Three quarters of finance organizations are wasting time and resources by trying to optimize accounting close processes before they have established the ability to absorb the effects of new technologies and new ways of working, according to research by Gartner, Inc.

“Corporate controllers have a once-in-a-generation chance to transform the close with digital technologies, but they are hamstrung by a process that isn’t ready for digital,” said Mallory Barg Bulman, director, research, in the Gartner Finance practice. “Controllers are wasting time optimizing processes that will soon be made redundant by the latest technology or digital disruption. Doing this offers only a marginal improvement in digital readiness over doing nothing at all, while costing much wasted effort and investment.” 

To assess digital readiness in finance, Gartner collected data from 192 senior finance leaders in December 2021. The survey found that finance leaders who focused on optimizing accounting close processes for digitalization were only marginally more likely to be digital-ready than those that took no action at all. Whereas finance organizations that focused on process resiliency first, before optimization, were three times more likely to be prepared for a digital accounting close, compared to companies that took no action (See Figure 1).

Gartner’s research found that 75% of organizations are currently optimizing their accounting close processes for digital. Trying to optimize processes that are soon to be made obsolete by new digitally enabled ways of working introduces lengthy periods of futile process mapping and standardization.

“Controllers need to take a step back and focus on building resilient processes before they begin to optimize, so that their teams are ready to go when new technologies are introduced into the close,” said Bulman.

Three Steps to Building Process Resiliency

Gartner’s research found that controllers who focused on building process resiliency first, before starting to optimize their processes, were more than twice as likely as to be digitally ready than those that only focused on optimizing processes.

The controllers who expressed confidence that their accounting close processes were ready for digital transformation took three distinct steps on the path to building process resiliency. They include:

1. Establish a Vision for Digitizing the Close Process – Organizations need a framework for determining whether interim digitization decisions are moving the close process in the correct direction. Establishing a desired future state that is measurable, task-specific and both aspirational and achievable are key elements in establishing a vision.

2. Build a Decision-Making Infrastructure – Ongoing alignment of the close process with ongoing digitization efforts require a two-part solution: First, building a framework for deciding the degree of autonomy each team can have; and secondly, continuously managing exceptions that threaten to undermine the established vision, so that they can be incorporated into digitization plans.

3. Sense Disruptions from Upstream Digitization Decisions – Leading organizations maintain mechanisms to identify upstream (non-finance) disruptions that could derail the close. These parts of the process not owned by finance are going through their own digitization efforts and have the ability to disrupt the closing process.

Gartner clients can read more in: Prepare the Accounting Close for Digital by Making it Resilient and the accompanying infographic. Nonclients can learn more in: Top Strategic Technology Trends in Finance.

CFOs and finance leaders can participate in Gartner research and get complementary access by joining the Gartner Research Circle.

About the Gartner CFO & Finance Executive Conference

Gartner experts will provide additional insights on the key issues facing CFOs during the Gartner CFO & Finance Executive Conference, June 6-7, 2022, in National Harbor, MD. The Gartner CFO & Finance Executive Conference delivers actionable, objective insight to CFOs and their teams to help them leap-frog forward on their digital journey by understanding what successful teams are, and are not, building, buying, and borrowing in the market. For the full agenda and to register visit: https://www.gartner.com/en/conferences/na/cfo-finance-us.

About the Gartner Finance Practice

The Gartner Finance practice helps senior finance executives meet their top priorities. Gartner offers a unique breadth and depth of content to support clients’ individual success and deliver on key initiatives that cut across finance functions to drive business impact. Learn more at https://www.gartner.com/en/finance/finance-leaders. Follow Gartner for Finance on LinkedIn and Twitter using #GartnerFinance to stay ahead of the latest expert insights and key trends shaping the Finance function. Visit the Gartner Finance Newsroom for more information and insights.