What does the agile finance function look like?


By Peter Simons, FCMA, CGMA

An agile organisation is fit, alert, flexible, and nimble. It is efficient, profitable, liquid, and resilient. It is aware of how the business generates value, alert to threats in the marketplace, and looking out for opportunities. It is able to develop strategies and implement them promptly. It is nimble in performance management, able to build and test ideas swiftly, and scale up quickly if they work or try something else if they fail, constantly re-allocating resources to where returns or prospects are best.

How finance functions can best support this organisational agility is explored in a new Oracle-sponsored report, Agile Finance Revealed: The New Operating Model for Modern Finance.

To enable the wider organisation to be agile, finance has to be smoothly run and have the following characteristics: 

  • Has efficient accounting operations that are scalable.
  • Is able to inform strategy because it understands how the business model works and what the drivers of value are, including the intangibles that are important to the model’s success.
  • Leads on horizon scanning, making sure decision-makers are alert to external developments, including new technologies or new business models, and have the information they need to develop a strategic response. The primary reason businesses fail is that they have neglected to address an external risk that they had long known about, but that had always seemed unlikely to make much of a difference over their planning horizon of 18 months or so.
  • Develops performance metrics and milestones to measure and manage progress to enable the business to implement new strategies and get products and services to market quickly.
  • Conducts dimensional analysis (by customer segment, product, channel, sales team, or whichever dimensions are relevant to the business) to provide transparency about what’s working in the business and what’s not. It identifies opportunities to optimise resource allocation, to manage risk proactively, and to innovate.

Finance transformation

A new operating model for modern finance is emerging. It should enable finance to better support business agility. The key features of this new operating model are:

  • Pioneering the use of modern technologies such as cloud enterprise resource planning (ERP), robotic process automation, and machine learning to ensure the efficiency and scalability of accounting operations.
  • Providing management information on a self-service basis using business intelligence systems, including dashboards with drill-through interrogation. This enables the financial planning and analysis role to extend its remit to consider a wider range of data, including new forms of big data, and provide the analysis and insight needed to improve the business’ performance.
  • Centralising experts on multidisciplinary teams to achieve economies of scale and build subject-matter expertise.
  • The recognition of management accounting as an important discipline that is engaged to improve decision-making and performance management.

What stage are businesses at in this transformation?

For many businesses, the transformation of finance is well underway, but few have achieved full implementation, according to a survey of 483 senior finance professionals in the US and Canada who represent organisations with a revenue of over $200 million. The survey was commissioned for the Agile Finance Revealed report.


Measuring the progress of transformation

Finance transformation: The extent of implementation 

What does the agile finance function look like?

It is particularly interesting to note that about 95% of organisations represented in the survey have implemented integrated business services to some extent, 90% have adopted cloud technology, 84% artificial intelligence, and 81% machine learning.

When asked what the obstacles were to such a transformation, 33% said the organisational structure is too complex, and 26% said finance was unable to get the information it needs in the format required in a timely fashion. Outdated or overly complex systems proved a hurdle for 33%.

The biggest obstacles were related to skills, according to finance leaders interviewed for the survey, who were not necessarily qualified accountants.  

  • 42% need more analytical skills in order to deliver forward-looking analysis.
  • 36% need more multidisciplinary skills.
  • 23% said finance is not recognised as having the business skills needed.

Agile finance leaders

The research looked at the finance teams which had made most progress towards an agile finance model and identified the common characteristics. The research found that these agile finance leaders were much more advanced in centralising and migrating processes to shared service centres, and were much more likely to be using cloud-based ERP and standardised reporting systems. They were also well ahead of the rest in terms of informing strategy, supporting agile implementation, and informing agile performance management.

There was further evidence that the wider business was, in practice, more agile than others. Over the past three years, 56% of agile finance leaders had seen an opportunity and launched a new product (compared with 43% of others), and 51% entered a new market (compared with 35%). Agile finance leaders were also more likely to have identified change and taken action, launched a new digital initiative, transformed their business model, and acquired another business.

The survey found that among those organisations that had made most progress towards the agile finance model, 95% had experienced positive growth in their revenue performance over the past three years, compared to 70% of other respondents.

Broader skillset

To serve an agile business, an agile finance function needs to develop and offer new skills. In addition to the traditional accountant’s skillset, critical thinking, relationship building, and understanding of the business model, advanced analytical skills are required.

Data management, data analytics, and dimensional analysis are increasingly important. Commercial acumen and the curiosity to ask the right questions of colleagues around the business, the communication skills to deliver insight in a compelling way, and the leadership and influencing skills to ensure the insights are acted on, are also essential for the future finance professional.

Along with the automation of knowledge work, the following will change the accountant’s role in the near future:

  • Mobile information: Partners around the business expect to be able to access the information they need from finance instantly, wherever they are and on whatever device suits.
  • Internet of things: This will change manufacturing business models because when the products are being used by the customer, they can supply information about that customer’s usage and needs. Heavy plant manufacturers, for example, are no longer limited to an income stream based on big-ticket sales. They can receive data that enables them to provide services – such as servicing the machines or providing an ongoing consulting service on how to make better use of them. Working with a leasing company to sell machine hours would enable them to serve a different market.
  • Advanced robotics: Robotic process automation is already being used in finance to automate routine processes such as taking data from two separate systems and combining them in a third system.

These developments will also drive change in business models in the coming years, providing even more reason for finance professionals to be agile.

Peter Simons, FCMA, CGMA (Peter.Simons@aicpa-cima.com), is an associate technical director at the Chartered Institute of Management Accountants, where he oversees research into the future of the finance function. He is the co-author of Agile Finance Revealed: The New Operating Model for Modern Finance, together with Lori Sexton, CPA, CGMA.