Become the Great Connector Your Midsize Business Needs
Insights and recommendations from new Oxford Economics research
The importance of finance for growth in an organization becomes more important with financial innovation. Since finance is a facilitator for almost all production and consumption activities, developments in the financial sector directly affect the economy. In addition, better financing encourages more efficient investment channels for savings and investments, which emerges as an indirect effect of financial innovation and positive economic growth (Frame & White, 2004). Thus, organizations must reach high savings rates and investment for economic survival and adopt the best technology practices (McKinnon, 1973).
Any organization’s finance department is vital to its success. This is especially true for small and midsize businesses, which frequently grow faster than their bigger counterparts and are more susceptible to unforeseen events. These departments must successfully manage cash flow, marshal resources to assure quality and efficiency and analyze and mitigate risk.
SAP and Oxford Economics interviewed 2,000 executives from small and medium businesses worldwide, including 255 from the finance department, to learn about their objectives, problems, digital maturity, and plans for improving customer and employee experiences.
According to one of their crucial findings, the majority of the finance executives cited improving customer experience as their primary strategic objective.
A well-run finance function is a catalyst for change. Finance managers can provide helpful guidance to other aspects of the business. Working collaboratively with GRC teams to prepare for changing regulation and potential threats, and endorse organization-wide adoption of digital tools and processes in addition to maintaining essential payroll, accounting, and auditing processes can also be listed under their roles.
Each of these responsibilities necessitates close collaboration with other departments, which is especially critical for smaller businesses that lack dedicated transformation and strategy teams.
Even for small and midsize businesses, eliminating silos is difficult. In reality, according to finance executives polled, the most significant internal impediment to attaining strategic goals is a lack of cooperation within departments. Another major roadblock to achieving strategic goals is the inability to extract insights from data, a challenge that can impede the level of help it can provide to other departments.
In this digital transition, the finance function plays a critical strategic role by leading the implementation of complex Enterprise Resource Planning (ERP) software, which unifies finance, human resources, manufacturing, supply chain, services, procurement, and other functions into one system.
The majority of small and medium-sized businesses are already utilizing sophisticated technologies in some form. However, only about a fifth of these options are used at scale.
According to the survey results, top-performing organizations are more likely to have invested in these technology solutions based on their sales growth and profit. The findings also suggest that finance, risk, and ERP systems are essential for bringing diverse teams across the company to successful businesses.
References
Oxford Economics & SAP. (2020). The Great Connector.
Frame, W. Scott, and Lawrence J. White. Technological change, financial innovation, and diffusion in banking. Leonard N. Stern School of Business, Department of Economics, 2014.
Fishkin, J., Keniston, K., & McKinnon, C. (1973). Moral reasoning and political ideology. Journal of Personality and social Psychology, 27(1), 109.