The finance function is faced with the decision of how it wants to position itself in the future. If it misses the chance for a fresh start, it will get stuck in accounting, planning and reporting. But how does it become a business partner for management? Dr. Raoul Ruthner, Managing Partner at PACEup Management-Consulting GmbH and course leader in the Certified Digital Leader program at Munich Business School assesses the situation.
Digitalization on everyone’s lips
Digitization does not only mean a lasting transformation for the business models of many companies, but above all it shapes the internal handling and use of information through almost exponential data growth. This means that the finance function is also faced with the decision of how it wants to position itself in the future: Either it limits itself to “classic” areas of responsibility (such as accounting, classic planning and reporting) and thus does not take on the role of a creative counterpart to the senior management, or it attempts to actively shape the future of the company based on solid analyses and industry-specific know-how.
Conditions are more challenging than ever before
Currently, however, there is hardly a company that does not (at least superficially) emphasize the topic of digitalization and name it as a focus area. The finance function in particular is being called upon, as fundamental changes appear inevitable. Nevertheless, the reality looks different: The digital transformation of the finance function is in part still in its infancy. There is often a wide gap between aspiration and reality, and many potentials are either not being utilized or are being insufficiently exploited. Many companies have so far been unwilling to embark on a far-reaching transformation in the financial sector.
In addition, the topic of digitalization is often underestimated and not seen in its full scope. In many cases, the introduction of technologies and new tools is already seen as a salutary approach – but unfortunately this is far too short-sighted and requires a much more far-reaching framework:
- Management models and processes need to be realigned and must have a high degree of business proximity through value driver models. In addition, processes must be proactive, future-oriented, lean and agile in order to keep up. Real-time data availability and predictive models require quick decisions by the management team.
- Defined end-to-end processes with clear responsibilities become a precondition for success and are indispensable. Only in this way is it possible to exploit the full potential of Robotics Process Automation (RPA) or Process Mining.
- From an organizational point of view, suitable framework conditions have to be created, this applies to the finance function as well as in the interplay with other company/functional areas. For example, tasks within the finance function must be restructured and teams must clearly distinguish between repetitive tasks that must be set up in a stable, structured and efficient manner (i.e. with a focus on efficiency) and project-oriented development topics.
- Systematic competence management and competence development for employees in the financial sector is the key to building up the necessary skill set. Be it through training or new recruits. This requires a structured and consistent development process that sees the human factor as a component of the success of a digitization initiative.