In a poll of more than 450 business leaders, nearly 50% say their companies are pursuing finance transformation in 2022.
By Jerrad Hall and Jeff Ramsey
In February 2022, industry experts from Vaco and MorganFranklin Consulting hosted more than 450 business leaders for the virtual webinar, “2022 Emerging Trends: How Leaders Are Driving Transformation in the New Year.” During the presentation, audience members shared their insight on a range of topics, including barriers to success, key transformation pursuits, and methods for investing in growth.
When attendees were asked which transformation initiatives their companies would pursue this year, 47% of respondents said finance transformation, while another 43% said digital transformation.
So given the sheer number of ways in which financial and digital transformation can occur, and often simultaneously, where are companies focusing first? Financial operations seem primed to benefit from a variety of transformation initiatives, particularly process automation technology. Business leaders seem to support this claim: in a survey conducted by Vaco and MorganFranklin in October 2021, 33% of respondents said general ledger and financial reporting were the business areas most likely to see a significant benefit from increased automation.
Why is the finance function a key area for transformation in 2022?
The role of the finance department—and CFOs in particular—is rapidly evolving. Finance teams are no longer focused primarily on tracking, organizing, and reporting on past financial data; they now function as strategic business partners who drive value through collecting and interpreting sophisticated data and providing future-focused insights.
Despite these evolving roles, many companies’ finance departments still rely on manual processes and outdated systems to complete non-strategic tasks, collect crucial data, gather insights, and meet reporting requirements.
Improving processes and systems
In a business environment that requires agility in financial operations, maintaining manual, outdated systems and processes can have a major impact on the overall health of a business:
- Manual input (in spreadsheets, for instance) increases the risk of human error and the likelihood of producing inaccurate reports
- Manual processes are time-consuming and labor-intensive and can divert top performers’ attention away from strategic, high-level business issues
- Outdated financial systems often function in silos, preventing easy integration with other business functions
Automation is a key part of digital enablement across the finance and accounting functions. Automated processes free up key team members to focus on higher value work, while reducing the risk of errors and allowing organizations to respond with more agility in the face of organizational need. Automation also helps with process standardization and workflow optimization, further streamlining various finance functions.
By reducing errors, increasing productivity, and improving the quality of data and insights the finance team is able to produce, automation can create significant financial savings.
Types of automation
There are several types of automation that can transform the accounting and finance functions:
- Purpose-built Automation: Purpose-built automation is the use of software specifically built for a process or processes, area, or discipline. Such tools focus on automation in the areas of Financial Operations Management, Consolidations and Reporting, and many others. These tools are largely system agnostic and scalable, meaning they can be deployed and then relied upon over time as the business itself grows and changes.
- Machine learning: Machine learning is a form of artificial intelligence that uses training data and analytics to build mathematical models, enabling algorithms to automatically improve without instruction or programming. Machine learning is useful in a variety of finance functions, including flagging suspicious payments, detecting fraud, improving financial forecasting, and predicting supply and demand.
- Intelligent automation (IA): Often called intelligent process automation, IA is a robust automation solution that combines artificial intelligence (AI), machine learning, RPA, and other advanced technologies like optical character recognition and intelligent character recognition. Together, these technologies can create end-to-end business process automation (BPA). Additionally, IA has the power to improve its own performance and outcomes by predicting patterns and augmenting the decisions of humans.
Automation is far from the only technology implementation that can improve, streamline, and elevate various aspects of the finance function. Cloud computing, ERP upgrades, blockchain technology, and data visualization are additional tools that finance teams can utilize as they continue to improve and expand their role within the organization.
Impediments to transformation success
In another poll in the February webinar, attendees were asked to choose their organizations’ biggest impediments to success as they execute strategic business initiatives.
Of the more than 400 responses, a staggering 53% said their biggest impediment to success was a shortage of qualified resources.
The hiring market continues to challenge and inhibit businesses, not only in their transformation efforts but across business initiatives. The struggles aren’t exclusive to recruiting and hiring new talent—companies are also struggling to retain the members of their current teams.
The Great Resignation has continued into 2022, with a staggering 4.4 million Americans quitting their jobs in February alone. It isn’t just the record-breaking turnover that has thrown a wrench in companies’ growth plans—the demand for talent far exceeds the supply of active candidates. In fact, the number of job openings exceeded the number of available workers by over 5 million in February 2022.
In finance and accounting roles, the labor shortage is exacerbated by a number of factors:
- Declining numbers of qualified CPAs and fewer accounting graduates, leading to fewer early-career candidates
- Emerging technology in accounting and finance has led to a rapidly expanding skills gap
- Shifting expectations and desires among candidates (e.g., remote flexibility, better benefits, and more diverse corporate culture) are making it hard for hiring companies to attract the talent they want
As 2022 continues, many transformation initiatives will hinge on companies’ ability to fill crucial roles on their teams and retain the talent they already have. This may mean shifting direct hire roles to a contract basis, providing permanent remote flexibility to employees, or adjusting employee benefits and perks to meet new expectations.
Hear from industry veterans on the state of finance transformation
Get the full picture on finance transformation by joining industry experts from Vaco and MorganFranklin. In the one-hour webinar, our panelists take a deep dive on finance transformation trends, the evolving role of the CFO, and top opportunities for process automation.
Register today to view the full presentation: