Do you remember the 1980s” Space Invaders ruled the video games world, “The Computer” was named Time Magazine’s Man of the Year, 1982, Microsoft Windows was first released and the Berlin Wall crumbled. At this point you?ll either be reminiscing, or you’re of an age where you can’t imagine life without Netflix but what I want to point out is that financial transformation hasn’t kept pace with?other sectors.
We can all agree the world has changed in the last 30 years and that a big driver of that change has been technology. Businesses have had to deal with that change, and many successfully embraced it?to create new industries and billions in value. Yet others vanished. Nearly 50 per cent of the companies part of the Fortune 500 and FTSE 100 in 2000 no longer appear in the rankings. So, what happened
Some were the result of the global merger and acquisition spree that has taken place over the last 30 years and continues today. Others fell victim to the financial crisis and Great Recession. But many were overcome by the forces of digital disruption. In the face of technical evolution, inaction allowed startups and agile competitors to win with faster and more efficient ways of doing business.
With that in mind, it seems crazy that technology itself should be a barrier to change, but for many companies that is precisely what happened and still continues to happen. Companies struggle because much of the technology currently in place was not designed to adapt and excel in this era of digital disruption. It was created in the Culture Club era when business requirements (and, certain musical tastes) were not the same as today.
A good example of this is how financial organisations have approached technology over the last 30 years. As a self-confessed recovering accountant and auditor, I’ve been part of the sector’since the early ?80s. In my experience, technology originally designed to automate transactions and accounting is now preventing the financial transformation that would helpcompanies realise that?ultimate goal: To be a better business partner.
Consider that today’s financial function has three main areas of responsibility: Transaction processing and accounting, compliance and control, and business partnership. Finance leaders are frustrated because their teams spend too much time dealing with the first two, leaving little time to be the strategic partners their companies truly need. But what does this strategic partnership look like
It requires finance to deliver data that goes beyond the general ledger information that legacy systems were designed to record. With a wider set of stakeholders and a business landscape that is continually evolving, finance is being asked to provide the broader company with contextual information that can influence decision-making and, for the most part, they?re struggling in this mission. Some form of financial transformation needs to take place.
There needs to be faster access to relevant data, better reporting, and stronger built-in internal controls. And because older financial systems were not created with this vision in mind, businesses and legacy vendors have attempted to fill the void by bolting on missing capabilities. As a result, finance technology has become a complex mix of acquisitions, custom integrations and middleware.
The bolt-on approach may address specific functional gaps, but it can’t support the complete transformation that is?required. Systems resulting from this complex architecture cannot adapt and change. Scaling or changing these systems to meet the needs of a growing, changing business is slow, costly, and in some cases, virtually impossible. But as technology has created new opportunities, so too has it created opportunities to rethink how financial systems should be built and what they should offer.
The emergence of cloud computing, increased processing power, falling storage costs, the rise of mobile devices, and the advent of the consumer internet have led us to a new, more economical, powerful, and agile foundation for finance. Those willing to take advantage of these changes are fulfilling the long held, but seldom realised, vision of transforming finance into a powerful business partner.
In this new world, systems combine planning, transaction processing, governance, accounting, reporting, and analytics into a single, easy-to-manage system. Companies can quickly and efficiently bring together actionable information about people and money in a system that can evolve with them as business changes. Financial transformation by definition is not something you can bolt-on?” it requires a willingness to question long-held assumptions and envision where you want to go and a total technology rethink.
Mark Nittler is VP?of enterprise strategy at Workday, a leading provider of enterprise cloud applications for”financeAnd human resources