Guest blog: KPMG Partner Kieran O’Brien on the future of finance

Business, Finance | Wed 20 Nov | Author – Business & Finance
Pictured: Kieran O’Brien, Partner in Management Consulting, KPMG.

New demands on the finance function can give CFOs the opportunity to carve out a more prominent position in the market, writes Kieran O’Brien.   

Finance functions and the CFOs that lead them have an opportunity to take leadership roles in their business like never before. While factors like rapid technological advancements, regulatory changes, big data and a heightened need for analytics are placing new demands on the finance function, with the right operating model, tools and talents, these challenges can be used as opportunities to carve out a more prominent position in the market. 

Accordingly, the latest KPMG Future Ready Finance Survey compiled the views of over 850 finance function leaders across the globe to learn what high-performing organisations are doing differently and the results are clear – finance functions must not only look to adapt to this new operating environment, but learn to thrive in it to establish a competitive edge in the market. 

What’s the deal with data?

To successfully transition from traditional control function to trusted business partner, perhaps the strongest card held by finance is its data. Finance functions can enable better decision making across a business by providing accurate, timely, and high-quality data analysis, which will also support improved planning and forecasting capabilities. To achieve this, however, data quality is critical. 

Organisations too often look for quick fixes from their technology solutions but avoid the “heavy lifting” necessary to properly address the quality and consistency of its data. While technology can enable better business outcomes, if you don’t get data right – nothing else matters.

The survey findings show that data quality is the single greatest challenge to improving analytics capabilities for many companies, followed closely by difficulty integrating new analytics tools with legacy systems.

The buzzwords

CFOs are also now being asked to innovate and further upskill in areas of new technology that didn’t exist not so long ago. Acronyms like IA (intelligent automation), RPA (robotics process automation), CC (cognitive computing)  and ML (machine learning) are now common vocabulary in finance. 

The survey results show that the most forward-thinking finance functions are mastering the current environment of technological change to drive revenue growth and profitability by combining agile service delivery models, extreme automation (using Cloud and emerging technologies) and advanced analytics. 

Less advanced finance functions are remaining more focused on traditional operational and cost-focused initiatives and are less focused on the use of advanced technologies than their executive management teams. Alignment of priorities between the CFO and CEO is crucial for the future of any finance function. 

So what does good look like?

The survey findings distinguish the highest performing finance functions from others with five key core capabilities:

  • Agile Operating Model

First, is the use of an agile operating model that promotes collaboration and blurs the distinction between Finance and other business functions. 

  • Predictive & Prescriptive Analysis

Second, is an emphasis on predictive and prescriptive analysis and insights to guide forward-looking business decisions, rather than simply measuring past performance. 

  • Automation

Third, automation is also key – specifically of data management, transactional processes and other activities of low strategic value, which can free finance staff to focus on higher value-added activities. 

  • Innovation

Fourth, high performing finance functions also show strong capabilities in supporting, and in many cases leading, enterprise-wide innovation through dynamic capital allocation that balances investments in core areas with known technology with riskier, new-to-the-organisation or sector technologies. 

  • Talent

Last but not least is a focus on talent. The best finance functions ensure access to the high-level analytical, design thinking, and technology skills that will be needed in the future.

What next for the CFO?

CFOs can take a number of steps to not only future-proof their functions but also and prepare for their future professions, taking the learnings from high-performing finance functions and understanding what they are doing differently:

  • Don’t just focus on Excel

Data management in Excel is a central theme for the Finance function and essentially a cost driver through heavy manipulation of data with questionable accuracy. With all the tools to which organizations now have access, there’s simply no reason to perpetuate inefficient and unreliable practices.

  • Think like a venture capitalist

Create an agile programme funding mechanism separate from the annual budgeting process that balances investments in core areas with riskier ones and relies upon forward-looking investment criteria that goes beyond pure ROI to measure success (e.g customer satisfaction, higher quality analysis, etc.).

  • Take a comprehensive, flexible approach to talent

Given the scarcity of the most important skills sets needed in the next-generation (such as influencing, relationship management, data analytics), focus on developing staff with high level “enabling” skills (i.e. highly productive speakers and writers) that can adapt to the changing technological landscape, and build, buy and borrow skills as needed.

  • Lead in driving the adoption of advanced analytics and automation technologies

One of the most critical characteristics that distinguishes high performing organisations from others is that finance places an even higher priority than executive management on using automation and advanced analytics to increase the quality of analysis and insights needed to answer the most pressing business questions.

  • Establish a digitally-enabled service delivery model

Do not optimise finance processes in isolation. Instead, design operating models that enable end-to-end processes that transcend functional silos and promote self-service within the organization while ensuring a strong focus on the customer.

Summary 

The ‘Future Ready Finance Survey 2019’ provided some valuable insights on finance’s priorities and capabilities. The key challenge being that finance needs to move away from being perceived as a transaction heavy function reviewing historic performance to a trusted business partner who is uniquely placed to drive and deliver strategic outcomes. The good news is that success is achievable. Indeed, Finance functions at high-performing companies have not only been able to adapt to this new environment, but to thrive in it.

About the author: Kieran O’Brien is a partner in Management Consulting and is the lead advisory partner in the Aviation Finance & Leasing practice with KPMG Ireland. Kieran has 18 years’ experience of providing advisory services to the world’s leading Aviation companies in the areas of performance improvement and optimisation, finance efficiency, post deal integration/separation and setting up leasing platforms. Kieran also provides Financial Management services to  clients across a number of industries leading the transformation of finance functions in reporting, controls and providing management insight.