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The Increasing Role of the Finance Department (Part 3): Operations

The Increasing Role of the Finance Department (Part 3): Operations

In the last two blogs in this series, we explored the transforming role of the CFO and finance organization as a whole, discussing the reasons finance has needed to evolve in part 1 and the expanding role into IT operations in part 2. These discussions, part of the much larger Finance Trends Report released by Microsoft, look to share what will be important for organizations as a whole in 2019. Beyond finance, organizations will need to adapt to evolving customer demands, new technology, more uncertainty, an evolving workforce, and new risks.

The entire 60+ page report features insights on digital transformation and discusses how Dynamics 365 Finance and Operations could improve business results; you can download it here or learn more from this blog. Today, however, we would like to look at another area into which finance is expanding—operations—and discuss the potential ways that the finance organization can evolve to fit the role.

Finance’s Foray into Operations

In part 2, we looked at the reason that finance is moving into IT, finding that there were two key drivers behind it:

  • If something impacts the bottom line, it’s the CFO’s responsibility, and
  • Everything impacts the bottom line.

As with the move to work more closely with the CIO, the move into the operations field will be another shift that is based on the bottom line, driven in part by the maneuver to embrace digital transformation and by the “disappearing” role of the Chief Operations Officer.

Business Transformation Accelerates

For businesses to remain competitive in 2019, many will need to test new business models, leveraging new technology to get there. With the accelerating growth of the “Anything as a Service” model—growing 7.3% in 2017, 70% of CFOs have found themselves leading the digital transformation charge in 2018, increasing investment in these initiatives. Per Microsoft:

“With technology leading this transformation, their newfound role as technology leader has also pushed CFOs into the role of transformation leader, evaluating technology investments, overseeing product development, and leading strategic planning for the organization. Accordingly, nearly 70% of CFOs reported plans to increase investment in digital transformation in 2018, with 40% planning an increase of more than 10%. And with 56% of senior leadership identifying digital transformation as critical to long-term success, CFOs’ involvement in this area will continue to grow.”

From here, the CFO will continue to expand his or her role into operations and finance will need to follow along.

Finance’s Expansion into Operations

The “disappearing” role of COO has come not as a result of restructuring, but due to the common pecking order within organizations—the COO decline can be primarily attributed to the fact that the CEOs of many major corporations were promoted from within and had previously served as COO, as is the case at 48% of Fortune 500 and S&P 500 companies.

When many companies make the move to start their CEO succession planning, they begin by transitioning out the role of the COO, instead moving many of the responsibilities to the CEO and the CFO. This “dream team” brings unique skills, leveraging the CEO’s operational background and the CFO’s ability to lead procurement and IT.

The Move into the Strategic Advisor Role

In addition to the move into IT and Operations, the CFO will continue to embrace a more strategic role within the organization. Empowered by technology, the CFO and the entire finance department will be able to see the bigger picture, in turn making bigger decisions that will have a positive long-term impact on firm growth.

According to Microsoft, an early 2018 survey found that only 54% of technology investments are actually controlled by IT departments, and finance will spend much more effort investing in software and analytics. This will improve the decision-making at organizations, who will gain deeper insights into KPIs and drivers behind them. Per Microsoft,

“Technology is ubiquitous in modern businesses, and while CFOs may not be able to code a website or set up a database, like technology, CFOs have also become ubiquitous throughout the organization.

Because CFOs possess a deep understanding of both the organization’s technology and its operational units, they are a natural fit to drive corporate strategy. And with a background in finance, CFOs possess a unique ability to apply a systemic and objective lens to business decisions. While CFOs remain saddled with a reputation for being penny pinchers and number junkies, the shift to a more quantified management approach provides an essential counterbalance to the gut instinct style of previous decades.”

Bringing Your Finance Team Further: Technology Consulting from Wipfli

From the staff accountant to the CFO, there are a wide range of places that finance will move into, empowered by the technological decision-making and digital transformation efforts driven by the CFO. As the finance organization continues to increase its stake in the long-term stability and growth of the company, it pays to have the right partner in your corner.

At Wipfli, we work with organizations of all sizes and industries to help you find, select, implement, and operate software that builds your business, solidifies your cybersecurity, and improves your day to day operations. Learn more about the software solutions we work with, download the 2019 Trends Report from Microsoft, and contact us for more details.

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