Is this the year the straw breaks the camel’s back?
Each year, it seems as if finance is asked to do more with less. This year will be no different, according to the 2020 Finance Key Issues research from The Hackett Group. Most finance executives expect to see a 3.4% decline, on average, in finance’s operating budget. At the same, other parts of the organization continue to expect finance to provide more value to them.
The five biggest enterprise “asks” of finance in 2020, all of which were ranked as highly important by a majority of executives, were:
- Support enterprise cost-efficiency improvement
- Support enterprise growth strategies
- Enable/augment enterprise analytics capability
- Enable enterprise digital transformation
- Support enterprise customer-centricity
“Management expectations in the coming year may outstrip finance’s resources,” said The Hackett Group.
The high expectations are helping to drive an increase of 5% to 10% in the share of the finance operating budget dedicated to technology. The uptick is the first in 10 years, said The Hackett Group. “Our research shows that executives are setting aggressive year-over-year targets for digital technologies’ adoption.”
Study respondents projected a rise of 26% in the adoption of data visualization tools, 24% in RPA implementations, 20% in migration to next-gen cloud-based core finance applications, and an 18% increase in the adoption of advanced analytics solutions.
“Our data shows strong growth in the adoption of cloud-based core finance applications,” said Nilly Essaides, senior research director, finance & EPM, The Hackett Group. “And the encouraging news is that more than 70% of the finance functions that have adopted cloud-based solutions have been able to realize or exceed their business [objectives].”
The realization of business objectives, however, was slightly lower in robotic process automation (68%) and business process management tools (60%). Adoption of RPA is still mainly at a small scale or pilot stage, 69% of executives indicated, which could partly account for the lower percentage of companies that have realized their business objectives thus far.
In the area of analytics, while companies have plowed ahead with large-scale data visualization deployments, only 12% of organizations are deploying advanced analytics on a large scale. And among those that have deployed it, almost half (47%) said the deployment had fallen short of expectations.
According to Essaides, “Without advanced analytics, management cannot make fully informed decisions or make them quickly. So, there’s a tremendous need for finance to improve its data and analytics competencies, adopt new tools, and enhance the business value it provides directly.”
So, what are the surveyed organizations doing to improve finance’s analytics capabilities? The top five strategies executives said they were taking were:
- Developing analytics’ competencies internally
- Providing self-service analytics tools
- Expanding the use of data visualization solutions
- Increasing internal and external analytics training resources
- Enhancing data quality and accessiblity
The most concerning aspect of that list was the “low prioritization finance has placed on human capital, including upskilling and reskilling of staff,” Essaides said. “It isn’t even on the top-10 list of overall finance issues for 2020. This suggests that not only does finance need to address the skills needed for the future, but it must also clearly design how services will be executed along with defining both new and old roles within finance to deliver on business expectations.”
The Hackett Group’s study, “Balancing Cost Reduction with Adding Value,” is based on results gathered from nearly 200 executives in finance, HR, IT, and procurement at a global set of midsize and large enterprises.