PwC's 2015 global finance benchmark report, "Breaking away: How leading finance functions are redefining excellence," said new technology, higher customer expectations and globalization are increasing the pace at which business is conducted, as well as demands for real-time information from the finance function.
For example, a faster rate of change is spurring a move away from complex forecasts and budgets toward more flexible and creative approaches to financial analysis and insight.
"Finance functions need to be far faster at predicting the changes that will present the most opportunity for businesses, but which could also jeopardize the existence of those that don’t see these changes coming."
Finance Enhancements
The study identified a number of characteristics of high-performing finance functions such as cost efficiency (leveraging automation and shared services), faster turnarounds (delivering budgets and information sooner than peers), sharper insights (helped by analytics and collaboration with business unit leaders), and leaner operations (supported by automation and standardization).
In the face of increased demand from business units for real-time insights about organizational performance, a growing number of finance functions are shifting away from big data warehouses to analytics and cloud technologies designed to provide near real-time access to information.
"We believe finance functions that aren’t already responding to [real-time information requests] will see their role as custodians of trusted data analysis taken over by other parts of the business," the report said.
Cross-Functional Transformation
Increased collaboration between finance and other functions is another feature the study says characterizes the leading finance teams. Depending on organizational needs, this integration can range from timely processing of functional information to the exploration of data-driven insights.
"Increasingly, organizations are turning to finance professionals as they consider transformation processes. As technology continues to advance and businesses demand more flexibility, efficiency and capability from their people, transformation projects often require the coordination of finance, IT and HR departments to ensure their success."
Resource Use
Cost efficiency is another key characteristic of leading finance functions, with the most effective teams running at an average 40 percent lower cost than their peers.
"Top tier finance teams operate at lower cost, but also make more effective use of their resources," the study says. "Rather than simply cutting spending, they adjust how they target resources. Enhanced efficiency means they can dedicate more [professionals} to business partnering roles and spend a greater percentage of their time on business insight."
Those finance functions are also paying closer attention to practices followed not only by their industry peers, but also by those in other industries. This examination of cross-industry practices can be helpful as traditional lines between industries blur, such as when retailers launch financial services subsidiaries.
As a percentage of revenue, for example, retailers run finance at approximately 25 percent of the cost of financial services firms.
"We believe there is an urgent need for finance leaders to look across all sectors and learn from the latest innovations and best practices, since these front-runners could soon be competing in their core markets," the study said.