Adopting a System of Engagement for Finance

In the offices of CFOs, particularly at large publicly listed companies, confidence appears to be waning. In fact, numerous surveys indicate that in 2016 optimism is low. The problem? Many finance chiefs have lost trust in their ability to accurately track, report, and improve performance across the enterprise.

One big challenge CFOs are dealing with is complexity. With the growing volume and velocity of data, myriad reporting mandates, and outdated and archaic planning processes, there’s a burgeoning fear that finance is getting further and further behind in its efforts to partner and support their organization’s lines of businesses, key departments and CEO.

High performance finance is transforming around a new kind of system of engagement, away from the system of record of the 90s

I’ve long believed that what can make or break a company is their approach to collaboration and how they plan their business. For too long, we’ve seen companies structure their organizations into a number of small teams that operate in silos. Separate goals, processes, communication and data. The byproduct of age-old corporate structure (and subsequently reporting), these top-down hierarchies typically have each team (with minimal to zero communication) feed their own data and plans into some type of system-of-record, with the pertinent data usually only accessible to the “Office of the Few.”

Respected author Geoffrey Moore, known for his groundbreaking work in Crossing the Chasm, coined the term “system of engagement.” A concept designed to eliminate silos within organizations (as I described above), systems of engagement were originally focused on CIOs and IT leaders. Yet as digitalization modernized, and all departments (from marketing, to sales, to HR, to finance) became impacted, forward looking CEOs saw the potential and entrusted their right hand women and men to utilize the progressive framework as a foundation for transformation.

This brings us back to the office of finance. A respected study by Accenture notes that more than 80 percent of CEOs at large organizations select their CFOs as the architects of transformation. Their ability to measure, analyze, and forecast growth have put them at the forefront of strategy (the same study reports that now an astounding 3 out of every 4 CFO has seen their role in supporting strategic decision making increase in the past two years). Yet in order for finance to drive transformation, they too need change. When reviewing the recent data on CFO optimism, it’s clear to me that the lack of confidence in improving performance across their enterprises is tied to their outdated, legacy planning systems. These systems-of-record prohibit the type of real-time information sharing, department-to-department collaboration and ease-of-use that non-finance users need in order to engage with complex financial and performance data.

Similar to the idea popularized by Zuora’s founder and CEO, Tien Tzuo, around new tools for new relationships, I believe new responsibilities require new processes. High performance finance teams understand that you can’t improve performance enterprise-wide without changing existing processes. New systems-of-engagement put an emphasis on making it easier for not only the core users, but for the non-technical user as well. In finance, this means the planning system must support not only the financial planning and analysis (FP&A) team, but also the lines of businesses users. Yet a financial planning system that encapsulates a system-of-engagement framework should include more than collaboration features like instant messaging and annotations. Modern systems need to not only make communication easier and more routine, but they must also help illustrate performance data in a user-friendly way. And advances in machine learning and AI in general offer unprecedented opportunities for modern finance to bridge to operational data and people and drive far faster and significantly more accurate forecasts.

Having attended the MIT Sloan CFO Forum at the end of 2015 to watch my CFO speak on a panel, we heard a recurring theme around the need for storytelling and performance narratives. “Stories, not just graphics and visualizations, help explain trends and patterns to the masses,” is what one CFO said. Getting the masses to engage is how you help move a siloed company towards greater companywide collaboration. Her words resonated with us because this type of collaboration is what we call ‘planning at the edges.’ Modern systems-of-engagement, unlike their predecessors, make it possible for the CFO and someone in the field to have access to the same numbers and performance data. This allows both the CFO and those in separate departments to track not only their own team’s goals, but because they are using the same integrated system they can also track against the company’s overall goals. No longer is critical data discretely kept to a select few, rather that information is freed throughout the organization so employees at all levels, regardless of location, can leverage it to improve what they do.

Shared data can result in greater alignment and better communication, which -- as we all know -- improves decision-making. When those outside of finance can think like the CFO, and vice versa, organizational transformation is underway.