the business, it must become agile as well. Finance must rethink its mission and embrace an innovative operating model that allows it to respond quickly to changing business needs.

Oracle and the American Institute of CPAs (AICPA) surveyed nearly 500 senior finance executives to determine the key attributes that are critical to a transformation to a dynamic, modern operating model that drives greater business agility.

Agile Finance Defined

So what does it mean to be an agile finance leader? Financial leaders that have made the transformation to a more agile operating model are able to:

• Make informed decisions quickly about how to adapt to rapid and constant change
• Implement new strategies with accelerated speed to market and support innovation
• Monitor performance constantly and make changes to take advantage of opportunities or ROI
• Remain strategically alert
• Analyze opportunities to mitigate risk
• Lead the business on measuring and understanding intangible drivers of value
• Deliver forward-looking analysis on new revenue growth opportunities
• Re-deploy resources quickly in response to strategy and market changes
• Achieve greater efficiency with cross-functional, integrated teams that share unique, non-traditional finance skill sets
• Rely on shared service centers (SSC) or centers of excellence, cloud technologies, and digital accelerators such as artificial intelligence and robotics

Why Now

The time is right for finance leaders to move to a new operating model: CEOs want CFOs to become more agile. According to Agile Finance Revealed: The New Operating Model for Modern Finance, two-thirds of CEOs would like CFOs to spend more time:

Driving growth

Ensuring strategy, budgets, and capital allocation are fully integrated

Nurturing growth spots

Balancing short-term demands with longer-term success

To transform into a modern operating model that supports agility, finance needs to adapt three ways:

Create cross-functional, integrated teams

Expand expertise in digital technologies

Develop non-traditional finance skill sets

Create Cross-Functional, Integrated Teams

An agile finance function requires cross-functional, integrated teams that are centralized in shared services or centers of influence.

In this modern operating model, cross-functional, uniquely skilled teams must provide business partnering or decision support. This partnership between finance and the business cascades the CFO's influence through the business, ensuring that decisions are based on a proper analysis of relevant information and performance is managed in the interests of stakeholders.

The research supports the link between agile organizations and cross-functional, integrated teams. Those businesses that are agile are more likely than non-agile businesses to have:

Set up centers of Financial Planning & Analysis (FP&A) (81% vs. 56% of others)

Centralized finance-related subject matter expertise in a global center (49% vs. 20% of others)

Migrated end-to-end accounting processes to shared service centers (SSCs) (41% vs. 13% of others)

As finance considers which functions to centralize, they should focus on centralizing those areas of expertise most important for their business. For example, if a company plans on mergers and acquisitions, they might centralize an M&A team. Other likely candidates for centralization include external reporting, tax, and FP&A.

Expand Expertise in Digital Technologies

Technology such as cloud-based computing, data analytics, and artificial intelligence plays a critical role in agile finance by automating repetitive tasks and freeing finance professionals up for more value-added activities.

Technology can do more than automate routine tasks. For example, artificial intelligence can perform in-depth analysis, such as forecasting and recommending pricing strategies to boost revenue and profit, or analyzing sales across online competitors to determine inventory needed.

Agile finance is more likely than non-agile finance to use emerging technologies such as robotic process automating (RPA), machine learning, and artificial intelligence: 44% vs. 12% of others.

For instance, RPA lets employees configure computer software "bots" to interact with applications and perform high-volume, repetitive tasks such as account reconciliation or "swivel-chair" processes where information is routinely selected from one system and re-entered on another.

Many finance leaders are looking to cloud-based solutions to increase response time and reduce costs. For example, Arby's implemented a cloud-based enterprise performance management system to automate the budgeting process and has shaved 30% off the annual planning and budgeting cycle by eliminating manual spreadsheets.

Indeed, agile finance leaders are more likely to use the cloud for:

Enterprise performance management (EPM): 51% vs. 17% of others

Enterprise resource planning (ERP): 45% vs. 17% of others

Develop Non-Traditional Finance Skill Sets

Since technology plays such an important role in the modern finance operating model, it makes sense that employees need to have technology skills. Finance leaders will need to develop and recruit talent with the skill sets required by a dynamic operating model, such as data analysis, data visualization, and business acumen to support rapid decision-making and performance management.

But it's often the "soft" skills—like analytical ability and communication skills—that are difficult to get right.

Finance leaders who can recruit, train, and retain talent with the right skill sets will improve the finance functions' strategic influence and management guidance and impact the bottom line. In fact, those survey respondents employing talent with the right skill sets are more likely than other businesses (48% vs. 18% of others) to see opportunities for revenue growth.

Conclusion

A modern operating model that creates cross-functional, integrated teams; expands the use of digital technologies; and focuses on non-traditional finance skill sets can transform an organization and deliver bottom line results including:

Profitability: 95% of businesses supported by agile finance leaders have increasing profitability vs. 70% of non-agile finance leaders

Revenues: 89% of businesses supported by agile finance leaders report positive revenue growth vs. 63% of non-agile finance leaders

Entering new markets: 51% of agile finance leaders have entered a new market vs. 35% of non-agile finance leaders

To begin transitioning the finance function to an innovative and modern operating model that supports agility, focus on these important properties:

• A clear understanding of the new role for finance
• Sponsorship from key business leaders
• Buy-in from other modern finance champions within the organization
• Proof of concept to illustrate contributions made by finance and improve credibility