Posted: 17 Jul. 2024 11.5 min. read

Maximizing return on investment on ERP in Finance

Why CFOs must pursue digital transformation

Authored by Casey Caram, Philippe Podhorecki, Beth Kaplan, Jessica Bier and Gavin Kostoglian

Finance leaders—unlock return on your ERP investments

Disruption has been a constant in the working world for nearly a decade as the exponential pace of technology innovations (and societal change) has made transformation an always-on requirement—and a constant on the C-suite agenda. Finance is no exception. There is no shortage of forces changing the nature of the finance function—its work, its talent, and its value.

Chief financial officers (CFOs) looking to realize the most return on their investments can no longer expect a technology implementation to singularly deliver the results they seek—especially in a macroeconomic climate placing imperatives for technology investments (such as enterprise resource planning [ERP] and Generative Artificial Intelligence [GenAI]) and cost-efficiency in tension .

Just as critical to any finance technology business case is the distinctly human work that drives strategic insights for greater revenue, margin, and other levers important to the overall enterprise. Redesigning the work of F inance, a critical requirement for any transformation, involves restructuring and redefining the tasks, roles, and processes within the finance function. This not only enhances efficiency, but also guides the function into an era where it can deliver increased value at a reduced cost.

Work redesign: From process to outcomes

Redesigning the work of Finance is fundamentally about embracing how technology changes the function and the role of human workers in it. As finance leaders dial up the use of machines, machines increasingly take on the work of traditional processes. They also need to pivot their human workforce to new work and work outcomes to benefit Finance and the broader enterprise.

No longer is the finance function forced to organize and size around tactical, mandated processes (entering data into the system of record, manipulating 10 different Microsoft Excel workbooks to develop a monthly report, etc.). Instead, those tasks in Finance are tackled by more robust ERP and emerging GenAI technology. Finance can instead organize its people around the distinct value it wants to create. In doing so, a new range of choices become available to either bank the savings from fewer hands executing transactional processes or reinvest in these new outcomes or achieve both.

In practice: What happens when Finance moves to a real-time close?

Monthly close today: Consider the monthly close process. Today’s finance workforce is often organized around the multithreaded assembly line that produces the final report for the business at the end of the month. Analysts will spend their time manipulating workbooks, chasing down errors and discrepancies—sometimes debating the outputs between different business segments, eventually handing the business its financial results. For some organizations, that process takes a small army of multiple days—perhaps even weeks—to accomplish.

Monthly close tomorrow: The concept of a virtual or continuous close in Finance is not new; it was first proposed more than two decades ago. However, the technology and skill set required to implement such a process were not available then. Today, with the advent of modern ERP systems in Finance, we witness a significant reduction in manual labor and associated errors. Furthermore, GenAI is poised to streamline this process further by automating the first draft of the financial report.

Imagine a scenario where the initial draft of the monthly financial report, courtesy of GenAI, is ready in a finance analyst’s inbox by the final Friday of the accounting period. The analyst simply reviews it for discrepancies, consults with relevant experts to fine-tune the narrative and implications of the report, and then shares it with the business. What was once a major aspect of the analyst’s role is now a minor end-of-the-month activity, freeing them up to deliver new outcomes and value.

This shift enables finance professionals to focus on evaluating scenarios, assessing strategic investments, forecasting for the current or subsequent year, and identifying pricing and sales trends more frequently. This proactive approach to Finance, made possible by AI, marks a significant change in work design within the accounting function.

A recent Deloitte Controllership Perspectives Dbriefs webcast, “A new frontier: Exploring artificial intelligence in finance,” provides interesting insights in this context. In a poll regarding the adoption of a GenAI strategy in the finance and accounting functions, 16.3% of organizations confirmed having such a strategy, while 21.3% are in the process of building one within the next year.1 However, a substantial 31.8% have no plans to develop one, and 30.5% were unsure or found the question inapplicable.2

This data underscores the choices that CFOs and their leadership teams can now explore. With new digital technology and a focus on the transformative opportunities it brings to the workforce, CFOs can decide where to reinvest in their teams to create new value and where to improve efficiencies for the enterprise.

