Interview Tim Wakeford, VP Financials Product Strategy at Workday.

Finance is rapidly transforming. The shift from a more administrative role to a more strategic one, helping shape the organization’s decisions, was already visible before the pandemic. Covid-19 accelerated this change and is influencing what organizations desire and expect from Finance professionals. However, we see Finance departments struggle to take on this new role and move beyond the technical nature of ‘classical’ Finance.

In this rapidly changing and dynamic world, in which the future is increasingly uncertain, organizations expect their Finance departments to step up to the challenge of managing the organization’s financial performance by effectively and efficiently planning and forecasting on an almost continuous basis. Besides that, an important role is to shape strategic decisions from a long-term perspective. Finance should not only focus on ‘what’ and ‘how’ but also help answer the ‘why’ question and give a projection for the future.

To fulfill this role differently, more data- and technology-oriented approaches and skill sets are needed. The agile and flexible approach required to deliver better insights can be hard to implement in an organization dealing with a legacy system landscape. This is a challenge for many organizations’ Finance departments, according to Tim Wakeford, Product Strategist at Workday. Finance on a Mission (FOAM) reached out to Tim to ask how he sees the changing role of finance and the IT landscape’s role as an enabler for Finance in the journey to become an organizational decision-shaper.

FoaM: Tim, thank you for your time. We notice that Finance departments sometimes struggle to fully grasp their changing role. How do you see this? 

 Tim: As a Finance professional with twenty-plus years of experience in various Finance positions, in both the public and private sector, I have noticed that our training as Finance professionals is often technical – primarily focused on core skills such as management accounting. A CFO is tasked with managing the performance of an organization in the broadest sense. However, navigating an organization through a dynamic business environment requires more than just ‘hard-core’ Finance skills. It is not just about accounting. Above all, it is about leadership and vision: ‘How do we get the best out of our people? Where do we need to invest? How do we involve people emotionally? How do we embrace the opportunities new technology provides to gain better insights and run the business better?’

Do CFOs realize that? If you fail to take action as a CFO, the business will move forward and make its own choice. In other words, if you are not part of the conversation on the moments that matter, you are out of the picture.

The majority of the CFOs I meet realize that. They have a strategic mindset. Most CFOs also realize they are being challenged by the business. They need to build a Finance function that adds more value. A Finance function that spends less time on transactional processing and more time and resources on providing advice, recommendations, and insights to the business. But sometimes they struggle with making that change. I would argue that to make the pivot, you must understand how you ended up with huge amounts of your resources involved in transactional processing in the first place. When you understand that, you can figure out what to do differently.

Many organizations have a legacy IT landscape that evolved over time. In your view, is this an obstacle for a swift transformation?

The design principles of legacy IT systems may complicate the Finance transformation. Organizations across industries all over the globe have designed IT landscapes based on systems that offer point solutions, focused on supporting various silos in the organization. The problem is that, while it may be excellent at processing transactions and preparing financial statements, it is not flexible. Many legacy systems are unable to quickly answer changing queries and demands of the business. Responding to changing business dynamics and demands requires agility.

If you look at legacy systems, most data are stored in separate silos. When you move data between the silos, you often ‘lose’ data. For example, if you want to open a new product line with a new product, service, or geographical area, aligning the master data from the silos can cause all kinds of problems. It can even blur your view and your ability to analyze and respond. This is highly inefficient. The complexity of an organization’s technology landscape is often one of the causes for that inefficiency, and it prevents the CFOs from getting the best out of the available data. It is hindering the ability to drive change and manage the organization’s overall performance. To unlock that potential and enable the CFO to focus on what really matters, you have to simplify the IT landscape.

Simplifying the IT landscape sounds like a good approach, but how can the organization achieve that?

Emerging technologies, such as machine learning and AI, can provide Finance with more agility, better insights, and greater efficiency. Modern IT solutions enable Finance to ‘invert the pyramid’, spending less time on transactions and more time on strategy. Finance departments can go beyond answering what happened and how, and move on to why things happened and what may happen in the future. To do this, Finance departments need access to the organization’s data in real time and the ability to merge with external data sources.

This development enables Finance to play an important role in a more strategic conversation. This conversation goes beyond the dialogue Finance was traditionally involved in. To get the best out of the strategic conversation, Finance needs a data-driven mindset. Besides that, a deeper understanding of technologies and algorithms greatly improves Finance’s chances of taking a leading role, driving better decision-making, further efficiency, and adding more value.

In actually replacing (parts of) the IT landscape, we see organizations either follow an inside-out approach, starting with replacing the organization’s core systems, or leave the core intact, adding newer systems in the periphery of the IT landscape first.

You mention things like data management, machine learning, and AI – things that were not all part of the Finance domain in the past. If you look at the competencies within Finance departments right now, is Finance ready to effectively use these technologies?

The short answer is no – I do not think Finance departments have the needed competencies. I do believe Finance professionals have a strong will to utilize the opportunities new technology brings and they see and appreciate the potential of digital technology. But really utilizing digital technology is still a challenge. The skills required to identify and generate commercial value from data and technology are not necessarily the same skills you needed to be a very competent Finance professional. Today’s Finance professionals think in terms of accounting and reporting. However, the value of data goes beyond accounting and reporting, which is why many organizations recruit data scientists. The ideal Finance professional combines business acumen with accounting skills and more knowledge of data.

Finance departments have a training issue and perhaps a mindset one. The first step in solving this puzzle is building a real understanding of technology and the potential it has among Finance professionals throughout the organization. They need a deeper understanding to be able to set the pace in the organization. They have to understand the commercial and cultural implications of utilizing technology and data to add value to the dialogue with the business.

What concrete steps can CFOs take to build tomorrow’s Finance departments?

An important step is hiring people with different skillsets. This also strengthens another important step: reskilling and upskilling Finance professionals to better understand the value of technology and data. CFOs also have to set their budgets in a way that supports long-term innovation. People are investigating and following trends even before the practical usability is clear. The potential longer payback time should be taken for granted. Selecting initiatives that lead to short-term profitability often seems more attractive, but remember that identifying breakthrough innovations and sustainable new business models does not happen overnight. This approach may require a change in culture within Finance departments. For many companies, Finance seems to prefer a short-term view, targeting short payback periods. They are hesitant to invest in technology or building skills without a clear outcome or an immediate positive impact on the organization’s profitability.