10 digital trends to build a value-driven controllership

July 1, 2024 3:48 PM

Digital innovations raise questions about the controllership's future value proposition. Gartner experts recommend that corporate controllers recognize and act on 10 digital trends shaping the controllership function. These trends include process-level innovations, digital acceleration and an emerging decision-support mandate, and they all help elevate the controllership function's efficiency and value proposition.

Elimination of manual work

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Accounting leaders anticipate myriad benefits from automating manual work: from a more digitized financial close process (per 86% of leaders surveyed), to faster processing (85%), to a cheaper and error-free close process (68% and 64% respectively). Many controllers, however, fail to quickly execute against these opportunities because they feel their processes lack the maturity to properly exploit these opportunities. Upon analyzing the levers that make controllership processes "ready for digital," Gartner found that teams will maximize their returns by establishing a clear end-state process vision.

Before implementation, teams should establish a clear vision that documents future-state processes and establishes a long-term digital strategy that aligns with that vision and appropriately sequences complementary digitization tactics. They should also establish dedicated teams to drive and govern transformation efforts to enable rapid digital decision-making capabilities.

Hyperautomation

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With 86% of finance functions now experimenting with or formally pursuing at least one hyperautomation initiative, and 54% of Gartner's clients now having four or more concurrent hyperautomation initiatives, these solutions stand to revolutionize the efficiency and insight offered through the controllership function. But what is it? Hyperautomation uses multiple automation technologies, tools or platforms to automate a process and uses artificial intelligence, machine learning and other tools to move beyond routine task automation, toward end-to-end process automation and, ultimately, augmentation.

To harness the power of hyperautomation, controllers should pursue a composable controllership technology architecture, which organizes finance technologies into modular application building blocks that deliver defined capabilities for specific business outcomes. Controller teams should also adopt an ambitious digital mindset among staff and crowdsource process innovation opportunities from their teams before evaluating digital solutions, rather than defaulting to tried-and-true automation cases.

Growing prevalence of finance IT

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The majority of finance leaders report corporate IT-managed finance technology projects often experience execution challenges related to project delays and data quality issues. Some 64% of finance leaders surveyed said their teams lack the capacity required to introduce new digital technologies. Finance IT helps finance leaders secure the necessary capacity and expertise for finance technology projects and frees traditional finance employees to better respond to growing end-user customization requests.

Controllers should build and present a business case detailing the importance of finance IT that highlights the gap between finance's current and desired levels of technology implementation and the costs of slow digital transformation progress. Functions that are slow to offer digitally enabled support risk internal reputational damage.

Process mining

Many controllers are exploring process-mining technology to understand the root causes of process inefficiencies and reimagine end-to-end controller processes. Some 83% of controllers are planning and sequencing finance transformation activities; 74% are standardizing and streamlining the close process; and 63% are digitizing the close. Controllers can use process mining in process discovery, process conformance and process enhancement to achieve better end-to-end processes.

To get started, and to demonstrate real ROI, controllers should measure the average cycle time from creation to posting of a journal entry, highlighting variants where the correct path is not being followed and the time spent on nonconforming flows that could be targeted for improvement. From there, a business technologist or data manager, in partnership with members of the accounting team, should train a core group of employees dedicated to source the required data.

New data governance mandate

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Today's data governance mandates are evolving in an increasingly complex and democratized data environment. Business leaders use a growing variety of data to inform key decisions that hold considerable implications on controllership processes and governance — particularly the complexity in the lineage of controllership data increases as data transformation efforts proliferate throughout the business.

Because controllership teams are increasingly mandated to govern financial data with a view to improving decision outcomes, they should move beyond focusing solely on ensuring financial data accuracy and pay attention to ensuring this accurate data can be better contextualized for internal decision-making purposes. To do so, controllers should get comfortable with nontraditional data governance strategies — differentiating data governed by a single source of truth versus datasets better positioned for governance via "sufficient versions of truth" methods. They should also document data-quality issues transparently, by working with financial, planning and analysis to define optimal quality standards for different-in-kind reports across different governance quality categories, such as data adherence to a business glossary.

Decision-support mandate

Changing business conditions are revealing new opportunities for the controllership to redefine its business value proposition and responsibility scopes around value creation and decision support.

