Leaders Place Faith in Finance Technology To Support Expanding Remit
Recent research reveals that senior leaders are laboring under a newer, wider set of responsibilities, but the solution lies in earlier adoption of finance technology.
From CFO to departmental director, the finance leader’s role has never been easy. But at least it used to be relatively predictable in terms of scope. Since the pandemic sent shockwaves through every layer of the global economy, businesses have been forced to evolve in the face of new realities. Leaders across the finance department find themselves in the vanguard of this momentous and, at times, bewildering revolution.
Even before Covid, McKinsey was reporting that the number of functions reporting to the CFO had risen from around four to more than six. Many finance leaders say they are being tasked with responsibilities far beyond their traditional remit, from cybersecurity to ESG and supply chain resilience.
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CFOs and Finance Leaders Prepare for Change
Recent research of senior finance professionals conducted by Tradeshift and CFO Dive makes it plain that senior finance leaders are struggling with the new range of responsibilities they now bear. This multiplication of priorities helps to explain why barely half (55%) of respondents say they’re spending the right amount of time on essential priorities. Problems are compounded by the fact that finance leaders still spend the bulk mired in day-to-day finance operations rather than the strategic activities that would most benefit from their expertise.
Whether or not they knew it, for several years CFOs and their leadership teams have been quietly preparing for the seismic changes that would affect their role, department, and enterprise. Around the world, finance departments have been investing heavily in a new generation of technologies for optimizing and automating low-value, process-heavy tasks across procurement, invoicing, and payments. And they are not done yet. Our research revealed that three-quarters (74%) of respondents plan to increase their technology investment in the coming year, with two in five (38%) saying they will grow their tech spend by as much as 25 percent.
For many finance directors, their tech procurement strategy was at first focused squarely on making important but iterative improvements to their department’s operations. Now, with finance, procurement, and supply chain challenges right at the top of the corporate agenda, these technologies have taken on a new significance – and so have the finance leaders who are driving their implementation.
While pre-pandemic tech procurement focused on fixing historical issues like managing overhead and tracking cash flow, finance leaders are finding that the same tools can address business-strategic questions that were, until recently, well outside their traditional ambit.
Finance Technology Adoption Too Slow
Technology ought to be providing some support to stressed finance leaders by automating and streamlining many of these traditional business processes. But is automation really helping?
Our research discovered a key disconnect that cuts right to the core of the problem: respondents report themselves broadly happy with their technology adoption strategy up until now; however, when asked, with the benefit of hindsight, if they would have changed their strategy, six in ten said they would have increased investment earlier.
What does this disconnect signify? The most likely interpretation is that finance leaders expect technology to play a major role in lifting the burden of their new responsibilities. This is illustrated by the fact that a sizable minority of respondents expressed concerns with cybersecurity (30%), the growing scope and responsibilities within their role (28%), supply chain problems (27%), and keeping up with new compliance demands (22%), underscoring the range of challenges that finance leaders are now expected to meet.
Given the timescales involved in bedding in new financial technologies, harnessing their full capabilities, and making the necessary organizational changes – from creating new, acquiring talent, and implementing new training – the chaos and disruption of the last few years came just a little too early for most finance leaders
The good news is that senior finance professionals are well aware of how profoundly their role is evolving and are clear about the challenges they face. And while technology is clearly an important part of the puzzle, the human factor also looms large, with almost half (45%) citing talent acquisition, retention, and better training (48%) as priorities for the year to come.
Our respondents acknowledge that their changing role requires increased tech spending, and it is highly encouraging that they are committed to this investment. But they also know that technology can’t provide all the answers. For senior finance leaders to thrive in this new era, they need teams around them capable of using these new systems to the fullest.
That’s why leaders across the finance department now find themselves directly responsible for employee recruitment and retention – another illustration of how profoundly and quickly their role is evolving. As the “Great Resignation” followed hard on the heels of the pandemic, finance leaders found themselves responsible for acquiring and retaining the talent needed to power their enterprises’ transformation.
It also reflects the fact, which came through so strongly in our research, that meaningful, strategic transformation requires the right blend of people and technology. If the first phase of business transformation was decidedly “digital” – applying technology to improve and automate inefficient processes – the next challenge for finance leaders is much more focused on the human factor; in particular, how to harness the insight provided by new technology to provide radically valuable new capabilities to employees.
Unnoticed by many, the role of the finance department has undergone a ‘velvet revolution.’ Where once finance leaders were charged with driving efficiencies, they are now responsible for long-term value creation, including the enterprise’s most precious asset of all: its employees.
This will make welcome reading for workers worried that a looming long-term recession will lead to a slash-and-burn approach toward the workforce.
As our research reveals, senior finance professionals clearly understand that the new focus on the finance department requires investment in new technologies and human skills to squeeze the maximum capabilities from them. Of all the issues piling up in finance leaders’ in-tray, none is more important than harnessing the capability of new technology to make every employee more productive and more valuable to the business – and not least, the leaders responsible for driving these changes forward.
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