Digital World-Class Finance– “Reaching New Heights in Peak Performance”
The Hackett Group Associate Principal Gerhard Urbasch talks with Principal Jim O’Connor, who lead’s our North American Advisory Practice, about the findings from our digital world-class finance research. They discuss how digital transformation has helped finance become leaner and more agile, and deliver greater strategic value to the enterprise.
Today’s episode of the Business Excelleration Podcast is hosted by Gerhard Urbasch, Associate Principal in the Finance Transformation Practice at The Hackett Group. His guest for the episode is Jim O’Connor, Principal and Leader of the Hackett Group’s North American Advisory Practice on Digital Word-Class Finance. The conversation is centered around the acceleration and transformation of technology during the year 2020, hastening the shift towards a digital operating model.
As companies make this digital transition, traditional measures of top performance no are no longer accurate. To kick off the discussion, Jim shares some insight on the new measures of top performance. In 2021, digital world class finance operates at about 43% lower cost than a typical finance organization, and an even bigger gap is predicted to be unveiled in the coming years. Digital world class organizations operate leaner, better and faster, not just in terms of cost. Jim explains the research which shows they have a clearer strategic lever for the entire business among other benefits.
Finance leaders should start with strategy when leading their organizations to become first class. Jim highlights a few of the six key characteristics as published by The Hackett Group. These include technology enablement, data and analytics, cloud-based modern architecture, operating model evolution, end process design and talent. As finance automates more work through digital transformation, the opportunities to improve efficiency will continue. The focus will begin to shift to how these opportunities can be automated.
Then, the conversation shifts to understanding the sources to a world class performance. With the use of technology, there is a large cost and productivity advantage. It has largely been adopted to address digital engagement, workforce and organization, service optimization, ecosystems and analytics-driven insight. Digital world class organizations have a clear lead in transaction over automation and will start moving beyond that. One typical way the Hackett Group helps their clients is by examining their finance processes and creating heat maps to find out where they have the most opportunity.
The improvement of data and analytics element of the Hackett Group’s published six key characteristics is a favorite among clients. The pandemic brought about a new urgency in terms of analysis and optimization. Successful FP&A teams are fully embracing these predictive models. Jim further discusses cloud-based modern architecture, which is essential in establishing complex organizations and reaping the benefits.
This digital transition has far-reaching implications for the operating model. While the outcome is still evolving, it’s certain that the model will shift from predominantly functionally aligned resources to a hybrid model where it’s both functional and enterprise aligned. In the future, finance will move from a more rigid hierarchy to a fluid network of resources that are deployed to the most critical initiative and high value activities. We really need highly skilled business enablement leaders that are at the core of FP&A, Jim explains. In closing, Gerhard breaks down the three key steps of action plans for digital world class: start with value, design future capabilities and create the journey map to achieve one’s aspirations.
- 1:05- Gerhard introduces himself and his guest, Jim O’Connor.
- 1:40 – What are the new measures of top performance?
- 3:24 – Why is digital transformation more important today than in the past?
- 5:45 – Broader business implications of technology adoption.
- 7:05 – What can finance leaders do to lead their organizations to be world class and what characteristics do they have in common?
- 10:15 – Numerical trends between world class and digital world class over the last decade.
- 14:57 – What role does technology play as a source for performance?
- 19:05 – Leveraging labor with technology.
- 20:14 – Value added by technology maturation.
- 22:17 – Context around data and analytics and cloud-based modern architecture in the Hackett Group’s six key characteristics.
- 26:49 – Implications of the shifting operating model.
- 30:52 – The role and skill profiles of digital leaders.
- 32:37 – Action plan for digital world class.
- 35:00 – The Hackett Group’s clients who have succeeded in digitizing their finance functions.