Gartner for Finance Leaders

The New Operating

Model for Autonomous
Finance
Many finance transformation initiatives focus heavily on technology or organizational
design, underinvesting in other operating model decisions. Finance transformation
leaders need to prepare the finance leadership team to make decisions about the
whole operating model for autonomous finance.

Overview
Finance transformation leaders need to ensure other finance leaders fully understand
the scope of changes that genuine transformation requires. Using an operating model
framework helps finance transformation leaders orient stakeholders to all the pieces of
large transformations. This research provides a framework for the finance operating model,
as well as clear principles that can guide finance teams toward autonomous finance.

Key Findings
• Finance transformation efforts are falling short against CFOs’ objectives. This shortfall
largely exists because CFOs pressure finance transformation leaders to make immediate
progress on projects before they can address the projects’ nontechnology implications.
• Finance transformation leaders struggle to get other finance leaders to think about the
entire operating model when planning transformation. Operating model elements such
as decision rights, ways of working and performance measurement are harder to visualize
or depict in easily consumed ways than technology roadmaps or process flows.
• Successfully engaging finance leaders to make hard decisions about these operating
model elements will require different-in-kind tactics from discussions about technology
or organizational structure.

Recommendations
Finance transformation leaders must:
• Show finance leaders what constitutes a comprehensive operating model by
familiarizing them with all nine operating model elements
• Along with the CFO and the rest of the finance leadership team, define clear, testable
principles for each element of the operating model by articulating a specific aspect of
how the leadership team believes finance will need to operate in the future
• Judge the viability and priority of transformation efforts by testing all proposed changes
and initiatives against the principles defined by the finance leadership team

2
Narrow View of Finance
Operating Model Leads to
Disappointing Progress
CEOs broadly believe their firms have not seen the anticipated benefits from many
of their digital initiatives. In fact, more than half of CEOs are disappointed by their
company’s performance when assessing how quickly digital initiatives are completed
and how quickly digital initiatives deliver value (see Figure 1).

Figure 1: Digital Finance Transformation Efforts Disappoint

Evaluating Speed of Key Phases in Digital Technology Investment Life Cycle

Percentage of Respondents

Speed to Complete the

Initiative Does Not Meet 52%
Expectations

Speed to Realize Value Does

59%
Not Meet Expectations

0% 50% 100%

n = 94, members of Gartner’s Research Circle, excluding “not sure”

Q. How would the top leader of your business or government characterize these aspects of the digital technology investments?
Source: 2022 Gartner Overcoming the Barriers to Digital Execution Survey

Finance functions’ transition toward autonomous finance has been measurably slower
and less impactful than many finance leaders expected. In our 2022 survey, only 13.5% of
respondents report a clearly successful finance transformation that is both as impactful
as expected and moving as fast or faster than expected. About 70% of respondents
report disappointing results, in which transformation is either less impactful or moving
slower than expected. A full 30% said transformation is both less impactful and moving
slower than expected.
These disappointing results can be partly attributed to the lack of a clear goal state —
that is, a target operating model designed by the finance leadership team that clearly
sets out which principles will guide decisions and trade-offs. One experienced finance
transformation leader summarized the problem well: “Successful transformation starts
with having a clear ‘to-be’ picture. In most organizations, this future state isn’t clearly
defined, and that makes it hard for leaders to make the right trade-offs and for teams to
keep on track. Without that mental picture of where we’re going, it’s easy to forget what
the goal is and where we need to aim.”

3
Finance leaders find some aspects of the operating model more challenging to make
progress on than others. “Technology” and “process” tend to receive extensive attention
that results in detailed assessments and plans. However, finance transformation leaders
and CFOs report that “ways of working” and “decision rights” are the most difficult
operating model elements for leadership teams to address.
Additionally, rather than taking a broad view of how all operating model elements fit
together, many finance functions begin their transformation efforts by trying to make
quick progress on changes to technology, processes or organization structure. This leads
to downstream challenges (such as rework or revisions) as interdependencies between
different parts of the operating model have not been considered and discussed.

“We’ve made some org decisions ahead of when they should have been made.
We should have started by taking a step back and discussing what work we
want to accomplish, then decided how to structure to deliver on that work.
That’s where we got it backwards.”
— Finance transformation leader, technology and telecom

Finance transformation leaders must help the rest of the finance leadership team engage
in concrete discussions about the broad range of changes needed to the finance
operating model. Otherwise, finance transformation efforts will continue to disappoint
CFOs and CEOs.

4
What Is an Operating
Model?
An operating model is a representation of “how stuff gets done” in an organization. A
finance operating model depicts how an organization orchestrates all of the capabilities
needed to achieve CFOs’ strategic objectives.
Our operating model framework shows nine essential elements of how organizations
accomplish their objectives (see Figure 2).

