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Strategy

Why CFOs Must Prioritize Agility in 2020


by Kerman Lau

Digital transformation within the office of finance is a new priority for organizations that, now more than ever, must operate with agility.

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There was a time when it was a best practice for CFOs and their teams to use historical data to forecast what would happen in the future. This worked when businesses operated in a more predictable environment.

But today’s businesses are increasingly data-driven, and the data that drives them is exploding in volume and velocity. Your amount of business data will very likely double this year, and then double again next year. And if your business relies on IoT data— that’s growing at 50 times the pace of enterprise data.

In the eye of this hurricane of change stands the modern CFO—who oversees the one function in the organization that’s responsible for curating all the data that drives and defines a business. As the influence of CFOs ascends within the C-Suite, they’re the ones taking responsibility for turning that data into insights for better, more timely decision-making.

Recent research reveals that today’s CFOs are recognizing the need to equip their organizations with the skills and the analytics technology necessary to plan continuously.

In other words, digital transformation within the office of finance is a new priority for organizations that, now more than ever, must operate with agility. It’s a priority that will take firm hold in 2020. Here’s why.

High-performing businesses are equipped for agility

Businesses that equip themselves to achieve agility do better than those that don’t. That’s not just my observation. It’s one of the findings of a 2019 global survey of 988 C-suite executives and leaders, a third of whom have finance leadership roles.

According to the survey, companies report stronger performance when they embrace agile ways of working: removing bureaucracy, breaking down data and process silos, outfitting a workforce with modern skills, and prioritizing technologies capable of evolving along with the business itself. In fact, those companies are 10 times more likely to react to shifts in the market with agility and speed. Imagine the competitive advantage that brings—and the disadvantage it represents to businesses that aren’t equipped to zig when the market zags.

Which brings us to the next finding: Roughly three-quarters of organizations fall into that second group—the disadvantaged. It turns out that relying on slow, inefficient planning processes appears to be at least partly to blame. Just 25% of finance executives say they are confident that their planning processes equip them to be responsive to economic and geopolitical shifts. This is a defining feature of active planning environments—which are continuous, comprehensive, and collaborative—because they position decision-makers not only to act fast, but even to anticipate what might happen next.

Those 75% of executives whose companies aren’t engaged in active planning say they’re held back by three primary obstacles: inflexible and outdated legacy planning systems, siloed planning processes that stymie collaboration, and a lack of relevant workforce skills.

Your culture of agility can begin with the finance team

Agility involves more than process improvements, as critical as those are. Finance executives recognize this. They also recognize that successful businesses will equip their workforces with the skills, mindsets, and tools that allow them to think and act with agility.

This requires building a culture of agility, and it will begin in finance. The research found that in the next five years, half of all finance leaders plan to upskill at least half of their workforce.

But what skills are finance leaders looking for? The research found that upskilling efforts will focus on ensuring that finance teams can make the most of technologies that enable agility. Their priorities include:

  • Interpreting and acting upon predictions. Over the next five years, 22% of finance leaders surveyed say the most valuable skill they expect to add to their function is the ability of team members to draw actionable insights from predictions made with machine learning.
  • Analyzing and visualizing data. Even more (27%) say the ability to use advanced analytics and data visualization will provide the greatest value.
  • Democratizing insight. In the future, we’ll see how powerful planning tools will take these once-specialized capabilities and democratize them so that people throughout an organization—not just highly trained analysts—can put these same skills to work in HR, sales, operations, and other functional departments.

Finance teams of tomorrow will even think differently than they do today. For instance, one in three finance leaders say they will look to hire and develop workers who possess an ability to identify and manage risk. One in four will seek employees who demonstrate the cognitive agility needed to contend with constant change, and who can produce creative ideas and utilize lateral thinking to solve problems and grow the business.

In 2020, we’ll see more organizations implementing and achieving an active planning environment so they not only can plan continuously, but also continuously guide their business. And they’ll do it based on insights derived from company-wide planning orchestrated by finance and the analysis and insights that only modern technologies can provide.

CFOs may well be standing in the eye of a hurricane of change, but for those aiming to prioritize agility, that’s not necessarily a bad place to be. Assuming they move now to equip their organization with the right processes, technologies, mindset, and people, CFOs may find themselves in the most strategic place of all.

Kerman Lau is Director of Finance at Adaptive Insights, a Workday company.