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Is digital finance the end goal or simply an enabler?

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This article is co-written by Anders Liu-Lindberg, Head of Global Finance PMO, A.P. Moller-Maersk and Claus Thorne Madsen, Partner, Implement Consulting Group.

Thanks to digital finance we are well into the next wave of finance transformation. But what follows, and what will it mean for you and your finance function?

Digital finance is creating a third wave of transformation in finance functions around the world. The first wave was driven by the ERP system that connected the company in new ways. The second wave was offshoring/outsourcing that focused on lowering financial costs. Now, digital has the potential to impact the finance function on an even greater scale, but is it the end goal? Or, is it an enabler of where we want to go?

The benefits of digital finance are clear. So what happens to Financial Planning & Analysis (FP&A) when you have automation in place? When your analytics are producing real-time insight, clear management reports and effective dashboards? And when the cognitive computing and artificial intelligence are delivering insights to you before you even ask them? Is there a role for people to add value?

Digital finance is not the end goal. It is simply an enabler for making better business decisions, and FP&A should take centre stage in improving them. We believe that business partnering can have an even greater impact for two reasons. First, while digital finance only touches upon the finance function’s costs – typically 1 to 3 percent of the company’s revenue, business partnering has the potential to influence the remaining 97 to 99 percent.

Second, digital finance can help deliver powerful new insights into how the business can be improved, but only if this insight is handled by a strong FP&A team with business acumen and in a partnership with business stakeholders. This begs the question: Is the future of finance new technology or new people? The answer is, of course, both. This was indicated by nearly 800 finance leaders around the world in a recent survey1:

What is "Business Partnering" and what does it mean for FP&A?

Business partnering is the act of utilising data, reports and analysis to generate insights that will influence business decisions and create a positive impact on value creation in the company. Historically, FP&A has been all about data, reports and analysis; however, with digital finance this needs to shift as it’s clear these tasks can be automated. Generating insights, influencing decisions, and impacting business performance requires new skills and a solid framework for how FP&A should work differently in the future. Some of the central skills to acquire are:

Communication – to effectively summarise and prioritise key messages in a simple and compelling way, depending on the receiver and their preferences.

Relationship-building – to gain trust with stakeholders, create new relationships and develop existing ones.

Influencing – seek to understand and then be understood by posing direct, guiding and process-generating questions that drive the dialogue in a certain manner.

Problem-solving – to identify, prioritise and define an issue, uncover root causes and develop an analysis to reveal the underlying hidden problems.

Creativity – to generate multiple potential solutions to a problem, prototype selected solutions and identify the key assumptions.

Decision-making – to translate an analysis into a recommended improvement action which solves the issue, while balancing effort and impact.

None of these skills are classic strongholds of the FP&A team or part of finance curriculums taught at universities.

So join us at AFP 2018 in Chicago for our session "How Do You Become a Great Finance Business Partner?", where we will present ways to acquire these skills and help you start to build a business partnering framework that details why business partnering is necessary, where business partnering can create value, what activities make the best use of your time, and how business partners deploy their skills and competences to create an impact.

Digital Finance is the third wave of transformation and the enabler of improved business performance. Next comes the fourth wave, business partnering as the accelerator of that performance. Welcome to the future.

The article was first published by the Association of Finance Professionals