Figure 2: Gartner Operating Model

Execute and Deliver to Strategy

Enterprise Engage
Governance
Performance
Enable
Decision Organization
Rights Structure Deliver
Sourcing
Ways of
Financials and
Thinking
Alliances

Talent Tools

Places Enterprise
Culture

Source: Gartner

While not every element of the operating model is equally important for all
transformations, finance leadership teams need to understand what each element
represents. Even more importantly, leadership teams must discuss and debate what
general principles will need to be true for each element to make their organization
operate effectively after transformation.
In most organizations, simply considering these different aspects of the operating
model will cut down on mistakes. But an even more sophisticated understanding of
the interactions between pieces of the operating model allows companies to unlock
new opportunities.

5
General Principles for
the Operating Model of
Autonomous Finance
No two companies or functions have identical operating models because of differences
in business context, talent, regulatory environment and history. This also means that while
the elements of an operating model are universal, there is no single “right” operating model
for autonomous finance; every company will need to make adaptations specific to the
context in which their firm operates.
However, most firms should incorporate common general principles into their operating
model if they expect to move successfully toward autonomous finance. Every organization
should clearly and unambiguously define two to three principles for each element of the
operating model.

Finance leadership teams’ transformation principles should be testable

statements about what must be true in their organization for autonomous finance
to be successful. Every transformation proposal or project should be tested against
these principles. If a proposal pushes the organization in a direction contrary to
the principles the finance leadership team established, that proposal should be
reevaluated or reworked.

Some elements of the operating model will be more important than others to different
organizations. An organization should have a higher quantity of and more detailed principles
for elements that are most important to their organization (or for elements they expect to
represent the areas of most significant change). For example, an organization whose entire
operations are confined to a single geography might choose to underrepresent “places.”
In contrast, an organization that is expanding quickly to multiple geographies or changing
quickly in response to remote and hybrid work may need to consider writing more principles
with more details for “places.”
The principles below provide a starting point for CFOs and finance transformation leaders.
They are informed by interviews with CFOs and finance transformation leaders at firms who
have made the most progress toward autonomous finance. They are also drawn from our
benchmarking and finance maturity models.
Finance transformation leaders should select, alter or add to the principles as they work
with the rest of the finance leadership team to plan their transformation. Leaders may
find it helpful to discuss this list with other senior transformation leaders (such as the
steering committee and PMO) prior to leadership meetings to spur more creativity and
provide guidance for developing additional principles.
We ordered the list based on our assessment of which elements of the operating model
are hardest to get right but are most impactful in the long term.

6
 1. Ways of working
The decision rights that key stakeholder groups have for executing the
strategy address who makes decisions, how decisions are made and how
disputes are resolved:

• Teams are empowered to define their own
tools, ways of working and approaches to
collaboration — Each team in finance will be
given wide latitude in deciding how they will
work together. This means teams’ day-to-day
work behaviors will vary more as they tailor their
workflows to their needs (while still operating
within the guardrails of compliance).
• Most projects are executed in a highly
iterative and agile manner — Teams are
encouraged to use test-and-learn approaches
to developing new processes, implementing
new technologies or updating how they work.
They will draw on methods used in agile
software development, even if they don’t fully
adhere to any formal agile methodology.
• As many activities as possible are fully
automated — Any activity that can be
automated at a reasonable cost is automated
to the fullest extent feasible. Automation
extends beyond simple tasks to more complex
analytical or judgement-based decisions and
end-to-end processes.
• Teams are designed to share best practices —
Instead of leaving best-practice sharing to
chance or individual relationships, teams are
designed in ways that promote and facilitate
sharing both within and across teams.

2. Decision Rights
The decision rights that key stakeholder groups have for executing the
strategy address who makes decisions, how decisions are made and how
disputes are resolved:

• Decisions are made as close as possible to the
point of value delivery — Teams and individuals
closest to the customer, business stakeholder or
data are expected to lead day-to-day operational
decision making, albeit within guardrails set by
senior leadership.
• The number of approvers needed to advance
an idea is minimized — Reduce the number of
individuals who are required to approve a project
or process improvement effort to a minimum
viable number. This becomes particularly
important as the stakeholder environment
becomes more matrixed and complex.
• Decision rights are explicitly assigned to
both machines and people — This principle
makes it clearer when an individual employee
is responsible for a decision versus when an
automated system takes the lead. For this
principle to work, decisions made by machines
must be as (or more) traceable and auditable as
decisions made by humans.
• Machines make all routine and uncontroversial
decisions — If a decision is rarely debated
and has low error rates, and the outcome of a
decision is highly predictable, rights for making
that decision should be assigned to a machine
rather than an individual.

