Today’s blog is a guest post from Brian Sommer, Founder of TechVentive, and is the second part in our series in our initiative at taking a deeper look at today’s tech-savvy CFO.

The modern Finance/Accounting organization is changing as the toolsets these professionals use continue to change. The question is what should a modern Accounting group be outfitted with? What are the tools they need to really help the corporation today?

Not all Finance groups are the same. Some are trapped with poorly integrated, old or redundant solutions. Maybe these groups got this way because they’ve outgrown their starter software. Or, maybe their dysfunctionality is due to a big merger they’re still trying to integrate. Or maybe they’re starved for re-investment or leadership. Either way, these Finance groups are often troubled and the proof is in the large amounts of overtime they work and the lengthy time it takes them to close their books.

Some Finance groups are functioning but not every aspect of their operation is a top-quartile performer. Yes, they close the books and pay the bills but they aren’t setting any records though. Usually, these firms have a single set of (older) software but there really hasn’t been much innovation in their processes for the better part of a decade.

There are other kinds of Finance groups, too. Some have outstanding processes. Many of these perform at top quartile or best in class levels. These organizations have relentlessly focused on eliminating as many non-value-added or no-value-added activities from their processes.

As Finance organizations move up this hierarchy, their ranks thin. It’s the exceptional organizational that’s helping the leadership of their firm win competitively and decisively in the market. That’s not bookkeeping—that’s strategic Finance.

So, what are the tools needed for a modern Finance organization? As it turns out, one can predict what tools will be used based on the level that Finance aspires to hit.

If a Finance organization wants to stay at a high state of dysfunction, then sticking with too many spreadsheets and multiple, out-of-date systems are the way to go.

But, as Finance groups aspire for more, their toolset really begins to change. To be functionally excellent today, a Finance group would need a multi-tenant cloud financial accounting solution that has minimal integrations and certainly none that require exports/imports from spreadsheets. This Finance organization has virtually eliminated the use and storage of documents, too.

The next phase of development involves the creation of top-performing processes. The new Finance organization is using workflow and collaboration tools complete with great exception/approval processes in place. Machine learning technology is analyzing invoices to pre-process electronic documents and to detect potentially fraudulent transactions. In this sphere, Finance personnel are massively involved in exception activities and, as a consequence, do little transaction posting.

Beyond this, Finance groups are utilizing Big Data, dark data (i.e., large internal datasets (e.g., email content) that are underutilized), and, external datasets to understand their competitors, market shifts, fraud occurrences, and much more. These groups help validate or enhance budgets/plans/forecasts with all kinds of Big Data inputs.

Lessons Learned

Experience is a great teacher.
Like with Maslow’s hierarchy of needs, Finance organizations generally can traverse one level of improvement at a time. However, with great planning and leadership, larger step changes are possible.

What makes bigger changes possible is the ability of Finance leadership to see the entire journey before them, choose new technology wisely and take the time to configure/implement new technologies the right way, the first time. That’s a tall order but it is doable.

Step changes like these also require the leadership to craft a compelling vision for the Finance function of the future and relentlessly communicate it to the broader group. Unfortunately, there often are a few team members that don’t want to change or actively resist the change. These personnel issues can be some of the trickiest aspects of material change and require a delicate but firm hand.

Failure to change (or unwillingness to change) may not be a competitive or smart option. The amount of change underway in Finance technology has been quite dramatic. An unwillingness to evolve can have the same consequences as a failure to evolve in nature: extinction. If your Finance organization is going to evolve, do it wisely.