Underpinning the success of the modern finance function's transition from a predominantly governance-based role to a broader guidance-oriented role is a new understanding of what it means to serve 'internal' customers. Fascinatingly, in a new era of customer-centricity, the finance function's relationship with internal customers is being influenced by exactly the same forces impinging on the organization's external customers. Ultimately, if the modern finance function is to succeed in its mission of being a full business partner, it need look no further than the way that organizations are redefining their relationship with external customers for inspiration.
Although once the primary consideration in attracting and retaining external customers, process excellence (good service, on-time delivery etc.) on its own can no longer be relied upon to give competitive advantage. In recent years the business mantra of process excellence has given way to a more intimate relationship with customers in which collaboration, crowd sourcing, communication, and social technologies have come to the fore. And it is the very same considerations which are influencing the strength of relationships on the inside as well, that is, between the finance function and its customers.
Historically businesses have been organized along functional lines—skill groups such as accountants (finance) or engineers (production)—but this does not reflect the way that work is performed, or the way that costs are incurred. Social tools such as workflow and unified communications embedded in modern applications allow businesses to transcend functional boundaries, improving productivity as well as the prospects for knowledge sharing and problem solving. Businesses are beginning to leverage these collaborative technologies to better service customers in, for example, the 'quote to cash cycle' by answering questions, resolving inventory issues, and invoice disputes. But finance functions can use the same technologies to strengthen their relationships with internal customers to more efficiently support collaborative processes such as integrated business planning and financial reporting.
But these new relationships are not merely characterized by transactions. Increasingly, online consumers want a social relationship with the brands they are interested in, not only to learn more about a company's products and services, but also to voice their opinions and experiences—good and bad. So are there lessons here for the modern finance function in the way that it reaches out to other functions as business catalyst and influencer?
One area of common interest is that stakeholder expectations have been rising both within the organization and beyond its boundary walls. The finance function's external 'customers' (regulators, investors, special interest groups) have been clamoring for accelerated reporting combined with more detailed and frequent disclosures. Social tools such as Facebook and Twitter have enabled the finance function to engage with its stakeholders in more lively and engaging ways.
Technology enablement has also played an important role in satisfying the expectations of internal customers. Cloud technology, intuitive dashboards, and mobile computing are encouraging an enhanced customer experience in which business functions can consume information on a self-service basis on whatever device they prefer as soon as it becomes available.
The phenomenon of crowdsourcing—a technique that has been used mainly with external customers—is also benefiting the finance function's internal customers. On the outside, crowdsourcing has sometimes produced spectacular suggestions for product development, but it can also be deployed within organizations. Strategy development, enhancing business performance, setting accounting policies, process improvement, and delivery of value to internal customers in the organization are all areas that provide fertile territory for investigation. The ability to draw on the skills of the whole organization is a very worthy prize. Imagine, for example, crowdsourcing ideas for the acceleration of the financial reporting process, improving margins in underperforming business units, standardizing processes, reducing inventory, or managing risk. As HP CEO Lew Platt once put it, "If only HP knew what HP knows, we'd be three times more productive."
Big data is another area where ideas around internal and external customers are coalescing. The ability to collect, sift, and analyze vast volumes of variable data is proving crucial to understanding customer behavior as well as informing entirely new possibilities for service delivery. Insights garnered from big data initiatives allow microsegmentation of markets and precision marketing of more profitable services. By drawing on finance's deep analytical skills, the same big data initiatives can help CFOs point out new insights, guide the organization to new opportunities, and plan for profit.
In the same way that the best marketers try to anticipate and satisfy emerging customer needs, the modern finance function can act as a business catalyst, anticipating the needs of internal customers and keeping the organization on the leading edge of developments.
But there is still much to do. McKinsey Global Institute says in its "Ten IT-Enabled Business Trends for the Decade Ahead" [May 2013] that even now the potential for value creation from the use of social technology remains largely untapped. A McKinsey global survey of more than 3,500 executives across industries in 2012 found that while more than 80 percent of respondents use social technologies, only 10 percent are truly networked and derive substantial value across all stakeholder groups. The ability to leverage big data is similarly disappointing, held back by a shortage of skills. McKinsey estimates that 1.5 million more data-savvy managers will be needed to take full advantage of big data in the United States alone.
So the modern finance function faces daunting challenges as it seeks to play a more influential role as business strategist and change agent. But as it rebalances its relationship with its internal customers, perhaps it can look to the way that technology is enabling the redefinition of external customer relationships as a working model.