In the world of finance, adaptability isn't just an industry buzzword; it's a non-negotiable survival skill. Now more than ever, CFOs find themselves under constant pressure to spearhead transformative initiatives within their organizations. This goes beyond the traditional notions of cost control and technological advancements, demanding a complete assessment of finance operations to make sure they are equipped to remain relevant in an environment where the common denominator is change, and move with the times.

Yet, a fundamental truth: In order to successfully navigate transitions, companies must still prioritize core principles while embracing the latest innovation. Though technology, automation, and cybersecurity take center stage, organizations must stay grounded in who they are to know where they want to go. According to U.S. Bank, 56% of finance leaders say they struggle to balance cost-cutting and investment in future growth.

Here, we delve into the essential components of finance transformation, examining how forward-thinking organizations can leverage innovation to drive growth, manage risks, and seize new opportunities.

Understand your current state.

Amid the whirlwind of change, one principle remains steadfast: the imperative of understanding the current state of your business. While tools and methodologies may evolve, the fundamental importance of grasping the organization's present realities, strengths, vulnerabilities, opportunities, and threats remains unchanged.

As technology reshapes traditional finance practices and introduces new possibilities, the ability to assess the current state becomes even more critical. By harnessing data analytics, AI-driven insights, and automation tools, finance leaders can gain deeper visibility into their operations, identify optimization opportunities, and make informed strategic decisions. This timeless insight serves as the bedrock upon which successful finance transformation is built, enabling organizations to proactively navigate the complexities of change with confidence and flexibility.

Within the change management process itself, focusing on key metrics and outcomes during and after implementation is imperative. Real-time monitoring allows prompt identification of bottlenecks and deviations from expected results, enabling swift corrective action. Meticulously scrutinizing budgeted versus actual costs and post-change efficiencies provides valuable insights into initiatives' success and improvement areas.

Secure stakeholder buy-in.

Resistance to change is deeply ingrained in human nature, making stakeholder buy-in critical during organizational transitions. Those managing day-to-day operations must grasp the reasons behind upcoming changes and how they will benefit individuals and the organization. Thus, establishing a robust Change Management Protocol extends beyond technological adjustments to include thorough psychological preparation. Psychological readiness is essential; individuals must be mentally prepared to implement changes. Fostering a culture of open communication, empathy, and support enables organizations to facilitate smoother transitions and enhance success in optimization efforts.

Many times, change management focuses on how to use a new technology or process, yet changes in roles or communication cadence may be the more difficult ones to adopt. It is important to consider changes from the stakeholder and company culture perspectives to incorporate tools to help everyone adapt and adopt the new ways of doing business and understand how the changes improve the business. Be sure to celebrate learning and change adoption milestones during the transition phase.

Be data-driven and data-ready.

In this uncertain environment, it is imperative that CFOs have ready and efficient access to accurate, timely, meaningful data and insights. This means not only the standard financial reporting packages, but also impactful flash reports, dashboards, metrics, and information that informs decision-making and provides insights into the health of the business. As stated earlier, adaptability is key, and CFOs need to have a pulse on business operations in order to tell the story and guide colleagues, stakeholders, investors, bankers, the CEO, and the board through distractions, disruptions, transactions, transitions, and other important decisions.

Advanced capabilities, processes, technologies, and tools enable the adoption and use of predictive analytics that enhance the CFO's role in strategic decision-making, risk management, and driving business growth, ultimately positioning the finance department as a more proactive and strategic unit within the organization.

Encourage financial evolution and strategy.

The role of CFOs has evolved significantly, transitioning from traditional record-keeping and reporting of historical numbers to strategic leadership and real-time reporting. This shift has become particularly pronounced amid the changes and challenges resulting from COVID-19, where the demand for real-time accounting insights has become paramount. CFOs now prioritize outsourcing routine tasks to empower their teams to focus on strategic contributions to the finance function. Achieving real-time reporting requires operational adjustments, including data cleanup and governance, harmonizing the technology stack, reducing manual interfaces, and automating workflows and tasks. By emphasizing agility, efficiency, and data integrity, CFOs drive a fundamental change in finance operations. As a result, CFOs have transformed into strategic advisors, steering organizations through a landscape shaped by technology and innovation.

Walk before you run.

Amid trends toward increasingly advanced technologies, it's crucial to exercise caution. A company should not seek to jump to a Level 5 maturity state from a Level 1 state; side-stepping maturity levels can do more harm than good. Growth is a process and an evolution. It is not a question of how fast one can get there. Rather it should be more about building a strong foundation and determining the optimal way to get there, which may not necessarily be the fastest way.

Prioritize fixing broken systems and optimizing processes. Always start with process optimization or transformation; automating a bad process generates inaccurate data faster. Build a strong foundation with best-in-class processes and invest in rightsized or scalable technologies that enable your business objectives. Doing this helps solve for process efficiency, improved controls, and enhanced reporting.

Rather than chasing the newest trends, focus on building enduring foundations that will stand the test of time, driving sustained value and supporting evolving technologies. Then, once any underlying needs have been addressed, start delving into AI and automation. This approach fosters a culture of sustainable growth and cultivates a culture of continuous improvement.

How we can help.

Ultimately, transparency and candid dialogue about successes and failures will be key to sustained growth across the finance community. Through these shared experiences, all participants can glean invaluable lessons, fortifying resilience and propelling this critical function toward future success.

CohnReznick's CFO Advisory team coaches and advises CFOs on the steps to take to evolve their function to meet changing expectations and business needs. Contact our team to learn more and start planning your finance function of the future.

This article was contributed by Swami Venkat, Partner at CohnReznick and Kim Clark Pakstys, Managing Director at CohnReznick.

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