8th January 2015
CFO | Finance architecture | Financial Accounting | Financial controller | Our thinking
The role of financial controllers is shifting. We take a look at some of the themes around this important role in 2015.
The New Year wouldn’t be complete without an array of prediction lists, from economic predictions to our own Hadoop predictions to 2015’s top grossing movies (new Bond, new Star Wars and a new Terminator!)
At Aptitude Software, we are interested in anything that affects enterprise CFOs and their finance teams so we’ve decided to focus this list on 4 key predictions around the role of financial controllers. They must be more strategic, more efficient, more data oriented and even more focused on global regulations.
For many years, we have heard from financial controllers that their role is becoming more strategic. In addition to overseeing the day-to-day finance operations, controllers are providing strategic analysis, driving improvements in productivity through automation of operations, and finding ways to streamline processes. In fact, a study by the IMA found that over the last 3 years 73% of controllers have increased time spent performing strategic financial planning & analysis (source).
In 2015, the stage is set for controllers in many organizations to dramatically impact their organizations. They have the clout within the organization; 81% report to the President or C-Suite Executive and their increased involvement in strategic support is raising their profiles throughout the organization. Leading controllers will be recognized as the “go to” source for both analysis and highly validated business data.
While the close-to-report process is often the ultimate “time pressured” finance challenge, the lack of a disciplined and timely financial close exposes a company to a number of serious risks. Finance teams are looking to truly commit to better data-driven analysis and decision making to address these burdens.
In the past, this work has been anything but strategic. Spreadsheets, reams of paper, and manual processes were the tools used for the job. While technology has been introduced into the accounting world in the form of Enterprise Resource Planning (ERP) tools and large-scale general ledger systems they are not focused on delivering what modern finance organizations need for effective management and control.
Even with ERP systems, many controllers have realized that they spend too much time on manual reconciliations, adjustments and auditing how accounting rules are applied. According to Gartner, finance teams (in a number of key industries) will successfully make the case to renew core back office systems that underlie the organization’s reporting processes.
Big data has been over-hyped and in most firms, is limited to ad-hoc, isolated analysis. However, in 2014, many firms realized that their most valuable ‘big data’ set sits at the convergence of their financial, transactional & operational data and have begun to make investments in IT to harness it. These investments include data warehouses, Hadoop and in-memory processing to handle the growing volume of ever more granular transactional data.
The financial controller will be at the center of this data and responsible for analysis and dissemination. Already in 2014, 70% of controllers reported increasingly helping other functional areas to assess their information needs – including information often beyond traditional financial and budget data (source).
This requirement to provide increased information and data access exposes new challenges for the controller, primarily around technology. These include limits on reporting capabilities, real-time access to data, and constrained information system capacity. Another significant concern is the proliferation of data across multiple departments and divisions, which causes organizational confusion around whose data more accurately represents the truth. However, if financial controllers can overcome these challenges they will be incredibly valuable assets to their organizations.
Statutory and regulatory reporting has long been under the jurisdiction of financial controllers and for the most part they will continue to tackle challenges in this space. However, the goal of tomorrow’s financial controller will be to strategically manage regulatory uncertainty and respond to new requests faster and more cost effectively.
For example, controllers at large banks are looking at how to address IFRS 9, while controllers at telecommunications operators are leading the charge to help their companies address the new IASB and FASB joint revenue recognition standard (IFRS 15.) Finally, financial controllers at large US health insurance companies will look for ways to ease the burden of the ACA’s MLR requirement in 2015.
The financial controller of 2015 will have to be an ‘all-rounder’, with his or her finger on the levers of business performance. As the speed of business change and innovation continues to increase, the financial controller must keep one eye on the day-to-day financial operations while keeping one eye on the strategic direction of the company. Despite these challenges, they have the opportunity to significantly impact the success of their company.
Update: We’re writing a piece on the evolution of finance IT architectures. If you’re a financial controller, finance IT architect or have views/experience on the importance of strong finance architectures, please get in touch at marketing@aptitudesoftware.com. We would enjoy discussing these topics with you.
