What Does Transformation mean for the Finance Function?
The existing acute priorities complicate the transformation progress of the finance function, which is crucial for the long-term success of the company. But what factors trigger this transformation, and how should corporate governance be shaped in the future?
Main Drivers of Transformation in the Financial Sector
The upcoming, significant shifts - demographic shift, climate change, and digitalization - are shaping the future. Additionally, there is a need for a new form of resilience in the face of ongoing crises. Notably, the predictability of these developments is remarkable. We already have a clear idea of what to expect and can even partly estimate the pace of these changes. Now is the ideal time to further develop the CFO's navigational tools. It would be irresponsible to miss this opportunity and thus risk competitiveness, or in other words, not to actively manage the structural risks that threaten corporate success.
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Key Requirements for a Successful Transformation
For an effective transformation, alongside managing acute challenges, certain prerequisites are essential:
- Flexibility and Change Readiness: To effectively shape the transformation, it is crucial to significantly strengthen these two aspects.
- Automation of Processes: Finding and affording additional personnel is becoming increasingly difficult. Therefore, increasing staff is not an option. Instead, processes must be automated to such an extent that existing capacities are freed up for change.
- Technological Upgrades: The technological platform must be developed in a way that significantly accelerates the speed of transformation.
For the finance function this specifically includes the implementation of the following measures:
- Introduction of S/4: For standardization, integration, and automation as a key step in the transformation.
- Implementation of a Flexible CPM Platform: To represent both known and new, unknown requirements as a central component for adaptability to future challenges.
CFO as a Navigator in Disruptive Times
In today's volatile world, traditional planning methods are inadequate. Flexible, company-wide simulation models are needed, providing decision-relevant information, and aiding in the implementation of swift strategic shifts.
The finance function also holds a key role in ESG management. It must implement a group-wide, auditable reporting system to meet regulatory requirements alone. Furthermore, ESG will sooner or later be integrated into corporate governance, which will enable the implementation of a sustainability strategy.
The importance of risk Management in corporate governance is increasing substantially, making its integration into both simulation and reporting systems essential.
