According to a recent survey, 34 percent of finance functions are actively pursuing finance process innovation. However, that leaves 66 percent of organizations mired in legacy systems that prevent them from breaking out from the pack.
The FSN “Innovation in the Finance Function” study harvested views from more than 1,000 senior finance professionals to identify global attitudes toward innovation and also shone a helpful light on some of the barriers to innovation. Organizational culture, lack of time, and an absence of agreed measures around innovation success were all reported to take a toll on new finance initiatives.
Global perceptions of innovation
Attitudes to innovation vary markedly around the world, and culture, both national and organizational, can have a profound impact on whether innovation gets out of the starting blocks. For example, 50 percent of European finance professionals consider their organizations to be too conservative when it comes to embracing innovation, compared to only 21 percent of their North American colleagues.
North Americans, the survey indicates, are more prepared to experiment with new technologies as they become available. One of the underlying reasons for this cross-Atlantic contrast in attitude is that Europeans are haunted by the fear of failure. Almost double the number of projects in Europe get shelved for this reason compared with the States.
Do the rewards outweigh the risks?
The study highlights that the 34 percent of successful innovators work in an environment that encourages and rewards innovation rather than punishing mistakes. These enlightened organizations see failure as a learning opportunity and an intrinsic part of innovation. Successive FSN surveys have highlighted how the relentlessness of monthly, quarterly, and yearly reporting leaves finance professionals time-poor and unable to pursue process improvement initiatives that would otherwise transform their performance. In fact, 54 percent of finance professionals say they would like to be more innovative but rarely get the time, and a further 11 percent say they rarely, if ever, discuss innovation and don’t have time to devote to it.
The irony is that the simplest of innovations, such as process standardization and automation, would yield time savings. Without any attempt at innovation, too many finance professionals find themselves caught by the law of diminishing returns, that is, no time for innovation, so no opportunity for time-saving improvements, leading ultimately to a downward spiral of even less time overall.
The view from the top
Convincing the rest of the C-Suite of the need for innovation in finance is also a formidable challenge but the inability to make a cast-iron business case is one of the major stumbling blocks. Fifty-eight percent concede that they do not have an agreed method of evaluating ROI on technology-driven initiatives.
Successful CFOs are not hindered in this way. These are the early adopters of technology; they encourage an active culture of innovation and they make time for it. They are not hindered by legacy systems and do not have difficulty making a robust business case and persuading the rest the board to invest in finance systems.
Nearly a quarter of this year’s survey highlighted their accomplishments in innovation and around 20 percent of those accomplishments related to driving insight through the implementation of dashboards, better reporting and planning, and budgeting and forecasting systems, especially in the cloud.
The final irony is that 58 percent of organizations claim that they are hampered in their efforts to innovate by the lack of tech-savvy finance professionals even though research shows that modern finance functions that invest in innovation do not report the same difficulty. Smart CFOs know that innovation success breeds success in talent acquisition, and it helps attract more experienced and resourceful talent over candidates who are comfortable maintaining the status quo.