Daniel Mason from Prophix on Future-Proofing the Finance Function

By Daniel Mason, Managing Director UK, Prophix Software Headquartered just outside Toronto in Canada, Prophix Software is a leading developer of innovative performance management solutions, designed to automate financial and operational processes. Thousands of finance leaders in nearly one hundred countries use Prophix to empower their organisations and gain valuable insight into business performance. Prophix […]

By Daniel Mason, Managing Director UK, Prophix Software

Headquartered just outside Toronto in Canada, Prophix Software is a leading developer of innovative performance management solutions, designed to automate financial and operational processes. Thousands of finance leaders in nearly one hundred countries use Prophix to empower their organisations and gain valuable insight into business performance. Prophix and its partners deliver superior value by combining high-end functionality with low cost-of ownership and fast implementation. Daniel Mason has been with the Prophix organization for just over 7 years, having spent a total of 17 years working within the corporate performance management sector. He is currently responsible for Prophix’s UK operations, including sales, marketing and professional services. 

Here Daniel explores the modern finance function, the skills finance leaders need to recruit and offers his views on how organisations can prepare for the future by investing in their finance teams.


You can’t handle the truth

The truth of business comes out in the numbers. Not just revenues and profits, but headcount and staff turnover, customer churn and marketing reach.

Finance has historically been the natural home for numbers in an organisation. But recent reports show that finance teams are struggling to keep up with the growing demands of modern business. A lack of data literacy, continuing reliance on manual tools, and poor collaborative skills, are seeing the finance function side-lined as business transforms in this data-driven age.

The challenge is more acute now, highlighted by the capabilities brought by global connectivity and new technology. But issues of skills development and technology investment in finance are not new.

I’ve been working in the finance world for the last 17 years and the same issues were apparent when I first moved over. Prophix was founded on the recognition of some of these issues 30 years ago. Yet still, many – perhaps most – finance teams have not changed their practices. Why?


Barriers to progress

In my experience there are three things that hold the finance function back.

The first is a lack of resources. Even though IT was born out of the finance function in many organisations, investment in IT for finance has long been hard to secure. Because it doesn’t have a visible ‘front line’ effect on sales, it’s often overlooked.

The second is the knowledge base. Too few finance professionals have been on a mission to grow their skill base and expand their knowledge beyond its current bounds. The reasons for this are sound: the realities of operating a modern finance function haven’t left much room for personal development. But breaking the cycle of all-hands-to-the-pumps manual processing requires that time to step back and analyse the current processes.

The third reason is a lack of soft skills across the function – particularly communication. This isn’t about lazy stereotypes of finance professionals. It’s about formalised training in building collaborative relationships and releasing staff to have the time to go and build them. While other functions have moved on in this regard, finance has all-too-often remained static.


Building maturity

It’s possible to begin to quantify the problem, or at least recognise just how widespread it is amongst finance teams. The global analyst firm Gartner created a ‘Maturity Model’ to map the transition from historical finance practices to new. That means moving from a messy world of manual data manipulation, isolated in its own silo, to being truly smart about data, and providing strategic insight across the business.

In this Maturity Model, Level One represents those unaware of corporate performance management (CPM) tools – the term for technologies that enable more automated and integrated data handling in finance and beyond into business operations. Level Five represents companies making best use of data – connecting across departments and driving business strategy.

What’s interesting about Gartner’s analysis is that in the most recent update of its research, no companies were found to have reached Level Five. That’s no companies, of any size.

At Prophix, we work primarily with mid-market companies. We, and they, often expect that the largest global organisations will be significantly more sophisticated. But it seems not. It seems all finance teams in every size of organisation might be facing the same barriers to progress.

The ideal modern finance function

These barriers aren’t just bad for the finance function. They’re bad for the business. Finance’s requirement to look backwards as well as forwards puts it in the strongest position to drive strategy within the organisation. By underinvesting in skills, development and infrastructure to advance the finance function, the business is missing out on better insight, evidence-based strategy and enhanced day-to-day decision making.

There are three core areas where investment can unlock a transition of huge value to the organisation.

The first is what might be called ‘Smart Compliance’. Finance teams invest untold time – and sweat – in the production of mandated reports of one form or another. Still today, most organisations produce these reports through manual manipulation of spreadsheets with very poor repeat-ability and little robustness. The skills of manipulation required for a particular task are often locked in the head of a single individual, and audit trails are incredibly hard to produce.