With 87% of operational decisions supported by finance teams being exclusively profit-and-loss-focused, and with macroeconomic and industry-level volatilities accelerating the priority for finance to close balance sheet and coverage gaps, controllership has a major opportunity — but it must overcome two major legacy challenges in developing a targeted decision-support strategy. Controllership has traditionally lacked a mandate for decision support, with operational leaders typically defaulting to the finance front office for their decision-support needs. Second, controllership staff do not all exhibit effective aptitude and attitude to support judgment-based finance work. Controllers are aware of these skills gaps: 54% stated in 2023 they will dedicate significant time to improving their team's business-partnering capabilities.

To develop a clear decision-support mandate, controllers must begin by defining a value-additive scope of functional responsibilities that align to critical business outcomes. This can be done by cataloguing all currently performed — and desired — controllership activities, before defining common criteria to subsequently use in force-ranking the relative value of performing those respective activities.

New accountabilities for new controls risks

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In 2023, controllers and CFOs reported that digitization initiatives rank in the top five priorities for both accounting and finance. Yet automation initiatives related to solutions like robotic process automation and machine learning technology will generate new control challenges even as they significantly reduce labor-intensive activities.

To that end, controllership teams have the responsibility to automate internal controls leading to efficiencies and to evaluate the internal controls implications of automation initiatives at-large. To do this, controllers should apply an adaptive governance framework that provides finance leaders the flexibility to choose the right level of control over digitization projects that deliver business value. They should also adopt a business-first approach to screening technology use cases for internal controls impact, which will help balance out the need to assess the internal controls impact of proposed tech projects with the business' need to implement new technologies quickly.

A highly scaled organizational design

The growing number of digital technologies aimed at improving the efficiency of most accounting and finance processes and the speed by which these efficiency gains are realized is driving department organizational structures, roles and skills toward the autonomous finance vision. As controllers implement technology aimed at simplifying and automating record-to-report processes, manual accounting activities and data collection and cleansing roles will be eliminated. Future controllership organizations will comprise fewer staff members with traditional accounting backgrounds and more with process improvement and finance IT expertise.

To propel scalable controllership organizational design, controllers must determine optimal centralization levels and consider whether shared services teams can handle additional accounting responsibilities from regional or country-based accounting teams and the corporate accounting function. They must also reevaluate the controllership's scope and redefine their team's value proposition as it moves from completing routine tasks to supporting judgement-based and decision-enablement workstreams.

Business process outsourcing

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Controllers and CFOs are evaluating the use of BPO providers for digital transformation services with leaders increasingly selecting these vendors for support of end-to-end processes across source-to-pay, order-to-cash and report-to-report, as well as faster access to tech solutions in general. Controllers' ability to capitalize on automated solutions — whether through a BPO provider or direct purchase and implementation — will impact the extent to which accounting staff roles and team structures change.

As such, controllers, in collaboration with their CFOs, should evaluate the costs and benefits of contracting with a BPO provider to accelerate digitization efforts instead of defaulting to focusing BPO evaluations exclusively on cost arbitrage and process efficiency outcomes.

Non-negotiable digital competencies

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While controllers recognize the priority to upgrade their accounting processes and technologies, only 25% of controllers consider their employees very effective at digital competencies that enable the use of those technologies. Yet 72% of controllers are unclear on the specific digital competencies their team needs, creating a barrier to increasing their teams' digital proficiency.

Digital competencies for controllership fall into five categories: technology literacy, digital translation, digital learning and development, digital bias management and digital ambition. Controllers who successfully recruit more technology talent into the job function, as well as develop existing talent, will be well-positioned to realize significant gains in speed, quality of decision making and efficiency.

To get there, controllers need to understand and acquire new digital skill sets for their team, establishing a baseline for ideal proficiency levels for each of the five competency categories above and comparing these against current proficiency levels. They must also set the expectation and hold managers accountable for coaching employees. Finally, they should be purposeful about developing digital competencies on the job, to create a strong foundational baseline of digital acumen across the entire function. They should also proactively help staff and encourage accounting managers to identify opportunities to practice competencies and provide training and resources to prompt them.