Proven Tips and Strategies for Achieving Autonomous Finance

Ruchi Kasliwal
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Dive deeper into the essential mindset shifts for CFOs to achieve autonomous finance in a digital landscape. Learn how overcoming algorithm aversion can help CFOs drive revenue growth.
February 28, 2023

In an increasingly digital landscape, CFOs need to be more strategic. The modern CFO, as a true strategic business partner to the CEO, needs to drive big-picture solutions for revenue growth and cost savings. To do so, integrating new technologies becomes paramount, especially when the business environment is governed by mounting inflation and widespread economic uncertainty.

CFOs must accelerate the finance function’s journey towards autonomous finance, or they will fall behind. By introducing and championing autonomous finance functions, CFOs can ensure that their organization stays competitive and makes the best decisions based on real-time data and trends.

In this article, we look at:

- Three CFO mindset shifts for achieving autonomous finance

- How to champion autonomous finance implementation at your org?

Let's explore together.

What is an autonomous finance function?

Simply put, in an autonomous finance function, processes and activities are partly governed by self-learning activities to optimize back, middle, and front-end finance functions. This involves generating real-time insights in the financial strategy with little to no human intervention.

The goal of autonomous finance functions is to improve the overall performance of the organization with enhanced decision-making, increased efficiency, and improved collaboration.

Three key CFO mindset shifts for achieving autonomous finance

#1 Embrace broad experimentation with technologies

A common belief among CFOs is that responsible spending equals narrow experimentation with technology until the application is proven. Scale follows later. That’s because, being the gatekeeper for responsible spending, the finance function is not given the same permission to fail.

Primarily, finance teams view technological experiments as isolated events because the experiments start small and in a few finance functions. Instead, the CFO should encourage running several pilots across subfunctions of finance operations, including forecasting, reporting, scenario modeling, and so on.

The key challenge

To champion successful autonomous finance implementation, the CFO must first identify areas in the finance operations that need improvement. Analyze the current processes and systems to determine areas for cost savings or higher efficiency gains.

💡For example, spreadsheets are often inefficient and prone to errors. Legacy financial software solutions are potential candidates for upgrades or replacements.

Another key aspect is to understand what the desired outcome of the experimentation process is. Once the needs are identified, the CFO can start experimenting with technologies in the finance departments.

#2 Get rid of algorithm aversion

Here’s an interesting question: Even when evidence shows that technology makes more accurate decisions, why are people reluctant to trust it? This phenomenon is called algorithm aversion. When asked to choose between human judgement and algorithms, humans prefer trusting what they’re familiar with: other humans.

💡As per Gartner, human-generated traditional financial statement forecast has the maximum acceptable variance of 10%, whereas technology-generated forecast has a maximum acceptance variance of 5%.

The current CFO’s mindset of technology must meet the absolute threshold that needs to be changed to ensure that technology performs even better than humans. CFOs and finance teams must be able to understand how technology makes decisions and put guardrails around it.

The key challenge

- Stakeholders and finance departments have ingrained perceptions about autonomous technologies.

- Lack of knowledge about how the technology works as well as the employee and leadership buy-in.

- Devoting a budget for this activity and assigning a team member who oversees the implementation and performance and takes responsibility for it.

#3 Upskill employees to become fluent in digital

The truth is, while CFOs are trained to follow hard numbers, they may not have much experience with the soft skills needed to convince their team to adopt technologies for autonomous finance. Research concludes that only one-third of CFOs invest time in learning about new technologies, such as autonomous finance and its applications.

Today’s workforce does not want to be a cog in the machine but rather make truly behavioral changes. For this, they need two things:

- Understand why they’re learning a particular technology and how it fits in the broader picture.

- The CFO should set an example towards adopting new technologies through a top-down approach.

It is essential to have a communication strategy in place so that everyone knows of the finance transformation initiatives and is aware of the progress being made. Without effective communication, it can be challenging to keep everyone’s eyes on the prize.

On that front of the CFO mindset shift, what leaders say has much less impact on employee behavior than what they do. Employees change because of how leaders behave, not because leaders ask them to change.

Tips to accelerating autonomous finance function

Along with changing the CFO mindset towards autonomous finance, organizations need to start from the ground up with a multi-faceted approach. To ensure a successful change in the CFO and finance team’s mindset, focus on the following elements.

#1 Develop an agile CFO mindset

A critical barrier to overcoming any transformation is mindset. While much importance is given to the finance team mindset, the CFO mindset is often overlooked.

An agile mindset is one of the most important elements of autonomous finance as it affects every aspect of the transformation process. It applies to choosing the right technology, software, implementation timeline, and adoption of the technology.

CFOs need to embrace new technologies and methods and ensure that the finance teams can adapt to change quickly and capitalize on growth opportunities.

#2 Create an implementation roadmap

The onus is on the CFO to build a roadmap with the objectives, key milestones, timelines, resources, and KPIs to measure success. It starts with assessing the existing processes and systems, understanding the data available, and prioritizing and scoping activities to focus on implementing technologies for autonomous finance.

CFOs can create value for all stakeholders by

- Keeping projects on budget and schedule

- Ensuring that the board’s interests are aligned with the outcomes

#3 Cross-departmental collaboration strategy

While we’ve covered the importance of the CFO mindset shift to accelerate autonomous finance function, an important step is to build a cross-departmental collaboration strategy. Find out what are the dependencies of other departments on finance and plan how you can work together to achieve desired results.

For example, the HR department needs access to accurate financial data to make decisions about headcount planning. The sales department would need revenue forecasting data for sales performance management. At the same time, finance would have to collaborate with the IT department to become a data powerhouse.

#4 Continuously evaluate progress to make adjustments when necessary

Autonomous finance initiatives require a great deal of continuous planning and coordination from multiple departments. A successful CFO mindset shift towards autonomous finance largely depends on the ability to reevaluate the progress frequently and make the necessary adjustments.

CFOs must take a holistic view of the financial operations, accept input from multiple stakeholders across departments, and make quick changes to improve the overall financial performance.

Embrace a mindset of autonomous finance

Implementing technologies for autonomous finance can help organizations meet the demands of today’s fast-paced business world. The modern CFO is in a unique position to spearhead the transformation, being an expert in financial tools, processes, and data insights.

By embracing experimentation with technologies, building credibility in technology, and encouraging employee behavior towards adopting technologies for autonomous finance, CFOs and finance teams can enjoy profitability in the long run. The right mindset, tools, and processes set up the financial function and CFO for success and sustainability.

Are you planning to implement technologies for autonomous finance in your organization? Modern finance operations platform like Bluecopa is designed to optimize high-growth for fast-scaling organizations. Sign up for early access.