Despite the huge interest in innovation and the thousands of column inches written in the media every day, innovation is one of those terms that defies precise definition. Rather than attempting to define it, FSN’s 2018 Innovation in the Finance Function research survey invited the global finance community to offer examples of what it thought constituted innovation in the finance function.

The answers were varied and surprising.

Innovation in the eye of the beholder

Over a quarter of the 1,063 survey participants claimed to have initiated some form of innovation in the last three years and described innovation examples in their business. The comments reflected the wide-ranging views of CFOs and senior finance executives at different stages of their journey leading modern finance functions, with the research highlighting that innovation is very much in the “eye of beholder.”

For instance, 35 percent describe quite modest developments as innovation. These are the organizations shackled by legacy systems for whom innovation is limited to tinkering at the edges of their processes and of necessity—making marginal changes in automation and integration rather than wholesale change to completely new systems.

But it’s telling that for 85 percent of CFOs, the most pressing need is for innovation to drive better insights about the business. This reflects the changing nature of the finance function from accounting to strategic leader. Finance sits at the confluence of all the business functions and is best-placed to offer the sort of insight that can give organizations a competitive edge.

Encouragingly, 20 percent of survey respondents gave examples of innovative projects designed to deliver management insight. The implementation of budgeting and planning tools featured prominently, along with business intelligence tools and dashboards. The motivation in the majority of cases was the delivery of better key performance indicators and analytical capability.

Cloud implementation featured more strongly in this category than any other, perhaps because of the greater choice and popularity of cloud-based applications in the corporate performance management space, or the relative ease of implementing management information initiatives in the cloud, compared with, say, ERP in the cloud.

For many organizations, the implementation of cloud-based planning, budgeting, and forecasting (PB&F) solutions offers an opportunity to break free from legacy systems while swiftly demonstrating to the rest of the C-Suite the benefits of innovation, such as improved speed of forecasting and accuracy that can be achieved by migrating to modern PB&F applications in the cloud.

Newer technologies employing machine learning and artificial intelligence capabilities represent the next wave of innovation in the finance function and remain largely experimental at this stage. CFOs who have successfully implemented PB&F processes in the cloud are well-placed to convince the rest of the C-Suite to invest in these exciting innovations.