February 05, 2021
February 05, 2021
Contributor: Rob van der Meulen
Both skills and competencies are key to the success of digital transformation in the finance function. Here’s what every digital finance function needs.
Accelerating the digitalization of the finance function is a priority for finance leaders in 2021 as technology rapidly alters finance and business processes. But many finance functions lack the digital skills and competencies needed to fully exploit technology and automation.
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The culture of digital “haves and have-nots” in finance will deepen if finance leaders don't address digital finance skill gaps. It will also make it harder to capture returns on digital investments. But even when finance leaders are committed to improvements, it can be challenging to identify and install the specific digital finance skills and competencies needed.
Finance skills (learned abilities) relate to technology, processes and business needs, and competencies more broadly span the knowledge and behavior required to perform well in a digital finance function. Both are key to advancing the digital maturity of the finance function.
Skills are more specific than competencies. Finance application leaders, for example, must install skills in each of the following five areas.
Cloud financial management system (FMS) applications, including robotic process automation (RPA), artificial intelligence/machine learning (AI/ML) and other digital technologies can empower finance to deliver more value with less effort. These innovations will change how end users perform their roles, and finance staff must be aware enough to exploit the capabilities of advanced technology and automation to eliminate time-consuming manual tasks that inhibit value-added activities.
Gartner predicts that through 2024, only 40% of cloud financial management solution implementations will achieve their goals. The problem? Shortcomings in change management and post-go-live management capabilities within the finance function.
CFOs and other finance leaders need to understand the nuances of cloud application management, particularly vendor management, service-level agreements (SLAs), role-based security administration and ongoing support, and make decisions that were once in the IT domain.
Finance has struggled to read, write and communicate data in context — with an understanding of the data sources and constructs, analytical methods and techniques applied, as well as the ability to describe the use-case application and resulting business value.
But business leaders need data-driven financial insights to help the wider organization identify hidden growth opportunities and manage heightened risks. Gartner research shows that when considering all the decisions made across an organization, a lack of skills in data literacy can cost a company as much as 1% of revenue. Finance leaders must close this costly skill gap.
Advanced analytics is the semiautonomous or autonomous examination of data or content using sophisticated techniques and tools — typically beyond those of traditional analytics and business intelligence (BI) — to discover deeper insights, make predictions or generate recommendations. Gartner research indicates that over 80% of finance organizations forecast increased use of advanced analytics in 2021, and this skill will remain critical to driving business insight.
Historically, the finance function has been somewhat isolated from other operational departments, resulting in disconnects that led to consequences such as overspending or poor allocation of resources. In an increasingly fluid post-COVID-19 environment, this lack of “line of sight” and collaboration can be disastrous.
As technology automates and takes over more transactional workflows, the finance organization must shift from “number crunchers” to becoming strategic advisors and business partners to the rest of the business.
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Beyond specific skills, there is significant “noise” too about which digital competencies are most relevant for finance. This noise can complicate plans to upgrade finance competencies.
Gartner evaluated more than 50 digital finance competencies and identified the following five as being truly new in kind, having enough staying power and being highly applicable within the context of back-, middle- and front-office finance to make them must-haves for a digital finance function.
To close digital finance skills gaps, finance leaders shouldn’t try to predict the skills needed for a more distant future. Rather, they should improve their ability to quickly react to immediate skills needs. The two principles of this “skill sensing” approach are as follows:
Read more: How to Look For the Right Digital Skills
This skill-sensing approach improves the likelihood that employees apply newly learned digital skills on the job and close the gap.
For example, a finance function is developing VBA programming skills to clean data for analytics. By applying the always-on approach, an employee identifies there is higher job value and in-house knowledge for learning R code for cleaning data. After comparing VBA and R skills for applicability and achievability, finance stops developing VBA to prioritize R.
As a result of continually searching and prioritizing for the most relevant and applicable skills, employees in the always-on approach apply 75% of new skills they learn. When trying to predict skills, employees only apply 37% of newly learned skills.
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Recommended resources for Gartner clients*:
5 “Must Have” Finance Skills Required for Post-COVID-19 Business Success
5 Competencies for Unlocking Finance’s Digital Potential
Make Finance Digital Skills Relevant and Achievable With Always-On Skills Sensing
New Realities for Finance Organization Design Following COVID-19
*Note that some documents may not be available to all Gartner clients.