In a modern, global business environment where competitors are constantly innovating, and start-ups are shaking up industries by using emerging technology in novel ways, the finance department has been under pressure to not only take care of the numbers but to innovate. CFOs are now being expected to lead the way and take a more strategic role to elevate finance beyond its traditional remit.

The balancing act

When it comes to new technologies, organisations have primarily invested in customer-facing solutions. But businesses focussing their efforts solely on more visible customer-facing capabilities are missing an important part of the smooth running of the organisation: business support functions. Without this investment, these organisations are slower and less accurate at forecasting and planning than organisations who invest equally in both.

A study from FSN Modern Finance Forum found that organisations that approach technology investment as a double-pronged approach find that they are better at nurturing innovation. These businesses are more easily able to share ideas and cross-organisation skills and are more willing to make mistakes as they grow: innovation is the top priority. The study also found that businesses that balance their customer-facing and business support functions face fewer obstacles like in-house politics or risk aversion, and they find it easier to spot talent to encourage further innovation.

Investing in customer-facing systems is more immediately noticeable to customers, but business support function investment is what will drive an overall better customer experience. Without this foundation, a unique omnichannel experience is almost impossible. By seeing both operational and financial data in one place, finance departments can have a superior, 360-degree view of the organisation—allowing data-driven decision-making, a more personalised customer experience and faster delivery of services.

Overcoming roadblocks on the path to innovation

Innovation in all forms requires a significant change, even if the finance function knows exactly what type of innovation it requires, and there are often many obstacles getting in the way of this change. According to the FSN global survey, culture, time and a lack of credible and accurate measures of success, like proving ROI, are all key hurdles to overcome in this process.

If there is not a strong organisational buy-in being driven by senior leadership, change can be hard to implement. This is especially true in environments where mistakes are relentlessly punished, which stifles naturally-innovative employees. Equally, if the finance function is not viewed as a source of innovation by the rest of the management team, it will be difficult to sell the value of innovation within it and make a strong case for investment.

CFOs and their senior executives need to be able to measure ROI to create a successful proposal for innovative investment. However, the FSN survey found that there are conflicting views on how to go about this. According to the survey, 75 percent of CFOs believe innovation success can’t be measured with traditional methods of calculating, arguing that these methods cannot adequately capture the intangible benefits of digital innovation.

However, sometimes, the cultural nature of the landscape in which they operate can impact an organisation’s propensity to innovate and drive change. The study notes that North American organisations are more willing to take risks, whereas European counterparts are traditionally warier of the perceived risks surrounding change. Yet, the opportunity is waiting to be grasped. For European organisations, a risk-taking culture shift could help to attract top talent, break new ground and pave the way for the performance gains they seek while encouraging creativity across other core business lines.

One of the most tangible benefits and measures of ROI for digital innovation is time. The rewards of automation are manifold, freeing up finance teams to focus on strategic thinking, and offering improved insights in less time. However, time is also a major reason why innovation is neglected. The FSN survey found that 67 percent of CFOs say that too much resource is tied up in legacy systems and traditional ways of working, which leaves very little room to innovate.

Without overcoming these obstacles, the finance function is in danger of falling behind the rest of the organisation. This is a huge risk to the organisation: with the finance team driving so many business decisions, innovation here is crucial to remain in-line with, or ahead of, competitors.

Join the movement early

The truly innovative finance functions are those that adopt technology early and actively encourage a culture of innovation across the business. These CFOs can forecast quicker, close books faster, plan and budget more effectively and forecast more accurately than those who don’t set aside resource to innovate. Initial investment may be tricky, but in the long run, the benefits far outweigh the cost.