Technology can remove the burden and often manual process of compliance through “Smart Automation”, which not only frees up human resource, but dramatically increases transparency and reduces risk. With time freed, finance teams can start to address more forward-looking issues of strategy and operational readiness.

This operational readiness forms the basis of the second major step. In an accelerated world, getting good information at speed is critical to good decision-making. Given the resources, finance can be the home of “Operational Intelligence”, giving leaders and departments the insight they need to improve decision-making. Analysis can be made available in near-real time against external events.

Of course, sometimes organisations need to look well beyond today and it is improved “Foresight” that forms the third pillar of improved service from finance that can be unlocked with investment. Planning stops being an annual trudge through budgets and likely expenditure, and becomes a process of acquiring and qualifying strategically valuable foresight. This delivers increased accuracy of forecasting, multi-dimensional modeling, resource correctly allocated to sales expectations and much better reconciliation of cross-functional planning. Imagine being able to quickly realise multiple future scenarios and explore the impact of different factors and decisions on the organisation’s success.


Partnering across the business

The ideal finance team should be seen as finance partners, having the trust and understanding of all departmental managers. It’s not enough to simply have the skills and collect data, analyze and report it as required. Since almost everything a company does is ultimately routed through finance, finance leaders need to be able to cooperate, partner and work efficiently with the teams and departments that report to them.

This highlights the importance of investment well beyond technology and systems. Skills remains a big gap in the finance function, both technical and more general.

The technical skills gap is in systems thinking, and financial planning and analysis. With so much effort devoted to manual processing, teams have lacked the opportunity to go beyond the immediate challenge and start to look to the future. There has been little opportunity below the most senior levels to examine operations – both in finance and the wider business – and consider improvements. Freeing time through automation creates this opportunity and the skills gap rapidly becomes apparent: even when the tools are available, teams don’t have the skills to apply them to their maximum potential. For this reason, investment in CPM should be paired with investment in up-skilling to maximise the benefit.

The softer skills gap is in communication, though perhaps calling it a ‘soft’ skill underplays its importance. To deliver the most value to the business, finance teams need to get well beyond the borders of their function and learn to communicate effectively, gain mind-share within departments, and socialise ideas. Building trust across the business will allow finance to enhance every department’s capability with better insight and support for improved foresight and operational decision making.

The truly modern finance function features a mix of skilled individuals who understand new technology, and who are able to interpret data, come up with a solution, point it in the right direction, and then are able to take that information and communicate it effectively through the organisation. Finance leaders need to look at training the people they have, but also at recruiting individuals who bring this mix of skills. People who have the financial intelligence and commercial acumen to understand the data, and see what’s going on within an organisation, and who are confident interacting with their colleagues and communicating information and ideas.


Preparing better for the future

At Prophix, we see lots of finance leaders who are happy with a large team dedicated to manually processing data. They don’t want to grow their role. They don’t want to embrace change. Until a risk is realised, or competitive advantage is lost. By then it can be too late – for the finance function, which has lost its role as the arbiter of truth. Or in the worst cases, for the business.

Finance leaders with ambition need to get closer to the CEO and push the business case for change. They shouldn’t just be signing off big-ticket investments in all the other areas of the business going through rapid transformation, it should be part of that transformation. Performance management may be thought of as a low priority because it’s a ‘back office system’. But extensive research shows that companies that invest in performance management generally outperform their peers 2:1 within the marketplace. The business case for change is strong.

Investment is just the start though. As Gartner’s Maturity Model shows, building a truly modern finance function is a journey, and one that all organisations are still on. 70% of organisations are still only at Level One, not even aware of how much better things could be.

Delivering the business benefits of a modern finance function requires continuous evolution, review, and investment. It’s not a one-off project and it certainly can’t be addressed purely with technology. Skills and talent are absolutely crucial, both developing existing talent and recruiting the right new people into the organisation. People who blend technical skills with systems thinking and the confidence to deliver that value across the organisation.

As with any journey, the starting point is to assess where your company is right now. At future-of-finance.com we have developed a comprehensive audit tool that will give you an immediate idea of your position and provide you with a 17-page report with practical guidance on what to do next. So get going today.


Read more at www.future-of-finance.com


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