7
 3. Talent
Employees’ competencies, skills and profiles needed to execute work in the
operating model:

• No “low digital dexterity” roles exist — Every • Fewer entry-level roles exist — Most activities
role will interact with technology at a relatively suitable for entry-level roles are automated,
sophisticated level. An important aspect of many significantly reducing the need for entry-level
roles will be diagnosing the performance of or simple process execution roles to ensure the
automation, which will require all employees to success of day-to-day activities.
have a moderately high level of digital dexterity.
• Junior roles focus on learning from and
• Dedicated finance technologist roles exist testing machines — Junior employees focus
for each core finance capability — Fulltime, on diagnosing machine failures, building test
clearly distinct technologist roles exist in the automation and evaluating machine performance.
finance function. These roles primarily focus on This shift in junior roles provides an important
developing and managing technology, in contrast opportunity to develop professional acumen
to employees with finance training who have while also monitoring machine systems’ outputs.
technology expertise.
• Technology talent is distributed across teams —
Continuous and deep interactions with technology
across teams will require that each team has
directly embedded, full-time technologists.
Increasingly, the distinction between technologist
and nontechnologist will blur.

4. Organizational Structure
Definition of the organization structure, key roles and reporting relationships,
and collaborative networks:

• Finance teams default to cross-discipline • Span of control is measured by decisions

groups — The default expectation for teams
within finance is that they are composed of
individuals from different backgrounds and skill
sets that span multiple disciplines. In particular,
technical and data talent is interwoven through
most teams.
• Teams are aligned to business capabilities or
customer journeys — Teams will be organized
according to the roles necessary to support
a horizontal product or end-to-end customer
experience, rather than organized into specialized,
expertise-based vertical subfunctions.
under management, not size of team — As
more autonomous systems start to play a role in
finance operations, the span of decisions under
a manager’s control becomes a more useful
measure of their responsibilities, cognitive load
and risks than the size of their team.
• Transformation efforts are coordinated by
a dedicated team — The many disparate
initiatives required of finance transformation are
coordinated by a named head of transformation
and team who are dedicated (and specialized)
at spotting interconnections between projects.

8
 5. Tools
Key tools and assets required for teams to perform
their responsibilities:
• Finance owns applications and functionality
that sit atop platforms, while IT owns
underlying platforms — IT owns and operates
foundational platforms such as ERP, but finance
owns all of the additional functionality, apps and
function-specific systems that are built using
those platforms’ capabilities.
• No finance work is performed on stand-alone
spreadsheets (or other stand-alone tools) —
Transferring data from one system to another via
any method other than API (or similar automated
approach) is forbidden. Stand-alone tools that
require manual transfer of data have been phased
out in favor of tools that integrate with the rest
of the technology stack.
6. Financials
How finance will be funded; how budgets will be allocated, planned and
monitored; how costs will be recovered or priced; how investment is aligned
to strategy:
• IT funds platforms; finance funds
functionality — Primary funding for core
platforms remains in IT. Funding for tools,
systems and functionality built on those core
platforms comes from the finance budget.
• Funding follows services and processes —
As organizations become more horizontal
(aligned to processes or customer outcomes),
funding is based on service teams aligned to
those processes or customer outcomes. This
is instead of allocating funding by traditional
subfunctional silos, such as controllership
and FP&A.
9
• Finance uses formal technology process
management methodology and tools to
manage its own technology — Finance teams
adopt the types of processes used by technology
product teams to better manage the growing
interdependencies between pieces of finance
technology. This includes formal processes for
assessing and coordinating changes to existing
technology and automation, documentation
of changes and roadmaps, and the use of well-
defined test and production environments.
• Finance technology is based on a
composable architecture — Finance
technologies are organized around modular
application building blocks that deliver well-
defined finance capabilities in support of
specified business outcomes.
• Business cases are approved more on
their value story than on traditional ROI
calculations — Many worthwhile investments
(particularly, digital investments that will change
how teams work and generate insight) will have
difficult-to-quantify benefits that play out over
highly uncertain time horizons. Impact to brand,
employee engagement, digital transformation
and society require alternate evaluation criteria.
 7. Performance
The approach to performance management to ensure the strategy and
ongoing operations are effectively executed and continually improved:

• Finance leaders’ performance is measured • Finance employees’ performance is

on finance platforms’ performance — Finance
leaders’ performance is measured partly on feature
adoption, usability, stability and consumption
of data and platforms. This closely resembles
how technology product or platform owners’
performance is measured. It also reflects the
importance of finance’s shift to provide a broader
range of data and decision support tools to other
parts of the business.
• Finance teams’ performance is measured on
impact to customer or employee outcomes
and experience — Finance team performance
is measured less on process execution metrics
and more on how finance enables the rest of
the business to perform better (for example,
measuring how the tool provided by a finance
team changes business leader decision quality).
measured on how effectively they adopt
and use new technology — How well
finance employees adapt to an increasingly
technologically enabled work environment
becomes one of the most important markers
of successful performance. This is particularly
true in an environment where technology
enables employees to customize or build their
own solutions to improve day-to-day work.
• Finance employees’ performance is measured
on continuous improvement and digital
dexterity — Finance employee performance
discussions should reflect the extent to which
staff both apply continuous improvement
principles, as well as demonstrably acquire
and apply digital skills.

