What does the agile finance function look like?

Bron: cgma.org

An agile organisation is fit, alert, flexible, and nimble. It is efficient, profitable, liquid, and resilient. It is aware of how the business generates value, alert to threats in the marketplace, and looking out for opportunities. It is able to develop strategies and implement them promptly. It is nimble in performance management, able to build and test ideas swiftly, and scale up quickly if they work or try something else if they fail, constantly re-allocating resources to where returns or prospects are best.

How finance functions can best support this organisational agility is explored in a new Oracle-sponsored report, Agile Finance Revealed: The New Operating Model for Modern Finance.

To enable the wider organisation to be agile, finance has to be smoothly run and have the following characteristics: 

  • Has efficient accounting operations that are scalable.
  • Is able to inform strategy because it understands how the business model works and what the drivers of value are, including the intangibles that are important to the model’s success.
  • Leads on horizon scanning, making sure decision-makers are alert to external developments, including new technologies or new business models, and have the information they need to develop a strategic response. The primary reason businesses fail is that they have neglected to address an external risk that they had long known about, but that had always seemed unlikely to make much of a difference over their planning horizon of 18 months or so.
  • Develops performance metrics and milestones to measure and manage progress to enable the business to implement new strategies and get products and services to market quickly.
  • Conducts dimensional analysis (by customer segment, product, channel, sales team, or whichever dimensions are relevant to the business) to provide transparency about what’s working in the business and what’s not. It identifies opportunities to optimise resource allocation, to manage risk proactively, and to innovate.

Finance transformation

A new operating model for modern finance is emerging. It should enable finance to better support business agility. The key features of this new operating model are:

  • Pioneering the use of modern technologies such as cloud enterprise resource planning (ERP), robotic process automation, and machine learning to ensure the efficiency and scalability of accounting operations.
  • Providing management information on a self-service basis using business intelligence systems, including dashboards with drill-through interrogation. This enables the financial planning and analysis role to extend its remit to consider a wider range of data, including new forms of big data, and provide the analysis and insight needed to improve the business’ performance.
  • Centralising experts on multidisciplinary teams to achieve economies of scale and build subject-matter expertise.
  • The recognition of management accounting as an important discipline that is engaged to improve decision-making and performance management.