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FinanceTechnology2020New approaches to solving thefour biggest challenges to financetechnology success in 2020
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
Governance GuidancePolicy Enforcer Service Provider Operations Decision
Support PartnersEnterprise Decision Support Partners
• Accounting• Auditing• Statutory reporting• Cash management• Policy formulation
and documentation
• Management reporting
• Budgeting• Forecasting• Enterprise planning
• Capital budgeting• Risk management• P&L analysis• Customer profitability
analysis planning
• Business development• Competitor analysis• M&A support• Pricing strategy• Product development
Finance Megatrend 1 Drive to guidance
Source: Gartner
Finance teams must deal with more risk in reporting and controls and help the company meet targets in a tougher growth environment. To do this, finance teams need to balance efforts across both the governance and guidance mandates.
Growth of Finance Responsibilities and Requests for Finance Support
Cost of Finance
Growth of Finance Budget
Finance Function Maturity
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
Finance Megatrend 2 Service model evolution
Finance Trend Consolidation of end-to-end governance teams
Business Strategy “Superefficient” overhead management
Business Strategy Focused growth investment and performance management
Business transformation is driving structural changes in the function.
Finance Trend Growth of specialized guidance teams
2002 20022020 2020
Shared Services
Global Business Services
Technical Finance
Accounting
TaxCorporate
Planning and Budgeting
Reporting Line Finance Line
Finance
FP&A
Analytics Center of
Excellence
Internal Reporting
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
IT Megatrend 1 The digital business
Enhancement TransformationScope of Change
Product
Sales, Marketing,Customer Service
FunctionalOperations
Using data and technology to enhanceexisting products and services
Launching new products or services beyong the core business portfolio
Digitization Opportunities
Improving channel coordination and performance
Transforming channels to match customer behaviors and preferences
Improving productivity or optimizingenterprise activities and processes
Making broad improvements in one or more corporate functions
• Automated data discovery• Smart sensors
• Serving cars, not selling cars• Selling “wellness,” not medical treatment
• E-commerce platform• Mobile customer service
• Omnichannel marketing• Just-in-time customer service
• Digital workplace• Dynamic resource reallocation
• User-customized products• Open platforms
• Multichannel marketing• Social customer service
• Predictive analytics• Robotic process automation
• Continuous accounting• Supply chain digitization
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
IT Megatrend 2 Business-led IT
TechnologyFoundations
ProcessAutomation
InformationSharing and
Analysis
CustomerEnablement
Productsand Services
Proximity to Customers and the Product
Used Narrowly(Local, BU orFunctional)
UsedEnterprisewide
TypicallyRetained byCorporate IT
The Blurry Boundary Traditional Business-Led IT
• Servers• Network• Integration
• HRIS• Expense
management
• ERP• Transaction
processing
• Customeranalytics
• Risk analytics• Talent analytics• Finance
analytics andreporting
• Teamcollaboration
• Cross-siloinformationsharing (EDW)
• R&D platforms• Process control• Additive
manufacturing
• Digitalmarketing
• Customereffort reduction
• Technology-enabledproducts
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
Four challenges for the success of finance technology in 2020
1Distributed TechnologyFinance needs to own its technology planning and investment decisions.
Risks• Scope and role ambiguity• Shadow technology teams
Opportunities• Less horse trading with revenue-generating IT• Flexible technology
2The End of Traditional HierarchiesTraditional IT and finance hierarchies are defunct structures for finance IT activities.
Risks• Diffuse accountability for IT• Process and control weaknesses
Opportunities• Flexible roles and employment models• Growth of collaborative service models
4Total Data RelianceDigitization equalizes data domains in enterprise decision making.
Risks• Security risk of data “graveyards”• Cost proliferation
Opportunities• Enterprise data integration• Development of “analytic culture”
3Tech Skill PremiumFinance’s activities increasingly dependent on embedded technology skills.
Risks• Tech talent shortage• Lost focus on core technical finance skills
Opportunities• More diverse career paths• New opportunities to attract university graduates
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
New approach Finance-led technology planning
Distributed Technology
Distributed TechnologyChallengeFinance needs to own its technology planning and investment decisions.
ActionFinance uses business goals to level-set technology planning. Instead of starting with process owner interviews, which often lead to isolated investments and a proliferation of applications, finance technology leaders ignore applications until leadership agrees on capabilities.
ResultFinance cut redundant applications by 40% and moved a majority of its non-ERP based applications to the cloud. The function also increased focus on emerging finance technologies, opening capacity to conduct industry-leading proof-of-concept with blockchain and robotics vendors.
