3 QUESTIONS EVERY CFO SHOULD ASK TO SPARK INNOVATION

6th April 2019

FSN’s 2018 global research study, “Innovation in the Finance Function” revealed that 65% of modern finance professionals never really discuss innovation. Yet in a market characterised by low growth, lack of pricing control and slender margins, innovation presents one of the few opportunities for differentiation and competitive advantage. So, the obvious question is why don’t we discuss innovation more often?

 

 

 

For many finance professionals, innovation does not come naturally. Few of us would claim to be born innovative and even if our imaginations were fired up, there are many organisational, political, operational, economic and cultural obstacles to overcome before an idea sees the light of day.

It’s not easy to get started, so here are three pithy questions that CFOs and their finance colleagues could ask to stimulate a more creative atmosphere.

1.What could we do better?

After nearly four decades of working at the intersection of technology and accounting, I am constantly struck by the number of second-time-around entrepreneurs in the financial systems space. Frequently, these are individuals who have successfully developed software products in the past but have acknowledged that there are things they didn’t get right the first time. These inspirational people, for example, Pat Garrehy, of Rootstock Software (cloud ERP), Michael Gould of Anaplan (planning software), Tom Shea of OneStream (corporate performance management software) and many others, asked the question “what could we do better”?

And it’s the same for senior finance professionals. Many of us have had many jobs and worked across many industries. Our experience tells us what works and what doesn’t work, but better still, our knowledge informs our ideas about what could be done better. But I wonder how often we actually challenge ourselves and our finance colleagues with the question “what could we do better”?

It’s important to note that innovation isn’t necessarily doing something completely new (like a new patent, business model or product). FSN’s research finds that only 7% of innovation in the finance function relates to mould-breaking new ideas and experimental technologies. For the rest of us it is something much more prosaic. For example, 35% consider it to be new areas of automation and integration, 20% see innovation in a new ERP system and 20% think it is a new budgeting and forecasting package.

2.What are other organisations doing differently?

A little bit of plagiarism is forgivable. Have other organisations digitised P2P (Purchase to Pay) processes so that they do not handle paper invoices? Have your contemporaries implemented CRM (customer relationship management) software linked to their accounting systems so that they can forecast demand more accurately? What about embedded chatter and instant messenger to get rid of swathes of emails and improve productivity, or the latest data visualisation tools to help with business partnering?

One good source of information is new hires to the business. Not only do they come with fresh ideas, but they also know what was good about their previous employer’s systems and processes.

3.How can we overcome inertia to change?

New projects rarely fail because of technology. In 37 years of practice, I have only seen two failures attributable to technology. One was the fraudulent sale of software to a construction company (the software hadn’t been finished as claimed) and the other was a budgeting system at a global insurer in the early days of client-server computing – it took all day to recalculate a simple change (lack of computing power). It’s not technology that ‘kills’ innovation but people. For example, someone has the wrong skill set, there is a lack of senior sponsorship, there are cultural or organisational barriers to change and in many cases the problem is the fear of failure itself. But these are all controllable. So what’s holding you back?

This year the FSN team has had the privilege of writing our 2019 Innovation Showcase taking in the most innovative technology developments across the financial applications space. I am constantly amazed and inspired by what financial software vendors have achieved or have in the pipeline. 

But what’s happening on the outside of our organisation must be matched by what’s happening on the inside as well. Make 2019 the year that you discuss innovation!

By Gary Simon, BSc, FCA, FBCS, CITP

Chief Executive of FSN & Leader of the Modern Finance Forum on LinkedIn with more than 52,000 members

This year’s FSN Innovation Showcase will cover BlackLine (financial close solutions); BOARD (corporate performance management and business intelligence); CCH Tagetik(corporate performance management); NetSuite Oracle (ERP); OneStream Software(corporate performance management); Prophix (corporate performance management; Rootstock (Manufacturing ERP in the cloud), Workday (financial management) and Workiva (financial reporting, risk and compliance).

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