From Efficiency to Effectiveness - Optimizing the Finance and Accounting Function

Abstract

The finance and accounting function is central to the successful operation of an organization. Finance professionals need to ensure that finances are effectively utilized in the best interests of all stakeholders. However, with multiple changes happening simultaneously across an organization, the roles of chief financial officers (CFOs) and finance leaders have evolved from being caretakers of company finances to strategic partners steering the organization to achieve the end goal. As strategic partners they need to focus on the inorganic model of mergers and acquisitions, and effective and efficient ways of reshaping the finance function. Transformation of the finance and accounting function results in the finance department moving up on the maturity level, an imperative for today's organizations.

Win Over the Skeptics

In the process of achieving desired transformation, finance leaders face a multitude of challenges. Globalization of operations implies inadequate control of business processes and high cost of consolidating them. Changes in the regulatory landscape require regular investments in infrastructure and the ability to identify sub-optimal compliance processes. Talent and efficiency management is also a key issue that results in low profitability and high cost of specialized skill-sets for organizations. In addition, analytics-led performance management is a necessity to consolidate data for decision-making and get a holistic view of the entire business portfolio.

Coforge’ 2015 survey sheds light on how the focus of CFOs has shifted from cost-cutting to efficiency improvement. The survey also revealed that there is a need to improve decision-making processes and data visibility across organizations. The survey polled 30 senior executives (CXOs, VPs, SVPs, and managers) to capture their views on the following key questions:

• What is the most crucial benefit that you think must be realized by optimizing and standardizing your finance function?
• What critical challenges do you face today with your staff?
• What do you think is the most critical benefit achieved with reliable data and analytics?
• When do you think Robotics Process Automation (RPA) will be a norm in the industry as opposed to a phenomenon?
• What challenge do you face in aligning finance and risk within your organization?

This report explores the typical journey for any finance function and how the goals for this function help improve overall efficiency and effectiveness.

Finance in the Lead

Coforge’ survey results revealed that most companies are slowly and steadily progressing towards the implementation of a world-class finance and accounting function. The last few decades focused on ensuring compliance with changing regulatory standards, meeting governance requirements, and ensuring cost reduction. However, today, the focus has shifted to:

• Operational efficiency and productivity to add real value to stakeholders
• Empowering the finance function to make better and informed decisions based on the information available
• Data visibility across the organization

Journey to Becoming World Class

Coforge’ survey has identified five key areas that play a vital role in developing a world-class finance and accounting function, and adding more business value.

Optimize and Standardize Finance Function

The finance function needs to build closer relationships with businesses to deliver optimized global processes leveraging technologies. The function should be able to identify opportunities, spot pressure points, and predict and forecast business performance to provide recommendations.

In Coforge’ 2015 survey of senior executives, 35% of companies said they needed sustainable cost reductions in their finance functions. Interestingly, a majority of the executives (42%) believed they needed to improve efficiency in their day-to-day operations as compared to only a few (19%) who believed that availability of meaningful information for department leaders helps understand the difference between performance and corporate goals. Also, 4% of the participants believed that accurate data delivered to the correct audience at the appropriate time is very important in optimizing and standardizing the finance function.

What is the most crucial benefit that you think must be realized by optimizing and standardizing your finance function?

Talent Management

In the past decade, employees in the finance function have experienced major structural changes. Today, these employees are working towards strengthening their role by being a part of the decision-making process and contributing to add value to the business. In order to fulfill these requirements, organizations must develop an organization-wide framework that can help in attracting, motivating, hiring, and retaining the best skill-set.

In Coforge’ 2015 survey, 41% of all respondents felt that their organization was understaffed and that the existing employees were overworked, while 22% felt that motivating and retaining employees was critical. More importantly, only 19% of the survey participants felt that organizations take time to bring employees to a certain level and 18% felt that finding the right talent at the right cost was the biggest challenge that the organizations are facing today.

What critical challenges do you face today with your staff?

Reliable Data and Analytics

Analytics is the practice of using data to answer questions about the business, understand its current state, spot hidden trends or relationships that can be acted upon, and make predictions about the future. This is an age-old practice in the finance and accounting world wherein CFOs and finance leaders use analytics to crunch numbers and draw insights. However, there has been a shift in the way analytics is deployed.

In our 2015 survey, most senior executives (52%) believed that information that improves decision-making is the most critical benefit of reliable data and analytics; 33% of the survey respondents felt that real-time monitoring and forecasting of events impact business performance and operations; 15% believed that the ability to extract analysis and visualize with the ERP of choice was the most critical benefit.

What do you think is the most critical benefit achieved with reliable data and analytics?

Robotics Process Automation—A Norm in the Industry

In the finance and accounting function, Robotics Process Automation (RPA) is fast emerging as a norm in the industry, due to the number of benefits it delivers. RPA can reduce cost, enhance accuracy, increase scalability and flexibility of IT systems, and increase compliance to standards. By automating processes, organizations reduce costs and also free their resources for tasks that require high skill-sets.

In our 2015 survey of senior executives, majority of survey participants (46%) are of the opinion that RPA will be a norm in the next 3-4 years. However, about 35% of the respondents said that it will be a norm in the next 18-24 months; and 11% felt that RPA will be adopted in the next 12 months by the industry, followed by 8% of the respondents that felt that RPA will never become a norm.

When do you think Robotics Process Automation (RPA) will be a norm in the industry as opposed to a phenomenon?

Finance and Risk Alignment

With the rising pressure from the stakeholders, organizations are challenged to find new ways that can help them balance risks and finances in a more sustainable manner. To meet this challenge, organizations need to align the activities related to finance and risk to ensure that they are able to handle any crisis.

In response to Coforge’ survey, 45% of the respondents felt that lack of an integrated approach and centralized oversight were the most difficult challenges that organizations faced in aligning finance and risk; while 22% felt that limited understanding of business requirements and technology were the critical challenges. A small number of participants (11%) felt that a poorly executed change management plan or lack of a robust one was the major challenge while aligning finance and risk.

What challenge do you face in aligning finance and risk within your organization?

The Coforge Thought Board:

From Efficiency to Effectiveness - Optimizing the Finance and Accounting Function

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Finance Transformation: The Key Enabler

Most organizations today are aspiring to establish a world-class F&A function. They are seeking platforms/solutions that can help them better integrate finance into the decision-making activities of the organization and convert finance professionals from analysts to decision-makers.

Enabling a world-class finance function is no mean task. It requires undertaking a company-wide transformation project with best-in-class technology, knowledge, and expertise to be able to deliver high business value to the organization.

Our survey results also suggest that finance teams face a number of challenges in making transformation a reality. Optimizing and standardizing finance functions, reliable data and analytics techniques, talent management, RPA, and aligning finance and risk functions are top priorities for investment in future finance functions.

To cater to the needs of finance leaders, Coforge offers a comprehensive portfolio of traditional finance and accounting (F&A) services that integrate key business processes such as Procure to Pay, Order to Cash, Record to Report, and Travel and Expense. We offer a technology-enabled platform FinGénie, a Business Process Services (BPS) layer—that helps organizations