From Average to World Class – Next Generation Finance Part I
This is the first of four articles unfolding the Finance journey towards World Class Strategic Partnering. Here we begin to build the framework to transition from today’s rear facing Finance, to tomorrow’s forward-looking Next Generation Finance.
For many years Finance has had a monopoly on reporting numbers to business leaders, but this monopoly no longer exists. In the digital world, data flows everywhere in the business and Finance needs to collaborate and build relationships to gain access to all that data.
Further, many companies are creating analytics centers that will “compete” with Finance to serve the business. Unless Finance gets into the analytics game, Finance risk being replaced in many of its FP&A functions.
Finance needs to act fast and step up their game. Gaining access to data and turning it into insights and foresight is crucial for, what we call, “Next Generation Finance”.
Here, Finance provides value added analysis that is more than just standard financial information. The most valuable CFO competency today is knowledge of how to transform Finance from operating as a hindsight looking spreadsheet driven accounting/reporting center, to a value-add top line and forward- looking predictive hub.
Traditional Finance Transformation has had the admirable focus on better and more efficient reporting, building relationships and communicating with executives, and developing a strong business understanding. Competencies like Analysis, Communication, Business Acumen and Teamwork & Collaboration are the skillsets required for success under the Traditional model.
Next Generation Finance Transformation builds upon these skillsets with the addition to empower Finance to drive value-add analytics. World Class Finance organizations understand how to utilize advanced tools and techniques to bring insight and foresight to business leaders that enables them to take data driven decisions.
The “Evolution of Analytics” depicted in the chart below, visualizes analytics stages and analytical techniques that have been available to Finance spanning 40 years. World Class Finance works across the full spectrum of Value Creation whereas immature organizations only work on the left side of the figure.
Imperative to note that if Finance does not move to the right of the chart toward higher value creation, it risks being sidelined as other groups will emerge to deliver analytics insights and foresight to the business leaders. The role of Finance will be shunted to audits and compliance vs. being a Strategic Partner who influence decision making and impact the strategic direction.
Today is a brave new world for Finance. It can be in the center of the operations, can demand access to all the data needed, and by engaging the tools and techniques of Next Generation Finance it can transform from being “just” a Reporting Center to also become a Predictive hub.
In the second article in this series of four articles, we will dive into the Roadmap of how to implement an Analytics Culture to become a world class strategic partner.
Part II - Roadmap to Analytics Culture
Part III - The start button, Mindset
To Learn More About This Topic
The Analytics Academy from the Finance Analytics Institute offers a class on Next Generation Finance. The Academy is held twice a year about February and September and is designed for executives, directors, managers, and analysts who want to exploit data in a new way to discover insight and foresight to unlock endless potential. Please see http://fainstitute.com/#academy
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