The Finance function is one of the most active business centers of any organization. It actively associates with the planning, allocation and utilization of funds for the efficient functioning of all business operations. The COVID-19 pandemic has forced businesses around the world to relook into their finance department and restructure. But, is there a standard restructuring pattern that has been observed in the past few months?
According to Gartner, there is. In its latest report titled “Redesign Finance Department Structure and Roles”, the leading technology analyst and market intelligence firm has advised organizations to actively relook into their existing finance organizational structure. According to Gartner, 81% of companies have already undergone a major reorganization in the past 12 months. And, this would continue to happen in 2021 as well.
In 2021, more than half of the respondents (56 percent) are anticipating a major revamp to their finance structure, largely inspired by the need to reduce costs (76 percent), followed by the desire to reduce process efficiencies (49 percent), and improve quality of their product / services (35 percent).
Finance restructuring is also required before organizations plan to expand into new markets and dive into a merger and acquisition deal — a trend that has taken every tech business by surprise during the pandemic.
What You Should do to Restructure your Finance Function?
Gartner has provided valuable insights in its report for CFOs and CEOs on how to restructure finance function in 2021.
The recommendations are as follows:
- Adopt ‘Centralization’ as a key to unify repeated tasks and operations;
- Access sources that lend to and then build upon your company’s existing competitive advantage;
- Reduce duplication by clearly defining subfunctions in your finance department;
- Drive ideal finance staff behavior by incentivizing performance metrics.
What can your Finance Function become in 2021?
Gartner recommends that Finance Function must move to one centralized and standardized structure for continuous improvement across its operations. This is possible through the integration of:
- Business Finance
- Core Finance
- Continuous Finance
As per Gartner’s report, your finance function can fulfill these roles in 2021:
Corporate Finance Center with focus on good governance and financial controls;
Center of Excellence (CoE) for improved business operations through qualitative data management and analytics;
Shared-service Organization, with a focus on cost reduction and process improvement across Accounts and Payroll departments;
BU-Aligned Finance, supporting the business strategically with risk assessment and quality recommendations on performance, pricing, and M&As.
Role of Data Scientists and Analysts in Finance
Data Science has become a key component for the finance function. It is particularly useful in redesigning and restructuring of finance as a CoE, driving data analytics models to assess risks and predict / optimize the outcomes of capital investments, deamnd planning and supply chain.
In the report, Gartner has demonstrated “10 Steps” to redesign your finance function and reorganize financial planning and analysis in sync with accounting practices.