New Priorities for Finance Leaders in the Next Normal
Covid-19 crisis forces companies to adapt
The Covid-19 pandemic has forced companies to adopt new methods of doing business in order to survive. Employees have been required to work remotely and business plans have been completely altered. Once the situation has stabilised, even if workers return to their offices, the processes they employ are likely to have been permanently transformed.
Despite the need to retool that the virus has exposed, many business leaders still do not feel adequately prepared for the next normal that lies ahead. According to an industry preparedness survey carried out by Workday across IT and finance leaders in Hong Kong, Singapore, Australia and New Zealand in late 2020, nearly two thirds of Hong Kong respondents said that their businesses were "unprepared to manage significant disruption".
Those in real estate, construction and consumer services felt particularly vulnerable, due in part to a loss of work and new business, but also as a result of a lack of adequate infrastructure.
Speed is of the essence
Disruption is unavoidable, and as concerns over the environment intensify, further upheaval is a given. In order to be prepared for change companies must become more agile and — critically — speed up their processes.
In September 2020, McKinsey noted that its survey of business executives and directives found "speed" to be the most frequently cited reason for organisational change during the pandemic. In addition, around three quarters of respondents said that they anticipated change to their companies' use of technology and systems, as well as to their core processes and how the company was run as a result of the crisis.
Digital competence is key to staying ahead
Finance and IT leaders know what needs to be done. Among their new priorities, they list finance digital transformation, cash and liquidity management and remote delivery of finance services. These competencies enable the accurate and continuous scenario planning that is so critical to being prepared with a swift response when circumstances change.
Meanwhile, on a more immediate, day-to-day basis, an ability to assess shifts in the environment has become less a mere advantage and more a business imperative. Instant access to financial and human capital data, supplemented with operations data, gives companies an edge when it comes to realignment of resources.
Daniel Cham, General Manager of Workday Greater China, notes that MGM, a major casino operator in Macau, uses the Workday platform end to end from its finance to human resources functions, enabling it to optimise its workforce utilisation almost in real time. "This shows the power of gathering human resources data together with finance data," Cham says.
Too many systems still not up to the task
Many teams elsewhere continue to find it challenging even to deliver basic information in the midst of upheaval, with 59 per cent of Workday survey respondents saying that their company would take four days or more to complete scenario planning, while 62 per cent said that they are not confident in their own profit and loss forecasts for the next quarter.
More frequent budgeting might help them to keep on top of circumstances. Before Covid-19, just 57 per cent of respondents said their companies carried out budgeting more than once a year. In light of the pandemic, 82 per cent said they felt budgeting should be on a half yearly or more frequent cycle.
Hampering the delivery of more frequent and accurate reporting is remote working, which has presented some companies with major challenges in assembling the necessary data. Giving workers secure and instant access to the information they need anytime, anywhere and on any device overcomes this, says Lee Thong Tan, CFO Practice Lead for Workday Asia, with the goal being "frictionless finance" and a “decision-ready" organisation.
The benefits extend beyond simply allowing a finance department to deliver its numbers on time. Insights such as how a team may be performing financially can be "democratised", empowering team heads to make more rapid and informed decisions. Furthermore, when real time data is seamlessly available from a centralised and unified data core it enables closer collaboration between users in different departments, which in turn assists with the continuous scenario planning that allows companies to be better prepared.
Impediments to progress
Despite the evident and pressing need for investment in technology solutions, there are a number of obstructions. Some business leaders cite concerns of obsolescence given the constant evolution of technology, while others say that they cannot find the right fit for their business or that the costs are prohibitive.
The risk for such companies is that they remain reliant on static, bespoke systems. If these have been in use for years, a company's processes may also have become stagnant, leaving them far behind current best practices — and, as shown by the pandemic, in a crisis it is crucial to be up to date.
The good news is that solutions are not only available to newer companies without legacy systems — any company with the right attitude can adapt. What's more, even the pandemic proved no hindrance to those determined to change.
In fact, more than half of Hong Kong respondents to Workday's survey said that they had accelerated their company's adoption of new technologies during Covid-19, while Cham notes that even in the midst of lockdowns, Workday succeeded in managing virtual rollouts of entire systems across different locations.
Finance leaders are central to success
Finance leaders have a central role to play in a company's digital transformation. These days, Tan points out, such key personnel must have more to them than the technical skills that qualify them to steward a company's finances. They must also be thinking continuously about how they can add value overall.
"Agility is not just about technology,” says Tan. “Finance leaders need to have the mindset that they really want to transform the organization — not just the systems — to allow them to adapt to changing times".
Business leaders themselves know that the role increasingly calls for "soft" skills: for the CFO of the future more than half of the IT and finance professionals surveyed ranked "agility" — flexibility and responsiveness to change — ahead of all other attributes, including "operational mindset" and "strategic thinking". This quality will ensure the survival of their companies through whatever crises lie ahead.