Agile Financial Steering… why not today?

The numbers revolution

A number is simple. A number is round. They allow us to compare ourselves, to reflect changes, to be accountable.

It took no less than 2.5 industrial revolutions and a few decades for the “well-oiled” industrial machine we know today to be driven by finance and budgets. And to its credit, it has added real value to traditional industrial activities.

During the 3rd industrial revolution, decision-makers seized the potential of digital technology to automate processes and process information on a massive scale. ERP and BI deployment projects flourished in most companies, and management controllers became automatons creating activity reports. Little by little, centralized budgetary mechanisms sclerosed employee initiative!

And yet, while organizations were centralizing and concentrating, they failed to anticipate the change in mentality of their employees, or the change in managerial challenges.

Companies became more and more specialized, while the employees who embodied them became more and more generalists (for example, in agile teams, or “squads”, the boundaries between production, marketing and even sales tended to blur). IT tools have become increasingly cumbersome, while product time-to-market is becoming ever shorter. So much so, in fact, that some companies have called into question their traditional budgeting processes and tools in favor of a rolling forecast[1], which they consider more agile.

At the service of all company players

In the past, the man holding the purse strings had great arbitration power. Today, in the name of the principle of subsidiarity, he has to let initiatives come from the bottom of the pyramid – which, by the way, is looking less and less like a pyramid: project managers are delegated responsibility for their projects’ budgets, product managers manage their performance, sales people manage their margins per customer…

In the light of these examples, it’s clear that the tools needed to manage economic and financial data can no longer, and must no longer, be in the hands of a small handful of experts.

Finance experts (i.e. the people who populate the finance departments) must make themselves available to the business lines, in order to support them in the use of tools enabling them to manage their activities quantitatively, and in any case financially.

Especially since the reliability of tools, data historization, and technologies such as Blockchain make it possible to ward off notions of fraud, accessibility and information security.

Moreover, traditional methods of performance management (ABC, Direct Costing…) known as “cost accounting” run out of steam when operational staff spend days editing annual budgets that will only be used by a “happy few”…

Thus, the finance of the future is less a technological tool or a performance management method than a posture for finance and management control departments.

They need to reinvent themselves: to take a step back in terms of their value contribution and the methods and processes to be applied. Then, they must devote all their energies to acculturating and supporting the company’s players in the management of their activity. In this way, operational staff must become true “benefit owners”, capable of collecting the expected benefits at the various milestones identified in a project. So that identifying the ROI of an investment, or a relevant KPI, becomes a matter for the operational players themselves.

If you want financiers to stop being perceived as grains of sand expressing themselves in a “volapük”[2] that marginalizes them, transform them into value gas pedals and redeploy them at the heart of the organization.

Are you ready to transform your finance function and put it at the service of your company’s performance and agility?

[1] Rolling budget forecasting process
[2] Artificial language based on simplified English