Date posted: 27/05/2019 4 min read

CFOs need to create value, not simply account for it

Contemporary technology platforms can offer more actionable insights into what you’re spending – with whom and how, and whether you’re getting value for it.

In Brief

  • Financial value of using tech tools is significant
  • Study shows 87% of tasks easy to automate
  • Good business case for first few steps to obtain payback on investment in 12-24 months

The time of the 'bean counter' is long past – the finance team must be focused on creating value, rather than simply accounting for it. That's the view of Stephen Lennon, Digital Partner at Cognizant, who is the first speaker at the Tech Innovation for Finance Conference.

CEOs are looking for CFOs to do much more than simply carry out the reporting and finance role. Because many companies have cut staff to the bone and remain saddled with inefficient processes in the finance function, many CFOs feel they don't have enough space and time for strategy and innovation.

In addition, basic functions can get in the way – lack of integration between systems, multiple sources of the same data, and burdensome processes to generate management and compliance reporting, too often tied together with spreadsheets.

Contemporary automation, analytics and reporting tools can give CFOs a dividend in time and space and more insightful, sophisticated capabilities that can help them focus on adding value. This is important from a productivity and a performance point of view.

"Technology can enable more transparency and a stronger forward view."
Stephen Lennon, Digital Partner, Cognizant.

Businesses often run on too much hindsight and not enough insight or foresight. "Technology can enable more transparency and a stronger forward view – whether that's in understanding customers' propensity to buy, or orders that are in hand, or orders that are likely to convert to sales," Lennon says. These tech tools make data more widely available but also provide deeper, more meaningful information for action.

Ignoring technological innovation in the finance space can hold companies back. Lennon quotes a McKinsey study that shows only 13% of tasks in the finance domain would be difficult to automate. And the financial value of introducing such tools is quite significant, so a company can short change shareholders by not doing so.

In a large enterprise, once the three core finance functions (procure to pay, order to cash and record to report) have been digitised, there are big productivity gains to be had in planning and forecasting. Contemporary technology platforms can offer more actionable insights – for example, into what you're spending, with whom and how, and whether you're getting value for it.

Not all businesses will benefit in the same way. For example, Lennon says there may be more value for a government agency involved in large capital projects with complex contracts, significant technical risk and security implications, than for a local trucking company.

Another comparison in planning and forecasting benefits is between commodity suppliers, where demand does not vary much, versus a fast fashion enterprise where demand changes with the weather and what celebrities are wearing and sharing on social media.

In the aviation industry, which is volatile and subject to fickle demand, Lennon says it's vital to understand customer behaviour and the possible events that may dampen or lift demand for travel. In aviation, as in most industries, planning and forecasting are as much about visibility of revenue as controllability of costs. Fortunately, many airlines moved early to sophisticated analytics to address this, enabling them to manage more sustainable profit margins.

Lennon says it is usually straightforward to make a good business case for the first few steps down the digital finance road such as automation, where it is possible to obtain payback on the investment in 12 to 24 months. Further down the track, it may get tougher and require more patience and targeted investment to achieve attractive returns in areas such as planning and forecasting.

Lennon embarked on his career with Coopers & Lybrand (now PwC), before moving on to Lehman Brothers and an Australian retail bank. For the past 20 years, he has worked with many of the world's biggest consulting and systems integration companies on technology and innovation, delivering real benefits for clients and their customers.

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