A survey by Everest Group revealed that 49% of CFOs have fully centralized their finance operations, with others adopting a hybrid model. Increased technology use is driving this trend, enhancing efficiency and standardization. However, challenges such as outdated technology and a reluctance to change remain significant barriers.
Recent technological advancements have prompted a significant shift towards centralizing finance processes among corporations. According to a survey conducted by Everest Group, in collaboration with Conduent—a provider of digital finance solutions—49% of 200 CFOs surveyed indicated that their companies manage all finance and accounting functions through corporate finance. Meanwhile, 35% of respondents utilize a “hub-and-spoke” model, wherein a centralized team develops standardized procedures that individual departments implement based on their specific requirements, leaving 17% managing their finance operations in a decentralized manner.
This trend towards centralization aligns with the adoption of enhanced technologies capable of improving operational efficiency. Conduent’s analysis highlighted that many organizations continue to operate outdated legacy systems that are both costly and cumbersome to update. However, a growing number are investing in tailored integrations that facilitate process automation, data analytics, and the incorporation of artificial intelligence and machine learning, thereby simplifying operations and ensuring consistent policies across the board.
Furthermore, the report identified key areas of outsourced finance that provide substantial return on investment, including management reporting, billing, accounts receivable, and capital budgeting. CFOs emphasized that achieving operational efficiency is paramount, followed by enhancing business metrics and customer satisfaction through outsourcing. Conversely, the survey also revealed significant barriers to outsourcing, including issues related to pricing models, outdated technology, and a pervasive cultural inertia that resists change.
Conduent advises organizations that have not yet pursued outsourcing to consider procurement as an initial focus area, as even marginal savings here can yield considerable financial benefits. Notably, many companies regard recommendations to alter established systems as threats to their operations. “Organizations may have significant wariness to new technology and approaches,” particularly due to fears of implementation errors and associated costs—an apprehension rooted in legacy systems heavily interwoven into their operational fabric.
The trend towards centralizing finance processes within corporations has escalated due to advancements in technology and the need for consistency in organizational operations. This movement allows companies to streamline their finance processes, ensuring uniformity in procedures, improved data accuracy, and increased overall efficiency. Various organizational models have surfaced, ranging from full centralization to mixed approaches involving the integration of centralized guidelines within decentralized units. The challenges of transitioning from outdated systems to modern solutions shape the conversation around financial outsourcing and operational restructuring.
In conclusion, the shift towards centralized finance processes reflects a broader trend among organizations to leverage digital solutions for greater operational efficiency. While nearly half of CFOs reported full centralization, others are exploring hybrid models that balance standardization with departmental flexibility. The potential benefits of such transformations are great; however, they are accompanied by significant challenges, including technological resistance and cultural inertia. Organizations are encouraged to pursue opportunities in procurement to unlock potential savings and enhance overall performance.
Original Source: www.cfo.com
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