Driving Finance Transformation With The Cloud In 2022
Long considered a technology laggard, the finance function is now making up for lost time. As the sponsors of digital transformation in their respective organizations, chief finance officers (CFOs) need to drive the finance function transformation to make it more intelligent and agile.
In 2021, a global survey of CFOs by McKinsey found a sharp increase in digital adoption in finance and accounting (F&A) operations across the board compared to its 2018 findings: for example, the share of respondents using robotics and artificial intelligence went up from 14% to 47%, while the proportion of respondents using advanced analytics for finance nearly doubled, from 33 percent to 60 percent. Of course, the pandemic has been partly responsible for this acceleration, forcing enterprises to step up digitization in all areas, including finance, to survive through the crisis.
As the sponsors of digital transformation in their organizations, CFOs need to lead the finance function transformation to make it more intelligent and agile. They must focus on building a new era of digital finance that leverages real-time data and insights to combat risk, improve forecasts and automate operational processes.
Three primary priorities for 2022 would be the following:
1. Exploiting the full range of intelligent technologies
Most businesses have automated basic finance and accounting processes, such as managing payables and receivables. But technologies like robotic process automation and machine learning have created highly sophisticated use cases, such as automated collections where everything from customer outreach to late balance notifications to aging reports is digitized. Advanced analytics solutions are capable of predictive modeling that finance managers can leverage to make better decisions.
CFOs need to prioritize the use of robotic process automation, machine learning and other intelligent technologies in operations, taking care to reimagine accounting and finance processes so they can get the full benefit of digitization.
2. Gaining the cloud advantage
No transformation is complete without cloud computing, the defining technology of pandemic times, which offers a host of advantages from allowing remote finance teams to collaborate securely, modernizing legacy technology, and providing innovative digital solutions as a service on demand.
A leading advisory firm says that although finance operations have moved to the cloud in recent years, adoption is relatively low relative to other functions due to finance’s transactional and reporting impact on the enterprise, latency requirements and regulatory compulsions. CFOs could consider a distributed cloud – a public cloud running in several locations but centrally managed by the cloud provider – to overcome these constraints. In 2022, finance heads should also look at cloud-native platforms to build agile and resilient application architectures.
3. Using data to make better decisions
Traditionally, the finance function used past performance data to analyze core F&A processes. But finance in the digital age is less inward-looking. Today, CFOs are required to study internal and external information to report on a wide range of business and strategic issues in real-time. There’s no better example than the disruption created by the pandemic, which forced CFOs to analyze abundant supply chain data to advise their organizations on finding alternative supply locations and markets.
Now, finance bosses must also ensure that advanced data and analytical skills percolate down the ranks. In addition to providing training, they should invest in a robust analytics platform that can collect structured and unstructured data from various internal and external sources and extract valuable insights that finance and accounting staff can use to work efficiently and make better decisions. Equally, they must invest in amplifying employees’ human capabilities, for example, collaboration, communication, strategic thinking and problem finding.
Change-averse, by nature, the finance function can no longer resist the force of transformation, especially in the post-pandemic world. Finance in the digital age is expected to play a strategic role, not least of which is supporting the digital transformation of organizations. To do that, the finance function must lean into the digitization wave in 2022 and beyond.