Gartner : Autonomous Finance Requires a New Finance Operating Model

Finance transformation efforts are falling short of CFOs' objectives in large part because finance leadership has not articulated a vision for its future operating model at the beginning of the initiative.

To successfully achieve autonomous finance objectives, finance transformation leaders need to ensure other finance leaders fully understand the scope of changes that genuine transformation requires. This rmeans using an operating model framework that will help orient stakeholders to all the pieces of large transformations.

We spoke with Emily Connelly, senior research director in the Gartner Finance practice, to discuss why finance needs a new operating model, why autonomous finance should be a focal point of this new operating model, and what she defines as the main components of an autonomous finance operating model.

Autonomous finance is a key focus area at this year's Gartner CFO & Finance Executive Conference, which is being held May 20-21 in National Harbor, and September 11-12 in London.

Journalists who would like to speak with Emily regarding this topic, or register for a media pass to the conference, please contact rob.vandermeulen@gartner.com. Members of the media can reference this material in articles with proper attribution to Gartner.

A: Many CEOs feel that their company's digital technology investments do not meet expectations in terms of time to complete and time to realize value. If we accept, for argument's sake, the premise that attempts to modernize the finance organization with digital transformation initiatives also tend to disappoint, we can lay at least part of the blame on the absence of an operating model designed by the finance leadership team that clearly sets out which principles will guide decisions and trade-offs in the journey towards autonomous finance.

Finance transformation leaders struggle to get other finance leaders to think in the context of the entire operating model when planning transformation simply because most finance organizations have not defined one. Planning the future autonomous finance operating model will significantly increase finance leaders' shared understanding of where their function is now versus where it is headed, and this alignment will result in clearer objectives for how to make transformation successful.

A: Autonomous finance refers to an environment where processes and activities are partly governed and majority-operated by self-learning software agents that optimize front-, middle- and back-office operations. However, an autonomous finance function isn't just automated; it's capable of delivering augmented real-time and predictive insights, effortless compliance, and greater flexibility in financial strategy.

Within an autonomous finance environment, finance teams can deliver valuable insights to decision makers, find innovative ways to use analytic resources, and connect business problems to the data to help inform better decisions.

"Within an autonomous finance environment, finance teams can deliver valuable insights to decision makers, find innovative ways to use analytic resources, and connect business problems to the data..."

A:Getting finance leaders to make hard decisions about these operating model elements to unlock value from finance technology will require a different approach to discussions about technology and organizational structure. That's because most finance transformation initiatives focus too heavily on technology or organizational structure and underinvest in other categories of operating model decisions.

No two companies or functions have identical operating models because of differences in business context, talent, regulatory environment, and history. However, all firms should consider nine operating model categories when designing their future organization to move successfully toward autonomous finance.

To help CFOs and transformation leaders formulate a comprehensive operating model, Gartner experts have outlined the categories of operating model decisions. Finance transformation leaders should select, alter, or add to these as they work with the rest of the finance leadership team to plan a transformation.

• Ways of Working: Includes more collaborative and transparent approaches to work, behaviors, informal workflows, team customs and the adoption of methods such as agile and lean.
• Decision Rights: The decision rights that key stakeholder groups have for executing the strategy address who makes decisions, how decisions are made and how disputes are resolved.
• Talent: Employees' competencies, skills and profiles needed to execute work in the operating model.
• Organizational Structure: Definition of the organization structure, key roles and reporting relationships, and collaborative networks.
• Tools: Key tools and assets required for teams to perform their responsibilities.
• Financials: How finance will be funded; how budgets will be allocated, planned and monitored; how costs will be recovered or priced; how investment is aligned to strategy.
• Performance: The approach to performance management to ensure the strategy and ongoing operations are effectively executed and continually improved.
• Sourcing and Alliances: Sourcing defines the approach to outsourcing and partnership with third-party service providers. Alliances define the necessary partnerships and how to ensure they create value.
• Places: Where in the world people and key assets are located. Includes a more granular view on office location and reflects the changing ways of working, such as hybrid work. Can extend to cover the enhanced collaboration through exploitation of the digital workplace.

Additional information and example principles each category noted above are available to Gartner clients in the report The New Operating Model for Autonomous Finance. Nonclients can watch the webinar Move Towards an AI-Forward, Autonomous Finance Future.