Business Goals
Finance-Supported Capabilities“How we will support the business”
Technology Capabilities“What we need to do it”
Minimize ComplianceSpending and Risk
Efficient accountingstandard transitions
Scale end-to-end statutorycontrol and reporting
Support new-to-companybusiness models
Increase speed of M&A support
Assimilate multiple legal entities
Reduce manual business processes
Increase Innovation Clock Speed
Reduce AdministrativeComplexity
Fast-cycleapplication refresh
More flexible, stable ERP
Provide “on-demand”decision data
Reduce data gathering time
Finance-Led Technology Capability Planning Process
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
CFO
Finance IT FP&A Tax and Treasury
Accounting IT SupportAnalytics & ReportingDiscovery
DataManagement
Applications
Stand-Alone Finance IT Subfunction
Pros• Easier to own end-to-end finance technology planning and alignment• Enables process-IT alignment at significant process handoffs (e.g., record-to-report, financial planning)
Cons• Cost to stand up new team and career paths• Diffuse accountability for centralized applications like the financial ERP
Activity-Based Finance IT Matrix
Pros• Provides responsibilities for strategic enterprise roles like a chief data officer• Enables specialization in finance IT capabilities• Creates collaboration mindset within finance instead of resource competition
Cons• Diffuse responsibility for finance technology planning
1 2Focus on Resource Distribution Focus on Technology Maturity
New approach Objective-based finance IT organizational models
The End of Traditional Hierarchies
The End of Traditional HierarchiesChallengeTraditional IT and finance hierarchies are defunct structures for finance IT activities.
ActionFinance organizes staff around its primary technology objective. Instead of using MBOs and business partnership to pursue finance IT objectives, finance leaders dedicate staff to isolated technology objectives.
Result• Stand-alone finance IT
subfunction: Finance cut its maintenance-related spending in its IT budget from over 60% to less than 45% and increased investment on transformation IT.
• Activity-based finance IT matrix: Finance retired more than 300 legacy internal reports and replaced them with a self-service analytic data environment.
New Finance Technology Organizational Models
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
New approach Finance-IT talent push recruiting
Tech Skill Premium
Tech Skill PremiumChallengeFinance’s activities increasingly dependent on embedded technology skills.
ActionFinance looks internally for experience and interest in finance IT. Rather than using external hires or consultants, internal staff from finance and IT are familiar with company processes and can work more effectively with business partners.
ResultFinance built a new finance IT career path in under nine months, and is hiring a head of finance IT to oversee the new subfunction’s day-to-day activities.
Internal Push Recruiting for Finance IT Roles
Learn Ask Shortlist
Finance employeesResume
IT employeesResume
Finance experienceExpense Reconciliation Accountant
Educational qualification CPA
IT ProjectsWorked on automating the expense reimbursement system
InterestsBasic programming, mobile applications
IT experienceDatabase Developer
Educational qualification Computer science major
Finance projectsDatabase Maintenance, SAP HANA
InterestsEquity trading, portfolio management
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
New approach Using data lakes to drive financial data integration
Total Data Reliance
Total Data RelianceChallengeDigitization equalizes data domains in enterprise decision making.
ActionFinance uses a data lake to augment enterprise data with financial data. Finance leaders stop pursuing “one truth” through centralized control and augmented financial data, instead focusing control on external financial reporting.
ResultFinance provides access to financial data at the transactional level in the cloud and self-service “snapshot” views of financial trends. Business leaders utilize more financial data to test micro-strategies around profitability.
Data Integration Model
Hub AcctEng
GL
• Call center• Channel data• Campaign metrics
• Social media• Affinity groups• Chanel partners
FinancialReporting
Expenses
Adjustments
A Nonsummarized transactions
B Finance-created data elements• Transactional level• Parent/child; keys• Adjustments (journals)
C Nonstructured• Nonrelational• Nonhierarchal• “Snapshot”
D Finance-created balances• Expenses (allocated and direct)
A B
D
C
Source: Gartner
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
Key take-aways
1Challenge: Distributed TechnologyFinance needs to own its technology planning and investment decisions.
Key take-awayAvoid discussions about IT applications until finance and IT leaders agree on which finance capabilities the function needs to support business goals.
2Challenge: The End of Traditional HierarchiesTraditional IT and finance hierarchies are defunct structures for finance IIT activities/goals and business goals.
Key take-awayUse finance's primary technology objective, such as better resource distribution, to organize staff around IT activities/goals and business goals.
4Challenge: Total Data RelianceFinance needs to own its technology planning and investment decisions.
Key take-awayShift financial data strategy from “one version of the truth” to augmenting enterprise data with financial data through capabilities like data lakes.
3Challenge: Tech Skill PremiumFinance needs to own its technology planning and investment decisions.
Key take-awayRather than using external hires or consultants to fill finance IT roles, develop a push strategy to recruit internal finance and IT staff who are familiar with company processes and goals.
© 2019 Gartner, Inc. and/or its affiliates. All rights reserved. CM_609932
Learn moreVisit: gartner.com/go/finance
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