Businesses have had to deal with a lot of change, and many have successfully embraced change to create whole new industries and many billions in new value. Yet other businesses literally vanished: Nearly 50% of the companies that were part of the Fortune 500 and FTSE 100 in 2000 no longer appear in those rankings today. Mark Nittler, VP Enterprise Strategy at Workday, here explains to Finance Monthly why technology shouldn’t be a barrier to change.

Some of these organisations were the result of the global merger and acquisition spree that has taken place over the last 30 years and continues today, and others fell victim to the financial crisis and Great Recession earlier this century. But many were simply overcome by the forces of digital disruption. In the face of technical evolution, their inaction allowed innovative start-ups and more agile competitors to win with newer, faster, and more-efficient ways of doing business.

With that in mind, it seems crazy that technology itself should be a barrier to change, but for many businesses that is precisely what happened and continues to happen today. Companies struggle because much of the technology they currently have in place to run their businesses was not designed to help them adapt and excel in this era of digital disruption.

It’s worth looking at how financial organisations have approached technology over the last 30 years. In my experience, the technology that was originally designed to automate transactions and financial accounting is now preventing finance from realising its ultimate goal: To be a better business partner.

When we think about the finance function today, it essentially has three main areas of responsibility: Transaction processing and accounting, compliance and control, and business partnership. Finance leaders are frustrated because their teams spend too much time dealing with the first two, leaving little time to be the strategic partners their companies truly need.

Achieving this vision of partnership requires finance to deliver data that goes way beyond the general ledger information that legacy systems were designed to record. With a wider set of stakeholders and a business landscape that is continually evolving, finance is being asked to provide the broader company with contextual information that can actively influence decision-making and, for the most part, they’re struggling in this mission.

If this vision is to be realised, then transformation must happen. Finance needs faster access to relevant data, better reporting, and stronger built-in internal controls. And because older financial systems were not created with this vision in mind, businesses and their legacy vendors have attempted to fill the void by bolting on missing capabilities. As a result, finance technology has become a complex mix of acquisitions, custom integrations, and middleware.

Despite seemingly perennial discussions around the need for finance to transform, this hasn’t really happened. Why? It’s primarily because legacy finance systems continue to stand in the way. They’ve stopped finance from mastering the elements of a true partnership: providing impactful business analytics, delivering clear plans and forecasts, and having the agility to adapt analyses, plans, and processes to business change.

Analytics that influence positive business outcomes stem from four traits that simply do not exist in legacy systems—a broad definition of the user, information relevance, simplicity, and availability on any device. Legacy ERP was designed in a command-and-control era, where information was delivered to a few who then communicated it to the masses. Today the audience for financial information is, quite literally, everyone.

This broad community is interested in analysis such as profitability, what-if-analysis, and cost model, but traditional ERP systems were built for IFRS/GAAP and regulatory output rather than delivery of contextual analysis. Finance teams have tried to tackle this lack of capability in their legacy ERP systems by looking for better reporting, achieved by bolting on aftermarket business intelligence or enterprise performance management reporting tools. But this approach hasn’t worked because the problem is not reporting—it’s the quality of the data and the ability to easily draw conclusions from analysis.

If the right data is not captured at the very beginning of the process at the transaction level, no reporting scheme will deliver relevant analysis. Modern systems, such as Workday address this issue at the transaction level by capturing data-rich transactions so that relevant analytics can be delivered directly from the system without the cost, complexity, maintenance, and control issues of aftermarket solutions.

Having the right data is the first step; making it usable is the next. Because we can no longer expect that everyone using the system is a back-office system expert, analytics have to be easy to define and understand and simple to access. And because everyone is mobile, relevant analytics must be available anywhere at any time and on any device. Such tools must be designed from the beginning for delivery on mobile devices as standard, not as an optional and a chargeable extra.

The days of static plans that last a year or more are gone, and to support the evolving needs of the business, planning must be an ongoing activity. And in order to be effective, planning and forecasting needs to be combined with transactions, controls, reporting, and analytics in a single system that offers a single source of truth, a single set of data, a single security model, a single control framework, a single set of processes, and a single user experience. Without this forward-looking approach, organisations run the risk of their plans becoming dated and redundant virtually as soon as they are produced.

That leads us to the third partnership attribute—agility. Legacy systems are inherently rigid, turning many otherwise very good finance departments into business prevention teams, because they’re unable to cause the change necessary to support new business initiatives. They need modern tools with the ability to change organisation structures, business processes, and even data models in minutes. Essentially, a finance system should be capable of converting a finance department into a change enablement partner to help the business rise to challenges and take advantage of opportunities, whatever they may be.

The journey to finance transformation isn’t easy, but it’s certainly doable. It requires an understanding of why previous efforts of failed, and reducing time spent on transaction processing. It also requires a rethink in terms of governance, compliance, and control, and how finance approaches this from a technology perspective. Finally, finance must become a more strategic business partner, by delivering insights from the right data, the ability to plan, and adapt to new opportunities as they arise. Only then can financial transformation take place.