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7 Principles of Dynamic Finance

7 Principles of Dynamic Finance

The success of finance lies in building a resilient, integrated organization that adapts quickly to change. Who could have predicted a global pandemic, geopolitical unrest, increased focus on sustainability and climate, changing worker expectations, supply chain disruption, economic uncertainty, and vast social change—all at the same time?

External forces like market shocks, industry consolidation and convergence, technology acceleration, and new regulatory requirements mean finance organizations need to continually adapt. The growing need for agility has led many CFOs to consider how their organizations can be more streamlined, more responsive, and faster to deliver change.

How does finance address a constantly evolving and dynamic business environment? By becoming dynamic itself.

The principles of Dynamic Finance can help CFOs transform finance from business function to dynamic capability—while still performing their steward and operator duties—to adapt in the face of external forces with speed, strength, stability, and flexibility to create value. Imagine a future in which your data and reporting capabilities enable finance to respond to inflationary pressures by immediately assessing purchasing choices. Or in the face of economic uncertainty, finance can monitor costs along every step of the production line using sensing technologies that provide insight into cost reduction opportunities. A dynamic finance capability requires simplified and standardized processes, a foundation of innovative and enabling technologies, and a highly skilled and technically fluent workforce.

Below are seven principles to begin or continue the journey:

Accept that ambiguity and continuous evolution are here to stay—the pace of business has changed. Have a strong, flexible foundation—core technologies, automated processes, structured data models, and savvy talent—that allows you to dynamically support the business in the face of evolving forces.

Be intentional about your workforce and their experience. Invest in and foster your people—across all levels. Skills development should be a part of business as usual and should span foundational finance skills as well as tech-savvy and problem-solving skills. Give employees opportunity and space to grow.

Reimagine and redesign processes to be performed by systems and automation. Leverage technology upgrade cycles and programs to help you achieve these outcomes. Make sure human interaction adds and drives value.

Meet the enterprise’s evolving and growing appetite for fast and reliable information. Rethink how information is made available today to fully align to business needs. The speed at which information is consumed has dramatically shifted, and the business has high expectations.

Establish strong governance over your data for both internal and external consumption. Make sure the finance organization is well versed in how data is structured, created, maintained, secured, and consumed—allowing the organization to be more responsive and flexible with analysis.

Leverage modern, compatible, and continuously updating platforms that can transform and scale with the business. Take advantage of platforms that regularly evolve to bring new capabilities to finance.

Develop the capability and capacity to sense, weigh, and mitigate risks. Know and measure the most important risk and performance indicators for the business, and be prepared to respond.

Barriers to Break Down

There are several reasons why finance functions may not always move as fast as they need to, especially when trying to help their organizations navigate disruption:

  • Functional silos: Too much work occurs in silos, with one part of finance not engaging with another or with the business to understand the downstream impacts of decisions.

  • Mindset and cultural shift: Change is hard for any function, but it’s particularly hard for finance, which has always held an essential role as a steward of stability. A mindset shift that flexibility is key to stability is necessary to successfully navigate change.

  • Lack of connection: Lots of things need to happen to transform finance, and they don’t always seem connected. But without integration, you can’t build the connective tissue of a Dynamic Finance capability.

  • Technical debt: Transforming the technical architecture and platforms that finance uses can be costly and challenging to implement. Furthermore, system changes alone won’t fix broken processes and underlying data challenges.

  • Incentives aren’t aligned: An organization’s reason for transformation may come from diverse perspectives, but it should be aligned across the business and championed by leadership. Everyone should have a clear understanding of the organizational vision.

  • Access to funding/capital: CFOs are in a competition for capital. Many rely on traditional ROI and cost out business cases. They should consider putting a value on intangibles such as better and faster information to make the case for the investment they need.

Questions to Ask First

An organization with a foundation of agility, resilience, and automated processes is often better set up for success, no matter what comes its way. A finance function that can move fast, embrace good over perfect, and continuously evolve to deliver strategic insights is one that is ready for the future.

Consider the following questions along the way:

  • How did your finance organization adjust to recent disruptive external events?

  • Is your finance organization ready for the next disruption?

  • Do your finance organization’s objectives, capacity, and capabilities enable the enterprise to meet its strategy and change at pace?

  • Which principle of Dynamic Finance should the finance organization address first to be able to match the pace of change for the enterprise?

  • What is the first step in beginning finance’s dynamic journey?

Any organization will face a huge disruption at some point, but by strengthening key parts of finance, disruptions can be used to unleash new opportunities, and the organization can become dynamic along the way.

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—by Mike Danitz, Jonathan Englert,  and Kristin Kanter, all principals at Deloitte Consulting LLP;  Liz Percy, partner, Consulting, Finance & Performance, Deloitte MCS Limited; Ryan Reiber, principal, Risk and Financial Advisory, Controllership, Deloitte & Touche LLP; and Philippe Podhorecki, senior manager, Consulting, Finance & Enterprise Performance, Deloitte Consulting LLP

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