We live in an age of uncertainty. This decade has already witnessed a series of seismic events that have shaken our assumptions and called into question established truths, while also turbocharging pre-existing trends and changes.
“The new normal” became a particularly popular idiom as the world emerged from the peak of the pandemic. It is noticeable how little one hears it now – not because we have settled into a new state of being, but because so much change is still under way.
Finance teams are under particular pressure, having to account for, measure and negate an ever-shifting risk landscape, while at the same time helping to deliver the scale of transformation so many businesses and industries are coming to require.
“From growing energy and environmental demands to staffing and supply chain disruption to significant inflationary pressures, there are so many macro challenges and changes in play,” agrees AccountsIQ COO Darren Cran. “All this uncertainty means risk is also being largely repriced, which is affecting everybody. Medium-size businesses, in particular, are really having to consider how they keep costs under control in the immediate term, while at the same time adapting to reflect and rise to longer-term shifts.”
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Cran points to former Bank of England governor Mark Carney’s observation during his 2020 Reith Lectures that those who failed to establish a sustainable business model would be out of business within the decade. “I don’t know if that’s precisely true, but we certainly see consumers and funders of businesses increasingly cognisant of the sustainability of a business by its design and across its value chain,” he says.
“That comes alongside a real restructuring of supply chains and questions being raised around their security and long-term sustainability. Look at Taiwan Semiconductor Manufacturing Company setting up in Arizona, or Apple considering its onshoring options. A lot of this will require significant investment for companies of all sizes, but it also presents significant opportunities. Businesses need to be able to look at exactly what they’re doing, why they’re doing it, and whether it needs to change. That process begins with the finance function.”
Finance control and integration
But what does this all demand of today’s finance leader? In short, visibility, accountability and collaboration.
It starts with controlling costs and prioritising spend. Cran and his team identified six steps CFOs should be taking to meet this challenge. However, if executed successfully, they address much more than today’s bottom line and transcend mere penny-pinching. Indeed, the overarching message is that finance must get the tools and talents in place to create a joined-up, real-time view of where the enterprise sits, what it is doing well, and where it needs to go across the medium and longer term.
Finance teams, Cran explains, must establish spending visibility; identify strategic and non-strategic spending; develop a granular and trackable view of cost drivers; then use that information to reduce consumption and identify what work can be eliminated or automated. Indeed, greater use of automation and AI, rather than downsizing the finance function, has the potential to position it as a key ally in efforts to drive synergies and transformation across one’s business.
“You need to be able to really drill down into the business’s overall strategy, where you’re trying to get to, and whether spend is in line with that strategy,” Cran says. “Things that seem important often turn out not to be strategically relevant – they’re just the way things have always been done. With so much change happening, and strategies and models shifting, you need to stay on top of whether the focus is still going to the right areas.”
While eliminating waste is a big part of this process, so too is redirecting funds and identifying priority areas for investment. In order to measure, report and direct during a time of such uncertainty, ensuring you’re in a position to harness automation and AI is invaluable. “It’s about having the tools in place that can really delve into the details, providing a view across business units, identifying inefficiencies, gaps and opportunities,” says Cran. “Automating a lot of those processes, getting more fluent with the data, breeds greater confidence and frees finance leaders to bring so much added value.”
Leaders: an agent for change
That value involves finance being seen as a partner and ally by leaders across the business. Cran acknowledges that the function (and its leadership) is often viewed through the prism of opposition, questioning spend, and slowing change. A data-driven culture built around greater use of automation and analytics, he argues, can change that perception quickly.
“When finance teams are preoccupied with checks, balances, compliance and auditing, querying and questioning whether things are right, it can harm the relationship with various parts of the business,” the COO acknowledges. “Having better-integrated systems, where much of this work is performed automatically, removes that tension. It empowers finance to move into more of a partnering relationship where they’re seen as much more as problem solvers, able to help interpret the numbers and craft them into a powerful story.”
By offering a scalable finance platform that allows for significant integration and automation, AccountsIQ believes it is in a strong position to help finance leaders make that leap. However, Cran cautions that technology is only one aspect of this transition; culture must also evolve in lockstep with the new possibilities it unlocks.
“The tech makes migration and integration as straightforward as possible, that’s not where the challenge lies,” he explains. “Businesses are investing in an industrial-size database architecture that they know they can build on for decades. But with those capabilities, what you need to do is build a really good data-first mindset, and that involves good data people really thinking about how this information should be structured and shared across the business.
“You want finance leaders that can still rely on their intuition and experience, but also using data to support their decision-making. Finance plays a key role in making that happen. The best decisions are made when people know the right questions to ask of the data and how best to extract the answers.”
This will only become truer as business models continue to adapt in order to reflect fast-shifting consumer demands and ongoing challenges to established working structures. Rather than fear such transformation, businesses of all sizes must learn to embrace it, viewing today’s challenges through the lens of opportunity.
For inspiration, Cran cites Jared Diamond’s Collapse: How Societies Decide to Fail or Succeed, in which Diamond observes that civilisations that survive great upheaval typically display a commitment to long-term planning and a “willingness to reconsider core values”.
“You see these societies make seismic changes to their approaches and emerging far stronger and more resilient,” Cran explains. “That’s the opportunity faced now, when, in many cases, business as usual is no longer an option. Businesses that have got a good change culture in place, and an appetite to question both themselves and the status quo, will emerge in a far stronger position.
“Finance leaders must help drive and empower that culture.”