By Mark Nittler, VP Enterprise Strategy, Workday
The 1980s, if you can remember them, was an era packed full of shoulder pads and Wham!, perms and Pac-Man. The iPhone was but a twinkle in Apple’s eye and 80s film classic Back to the Future was released. I realise at this point that you’ll either be overcome by nostalgia, or trying to fathom how everyone functioned when there wasn’t an ‘app for that’.
Either way, the last 30 years have seen a lot of change in all aspects of our lives, and much of that has been down to one thing: technology. Its reach has been extensive and its effect undeniable; we would not be where we are today without it.
Whilst the technological revolution has transformed many areas of our personal lives, the business world has not escaped its grasp either. Those organisations that have successfully evolved to function in the techno-age have created whole new industries, and have reaped the benefits both in terms of financial and reputational benefits. But others have quite simply disappeared, unable to adapt and take on board our new, silicon-powered world. It’s shocking that almost 50% of Fortune 500 and FTSE 100 companies in 2000 do not appear on these lists today. But why exactly were these organisations unable to keep up?
Aside from the financial crisis, the global recession of the early 21st century and the worldwide M&A spending spree that can still be seen going on today, one factor still stands out as a major culprit. Digital disruption has meant the downfall of many companies that have been overtaken by their more agile, innovative competitors who promise customers newer, faster and more efficient business transactions. Corporations have struggled because the technological tools they have in place were not designed to navigate an era of digital disruption, so the technology has become a hindrance and not the help that it should be. Overall, business requirements have changed and so must the technology to suit them.
A good example of how this has panned out in practice can be found when you look at how financial organisations have used technology over the last 30 years. A self-confessed recovering financial accountant and auditor, I’ve been living and working in the finance world since the early 1980s, and in my experience technology is now stopping finance from realising its ultimate goal. Technology that was originally designed to automate transactions and accounting is now preventing finance from being a better business partner.
I see today’s finance function as having three main areas of responsibility:
- Transaction processing and accounting
- Compliance and control
- Business partnership
And today’s finance leaders are frustrated because their teams spend too much time dealing with the first two, leaving little time to be the strategic partners their companies truly need.
Finance needs to undergo a transformation to create a strategic partnership with the business and where it delivers information that goes above and beyond the general ledger data that legacy technology systems were designed to record. This is because of the demands being placed on finance to provide the whole organisation with contextual information that can actively impact wider decision-making. In short, finance is currently struggling in its mission to embrace and influence a wider set of stakeholders and broader business landscape.
In the finance world of today, teams need faster access to relevant data, better reporting capabilities, and stronger built-in internal controls. In reality, the technology they have to deal with has become a complex mix of acquisitions, custom integrations, and middleware because older systems were not created with this vision in mind. Businesses and their legacy vendors have attempted to fill the void by bolting on missing capabilities, but these cannot support the overall transformation that needs to happen.
Put simply, the systems produced from this complex architecture are naturally stifled. They are not able to adapt and evolve to meet the needs of a growing, changing business, and to try and force them to do so is a slow, expensive and sometimes impossible process.
However, there is no doubt that technology has created opportunities to rethink how financial systems can be built, and what they should offer to those using them. Technology has enabled us to build a new, more powerful, agile and economical foundation for finance by using developments such as the emergence of cloud computing, increased processing power, falling storage costs, the rise of mobile devices, and the advent of the consumer internet.
In this new world, planning, transaction processing, governance, accounting, reporting, and analytics are combined to form a single, easy-to-manage system. Companies can quickly and efficiently bring together actionable information about their people and money in a system that can evolve with them as their business grows. Those who embrace the advantages that these changes bring are fulfilling the long held but seldom realised vision of transforming finance into a powerful business partner.
A bolt-on approach is not the answer to financial transformation. It requires a willingness to question long-held assumptions, a total technology rethink and a vision of where finance can help drive the business as a whole.