For enterprises operating in a time of massive change, building finance capabilities for the digital age is a strategic imperative. Today, the accounting and finance functions are involved in enabling the business goals, optimally deploy capital and leverage cash flows, and fostering business agility. Also, modern finance departments have transformed to become catalysts for business model innovation.

Essential Finance Capabilities for the Digital Age:

Covering the Core: The following are the core finance capabilities that should be in place, even without the more advanced capabilities.

  • Financial Data Management: Getting the data to be accurate and make it available on time is a critical and fundamental step. For companies that have grown too fast or thru inorganic means, it is challenging to get the data piece right.
  • Financial Close: Financial Close is often a herculean task in many companies with employees and consultants scrambling to meet the deadline. A streamlined finance close process is also a foundation for other advanced capabilities.
  • Finance Organization Structure: An organization chart that is stable with various competencies and skills, organized based on the core value streams is another critical success factor.
  • Shared Services Excellence: Whether outsourced or insourced, operating a set of shared services efficiently and effectively also is a pillar of a successful finance function.
  • Compliance:  Legal, risk, and compliance should not be an event, but a routine process.  With an alphabet soup of regulations spread across different agencies, getting compliance right is tough, but necessary.

Similarly, finance and accounting functions need to think of themselves as service providers and strive for an optimal stakeholder experience

Enabling the Digital Finance Capabilities:

  • March to the Cloud: The cloudification of finance is an important leap forward for streamlining the finance and accounting functions, as well as getting closer to real-time finance.  The cloud enablement of finance capability is perhaps the foundation for the rest that follows. Many companies, including new generation platforms like NetSuite or Workday, and the old stalwarts such as Oracle and SAP have cloud-enabled their finance software.
  • Data-Driven Decision Making: Gut feel and instinct are not enough to make decisions that determine whether a company survives or thrives. Data-driven decision making builds on the tenets of business intelligence and financial reporting, including dynamic dashboards, mobile reporting, and other such competencies.
  • Iterative Forecasting: Hitherto, forecasting was a long, convoluted, and once-a-year process. Now in the digital age, iterative forecasting, simulation, and scenario analysis power the finance decision-making.
  • Stakeholder Experience: A compelling value-proposition of digital technologies is a stakeholder-first mindset and an experience to support this goal. Similarly, finance and accounting functions need to think of themselves as service providers and strive for an optimal stakeholder experience

Enterprises need first to get the basics right and then elevate the finance function to meet the challenges of the digital age.

A detailed capability-centric finance transformation roadmap will be a valuable artifact.  CIOPages.com offers a finance transformation toolkit, as well as a complete finance capabilities model with decomposes the finance function into detailed multi-tiered capabilities organized into logical groupings.

Please share the experiences of your enterprise journey to building finance capabilities for the digital age.

Additional Information and Links for Finance Capabilities for the Digital Age

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