Why now?

With new technology, the workforce more than ever should be treated as a critical path and lever to expanded productivity. Without redesigning the work, they may continue executing processes or activities that aren’t on strategy for the value Finance wants to create. Finance leaders seeking pure-play efficiency may cut deeper than they should, given their strategic priorities. Redesigning work is a critical step to avoid deeper loss and inefficiency later.

Consider three additional reasons to redesign work now:

  1. More fully realize return on existing tech investments: Implementing a new ERP system is costly and frequently built on a board-approved business case. By redesigning work and delivering outcomes instead of outputs, Finance can more completely realize value from the enterprise’s investment in the function.

    Finance professionals can be reorganized and reskilled to deliver new outcomes focused on driving margin improvements for individual businesses, uncovering untapped revenue by more comprehensively analyzing trends in different segments and markets (soon augmented with AI that assists in processing more data than the human brain ever could), and more. Those results only come from intentionally rethinking the finance strategy, work, and workforce—prioritizing where to invest and where to save.
  2. Make data-driven decisions about how to fill critical workforce gaps: When work is viewed from all sides and envisioned as outcomes, not just processes, important information can be gleaned about the workforce. Who does Finance have—and who does it need—especially as humans and machines are more connected than ever before? What are the missing skill sets? For example, if operational accounting moves from transaction-based processing to exception-based processing, does it require an increase in problem solving and business partnering capability? If so, how might talent need to be reskilled or upskilled to deliver that outcome? Redesigning work can give a clear view of these gaps—and provide insights on how to fill them sustainably.
  3. Access the right talent, at the right cost, in the right place: A holistic view of the outcomes driven by Finance—and the enterprise value they drive—creates a level of clarity in decision-making on the service delivery approach that will put the right mix of talent, cost, and location against each outcome. What work truly needs an employee focused on it, what can be done by a partner organization in a lower-cost market, and what outcomes are too cost prohibitive to pursue entirely? In short, work redesign helps CFOs clearly look at the value they are creating, the costs associated with it, and the overall return on investment they drive for the business. That possibility is exciting and new but requires a different way of thinking.

How exactly can work be rearchitected?

  1. Start at the top—establish Finance’s “future of work” ambition and vision possibilities: What is the function’s highest ambition for its role in the enterprise and the value it will create? What is the right balance of cost efficiency and value creation that the function will pursue?
  2. Build the future—progress through designing the work and the organization needed to deliver: With the North Star set, finance leaders should progress through the unique value of each area in the function, the outcomes they own, the skills needed to achieve them, and the people who can do it.
  3. Set the roadmap—determine when specific levers will be pulled and their dependencies: With clarity on what value Finance will drive and the workforce needed to deliver, a roadmap is the next step to guide the function into the future. With consideration for the dependencies on technology, skills, process optimization, and other enterprise constraints, this guidepost makes transformation more bite-sized, integrated, and effective.
  4. Go together—bring finance leadership and the organization—through the journey: Throughout the transformation, leadership alignment and thoughtful change management will be necessities. Trust and partnership are fundamental in leading an organization into an uncertain future. With disruption as an always-on element of work, engagement between a CFO, the leadership team, and the broader workforce can be the differentiator between those who find success and those who fail to realize their digital transformation ambition.

Don’t leave value on the table from new technology. Set the function up to make the right choices to balance efficiency and impact with thoughtful work redesign—and realize a complete vision for the future.

Authors:

Casey Caram

Philippe Podhorecki

Beth Kaplan

Jessica Bier

Gavin Kostoglian

Contributor

Alex Belisle

Endnotes:

1 Katie Glynn et al., “A new frontier: Exploring artificial intelligence in finance,” Deloitte Controllership Prospectives Dbriefs webcast, October, 26, 2023.
2 Ibid.

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