The federal government is undergoing a period of rapid change in how its agencies handle back-office operations, information technology and human resources. These changes affect every aspect of an agency’s executive function, including the chief financial officer’s (CFO) role.
I believe that the CFO office of the future is going to look significantly different than it does today. In fact, significant disruption in federal financial management is imminent. Massive technological change and shifting public and user trends demand a new approach to how federal agencies create and deliver value for the public.
Based, in part, on work I did last year for a report on the CFO Office of the Future published by the Association for Government Accountants (AGA), I believe five key technological and human shifts will play significant roles in evolving the CFO office over the next five to 10 years.
Agencies increasingly are frustrated by the difficulty of managing financial technology systems. Although the lack of interoperability for integrating data streams has been acknowledged as a problem for decades, it continues to confront managers within agencies (and other organizations, too, for that matter).
Over the next decade, we expect to see federal agencies adopt new automated processes or use partners that will help simplify current interoperability challenges. Many organizations are looking for ways to get out of maintaining cumbersome back-office financial system operational processes, so they can redirect their full attention on work that directly contributes to fulfilling their missions. They will look for more efficient methods for software upgrades and systems and process standardization.
Common in the private sector, we are seeing a trend of federal agencies working toward selecting integrated financial, acquisition and budgetsystems and seamlessly connecting these with supply chain and asset management systems. Utilizing enterprise resource planning (ERP) for its pre-built integration will free up financial and chief information officer (CIO) resources from managing integration, reconciliation and systems challenges, including a growing set of security concerns.
One of the largest federal CFO Act agencies recently selected a single ERP for core financials, acquisition and budget functionality. This will provide the agency real-time, integrated financial data, and give the CFO and agency leadership decision-making capability they never had before. We foresee several other large agencies selecting the same pathway and goal for integrated enterprise systems.
A closely related challenge is enabling the financial reporting necessary to evaluate an agency’s financial performance, develop budget projections and to comply with regulations such as DATA Act reporting. This is at the heart of the CFO’s purpose, but stove-piping and system incompatibilities turn what should be a straightforward process into a frustrating series of obstacles. New OMB regulations like the Technology Business Management (TBM) portion of A-11 will help agencies collect total IT costs and be able to prioritize purchase and spend decisions.
As agencies solve system challenges through the measures outlined above, they will simultaneously help resolve the difficulty with data standardization, availability and opportunity for big data, business intelligence and analytics solutions. Within 10 years, agency personnel will be able to obtain real-time data straight from the ERP system and reporting engines. Expect to see reporting become close to real time and dashboard based. Agencies will eventually be able to implement predictive analytics using the free-flowing data streams that once were locked away in isolated island systems.
Human capital and change management
The changes necessary to resolve technology problems will inevitably lead to changes in the workforce. Industry research shows that even today, 50 percent of transformation projects still fail due to lack of organizational change management and successful end user adoption. The biggest barrier to success is changing mindsets and attitudes of the workforce. This will require strong leadership and employee belief that the change will make their jobs better.
As we see more automation of manual processes (i.e. data entry) to free employees to perform higher-value analysis work, employees will require training and guidance as they take on these new roles. Organizational structures also will need to evolve as new processes are implemented. As well, new skills will be required to help analyze, understand and perform strategic decision making. All of this adds up to a critical need for organizational change management to help agencies adapt, with the help of professionals to plan and guide the CFO’s office through the necessary change steps.
Automation of manual processes
Closely related to human capital is intelligent automation, and, in particular, robotic process automation (RPA). RPA is poised to perform many rote tasks which will increase the speed and accuracy of those processes. We have seen significant savings in time and effort from automating more than 100 financial processes (not including IT, administrative processes, and HR automation areas). However, it is important to understand what RPA is good for—and what it is not. As my colleague Sean Connell wrote in a 2018 blog post, tasks that are rules-based and repetitive can often be automated successfully. Processes that call for on-the-spot decisions outside the scope of a set of rules are not suitable.
Quoting from that AGA report I helped develop:
“RPA may replicate what people do, but these robots have neither intuitional nor institutional knowledge. As an example, an account reconciliation robot can identify when data anomalies exist but cannot apply institutional knowledge or subject matter expertise to assess the cause. Human effort and skill will still be needed to assess causes, resolve discrepancies and make suggested process adjustments where needed. But research suggests that process automation of manual tasks is proven to increase employee engagement, morale, productivity and regulatory compliance.”
This is an exciting time to be in the financial modernization arena, with an enormous opportunity for adoption of new innovation and capability. Those agencies that embrace this opportunity will emerge with new solutions that will power a new era for the agency CFO.
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About this author
Vice President, Consulting Services
Kevin leads the Management Consulting and Business Systems Shared Services practices within CGI Federal. He is responsible for the business growth and delivery in the management consulting area s, which includes financial management, organizational change management, technology business management, automation, ...