8. Sourcing and Alliances

Sourcing defines the approach to outsourcing and partnership with
third-party service providers. Alliances define the necessary partnerships
and how to ensure they create value:

• Tasks and processes that don’t enable
competitive advantage are outsourced —
Finance staff focus exclusively on activities
that provide competitive advantage to the firm
or that cannot be effectively outsourced or
automated.
• Tasks and processes where finance can’t
compete with a BPO are outsourced — In
places where finance does not have the
expertise or infrastructure to compete with
a BPO, finance outsources to providers with
turnkey solutions.
• Day-to-day finance operations are designed
to optimize finance-IT engagement — The CFO
and other finance leaders ensure finance and
IT have multiple points of engagement, shared
objectives and aligned plans.
• Outsourcing contracts are outcome-
based — The organization uses outsourcing
contract pricing models with pricing structures
that are aligned to the finance function’s
digitalization plan.

10
 9. Places
Where in the world people and key assets are located. Includes a more
granular view on office location and reflects the changing ways of working,
such as hybrid work. Can extend to cover the enhanced collaboration
through exploitation of the digital workplace:

• Finance is a hybrid-by-default work • Regional finance operations focus on advice —

environment — To successfully compete for Business unit or regional finance teams focus
and retain talent, finance operates on a “remote on providing decision support to local leaders.
first” basis, where employees work from whatever Except where legally required, finance avoids
location makes them most productive. This is creating regional or business-unit-specific
particularly important for talent with technical finance operations that perform transactional
expertise, given the highly competitive nature tasks where the central finance organization has
of that market and the hybrid-first posture of comparative advantage.
many IT departments and technology companies.
• The quality of digital “places” is a primary
objective for managers — Managers spend time
improving and curating the digital places where
their teams work. Encouraging and sustaining
participation in those digital places is a key
performance metric for finance managers (e.g.,
Slack channels, daily stand-ups)

11
Themes Across the
Operating Model for
Autonomous Finance
While the principles above are a good starting point, many finance leadership teams will
want to define operating model principles that are customized to their own business
context. Leadership teams should keep in mind these high-level themes as they design
their own principles:
• Finance teams will work more like technology teams — Finance leadership teams
should design principles that borrow from the best of how technology teams work
to prepare for an environment where most teams have some responsibility for
technology deployment, customization and ongoing management.
• M
 achines will play a bigger role in decision making — Finance leadership teams
should design principles that keep in mind the idea that machines will play a bigger
role in decision making as technology progresses. While automation is already widely
used for transactional tasks, machines will start to be more capable of judgment-
based decisions and provide more prescriptive advice to humans (e.g., answering
“Should we take Path A or Path B?”).
• A
 ll teams will need more technology expertise — Finance leadership teams should
design principles that emphasize that technology expertise will be widely dispersed
across the organization, not just confined to corporate IT or a finance IT team. At first,
most teams will not need deep engineering or software development expertise, but
that is likely to change over time.
• T
 he comparative advantages of the center will grow — Finance leadership
teams should adopt or design principles that respond to the likelihood that the
comparative advantages of the corporate finance center are likely to grow, while
the comparative advantages of regional teams are likely to narrow, as technology
and standardization progress.

12
How to Use This Research
Finance transformation leaders can use this research in three ways:
1. Help other leaders understand the full extent of changes needed. Using the
“honeycomb” operating model, finance transformation leaders can prompt discussions
with colleagues that expand the dimensions of their thinking about transformation.
This will help leaders address issues that might otherwise have been neglected until
much later in the transformation process.
2. Define your own principles for operating model change. Select two or three of the
most challenging “honeycombs” for your organization, then work with other finance
leaders to create clear, testable principles that define how you want the organization
to work in the future. Use the principles in this document either directly or as a starting
point for ones more tailored to your organization.
3.Test your current transformation plan. If your transformation plan does not get your
organization to a place that sounds like it fits with the principles above, take some time
to consider where the plan may be moving too slowly or may be undershooting the
magnitude of changes needed.

Conclusion
Finance organizations must understand what their future operating model will look
like. Otherwise, their transformation efforts will likely fall short of CFOs’ expectations.
To develop a stronger sense of what the future operating model needs to look like, use
a framework like the one in this research, and have finance leadership articulate clear
principles for each element of the framework. Taking this approach will significantly
increase finance leaders’ shared understanding of where their function is headed and
provide clear objectives for how to make transformation successful.

13
Actionable, objective insight
Position your finance organization for success. Explore
these additional complimentary resources and tools for
finance leaders:

Research
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