We have entered the Fourth Industrial Revolution, or “Industry 4.0”, marked by a shift towards digitization and the growing importance of data in day to day activities. The scope and impact of this shift remains to be seen, and businesses must be ready to adapt to greater levels of uncertainty than ever.
In the words of Klaus Schwab , founder of the World Economic Forum, “The acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate and that these drivers constitute a source of constant surprise, even for the best connected and most well informed.”
The unique overview CFOs have across the company’s operations makes them ideally placed to ensure the business continue uncovering new insights and opportunities.
In this age of data as capital, the finance department is moving out from under the cover of the back office and into the heart of the business. The unique overview CFOs have across the company’s operations makes them ideally placed to ensure the business continue uncovering new insights and opportunities from the data it collects. CFOs and their teams also empower line-of-business owners by giving them access to relevant information.
Never has there been as much pressure on the finance department to boost productivity and drive growth, all while keeping costs in check. However, increased competition, the demand for more transparency among stakeholders, and a need to constantly work faster and smarter are driving a major rethink of the way finance works as part of the organization’s wider digital transformation.
Oracle’s recent survey, Modern Finance: Driving Transformation from Within, revealed that developing a more complete view of financial performance is a top priority of finance leaders. Roughly two in five say gaining a better view of financial performance is a strategic priority over the next 12 months. Keeping costs in check also ranks high, with 44 percent of respondents saying they will prioritize the control of finance’s operational costs in the next year.
We have now hit a customization ceiling. Heavily patched finance systems have reached such a state of intricacy that they simply aren’t flexible enough to manage the needs of a modern business.
A more flexible and adaptable digital infrastructure is crucial to better managing the risks and challenges of today’s market. Agility is the hallmark of virtually every successful modern business, and companies big and small must adapt to this reality. However, years of customization have left many organizations – and large businesses in particular – with inflexible and convoluted legacy systems nearing the limits of what they can handle.
The common path for many companies over the years has been to steadily build up their applications with new features on an ad hoc basis. With each year these additions have grown in number and complexity, on top of which they’ve been further muddled by one-off patches and workarounds built to address spontaneous needs. Oracle’s research found 61% percent of finance leaders admit their current systems fit this description.
We have now hit a customization ceiling. Heavily patched finance systems have reached such a state of intricacy that they simply aren’t flexible enough to manage the needs of a modern business. More than half (54%) of finance leaders say their current systems are unlikely to cope effectively with the near future demands of their organization. Just as worryingly, when asked how long it would take before the cost of supporting their existing customized systems would exceed that of moving to a standardized approach, over 40 percent said the time will come within a year. Another third expect the balance to tip within the next two years.
Clearly, the sticking plaster approach to managing financial IT is no longer tenable. Rather than adding complexity to already-overloaded systems, companies are beginning to see the advantage of running their finance applications in the cloud and simply configuring these to suit their needs. These configurable systems are more flexible and easier to update, making them better suited to the needs and requirements of modern finance departments.
The finance department should not be the ball & chain holding the company back from progress. It should be the engine driving it forward.
Respondents to Oracle’s survey agree. Seventy (70%) said moving to a more standardized system will place less pressure on the finance function. On average, they believe they could increase their financial efficiency by 22% by upgrading their systems – based on their knowledge of the technologies currently available.
While there is widespread acceptance among finance professionals that configurable systems are the way forward, however, the majority are still resistant to change. Sixty-nine (69%) percent believe moving to standardized, cloud-based financial applications represents a risk to their business.
For the many organizations rethinking their strategies to stay ahead of growing competition, being able to speed up innovation and adapt quickly to change are at the top of the corporate agenda. The finance department should not be the ball & chain holding the company back from progress. It should be the engine driving it forward.
The Fourth Industrial Revolution will favor those businesses that are able to constantly fine-tune their way of working so they can quickly pursue new opportunities. The demands of the digital age will reveal just how much value finance professionals can add in this regard if the technologies they work with are up to the task.
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