The High-Performance Finance Function in practice

The essential role of IT and automation

If you ask a CFO about his ambitions for the finance department, the inclusion of a role as a business partner is bound to top his priority list. But where does finance stand on that front? What role do IT and automation play and what obstacles cross our path? Peter De Roeck, founder and owner of Financial Media, gave the necessary explanation during an Isabel webinar.

Peter De Roeck is the co-author (with André de Waal and Eelco Bilstra) of a book entitled ‘De High-Performance Finance Functie in de praktijk’ [The High-Performance Finance Function in practice]. This publication is based on extensive research of the literature on the topic and a number of case studies. The authors consider the role of the finance department to be crucial if a company is to grow into an excelling organization. In their view, it is vital for the financial function to run and operate optimally so that it can provide the operational departments with the right strategic and operational information tools.

Workload

An initial observation is that the financial function has to be at the top of its game nowadays. The workload reaches various peaks, for instance during budget periods, as a result of a takeover or when implementing a new ERP system. This leaves little margin for improved processes. Time and space are consequently needed to attain the High-Performance Finance Function (HPFF), and more efficient work methods and more intensive use of IT contribute to that end.

Direct and indirect factors

A commitment to effectiveness and efficiency through process improvement, greater focus on IT and the inclusion of a more strategic role have a direct impact on the performance of the finance department. Indirect, but by no means less crucially, personal development and the way in which finance is organized also play an important role. Such indirect factors have a leverage effect. The training of an employee does not affect the performance of a company directly, but will ideally lead to a more efficient way of working in the longer term.

There is still room for improvement for the use of IT and increasing efficiency in finance. Whoever sets his sights on this will pave the way to a High-Performance Finance Function and an organization that excels.

IT focus

On the IT front, the authors pinpoint six crucial characteristics which they categorize into two groups. The first group points to the finance function’s capacity to opt fully for IT and to make optimal use thereof. The finance department should be able to implement the latest IT applications, be preferably familiar with the latest tools, and have the knowledge to use them to its advantage. The second group entails deploying automation and avoiding unnecessary manual interventions. Needless to say, the necessary budgets are also required together with the conviction of the added value of automation and digitization in an organization.
At the same time, various obstacles stand in the way of an exhaustive IT focus. More specifically, ten stumbling blocks come to the fore:

1. Inefficiency and non-integrated processes in the organization
2. Lack of efficient data management and data quality
3. Insufficient leadership and the will to change on the part of the CFO
4. Insufficient change and improvement culture in the financial function
5. Inadequate IT systems in the organization
6. Lack of buy-in line management for the development of the HPFF
7. Insufficient insight into the business on the part of financial staff
8. Insufficient financial staff with the right knowledge and skills
9. Insufficient or unclear business goals and priorities in the organization
10. Insufficient use of analyses and insights provided by the financial function to the board of directors and the line management

Three of the identified obstacles have a direct IT dimension: lack of efficient data management and data quality, inadequate IT systems in the organization and insufficient financial staff with the right knowledge and skills. Data management appears to be a sore point, indicative of an IT infrastructure that must still be optimized. Software tools often do not communicate sufficiently with each other and still require manual intervention. A lack of IT knowledge in turn leads to missed opportunities.

Progress margin

Most companies today are at a fairly similar level when it comes to the High-Performance Finance Function. The best scores are in the more strategic interpretation of finance. The CFO’s team spares no effort to provide correct analyses for the business. On the other hand, the efficiency with which this is done and the use of IT score significantly lower. The levers ‘personal development’ and ‘the way finance organises itself’ can also stand improvement. This can be gauged from a situation everyone can recognize, ie. where the controller focuses on the validation of figures, he should be focusing mainly on analysis.
In other words: there is still room for improvement for the use of IT and increasing efficiency in finance. Whoever sets his sights on this will pave the way to a High-Performance Finance Function and an organization that excels.