The reinvention of the finance function

The role of the finance function is undergoing a steady and profound shift. The rise of supportive technology is allowing finance professionals to fulfil an increasingly value-additive function as their traditional responsibilities are supplanted by digital technologies. This also means that the current crop of CFOs and finance professionals need to be tech-savvy.

This change is global, and accelerating. In 2019, EY surveyed 769 CFOs and finance leaders in 32 countries. 69% saw the finance leader role fundamentally changing as traditional finance tasks became increasingly automated or managed in shared-services centres. 58% said that combining state-of-the-art technology with process improvement would be a major focus for the future of their departments.

The finance function within large organisations has typically been underexploited. Finance sits at the core of every business. It lets you see everything: risks, opportunities, compliance gaps, what is getting produced and where the company is going. Its role in strategic planning is essential, as is its value as a control board for the organisation, letting the c-suite know what options they have available to them.

A finance function that operates at its full potential will be seen first and foremost as a provider of strategic insights and forecasts.

By adopting digital technologies that allow its professionals to excel at analysis, communication and strategy, the function will be more efficient and effective than it was, and offer an additional suit of insights and business solutions.

But in order to reach that point, the rote tasks currently undertaken by finance need to be delivered into quicker, safer hands. Robotic process automation and AIs are poised to displace segments of the workforce and redefine the task of finance professionals.

These technologies do not pose a threat to employment, although they will alter it fundamentally. At no point are we looking to replace people with robots. Finance will remain very much about people. Automation frees finance practitioners to do what they do best: to think, creatively and intelligently – while automating the rote, repetitive, error-prone aspects of their jobs.

But the technological foundations of the finance department of the future go beyond automation of rote tasks. They make use of advanced data analytics, AIs and blockchain, supported by cloud-based software-as-a-service models, to reconfigure finance as an operator on a central stage. Digitally transformed finance functions will attract the most skilled and talented professionals, who are confident in the opportunities a well-supported workflow allows them.

And the change is not just technological. In the same EY survey, 57% of CFOs said that building skills in predictive and prescriptive analytics was critical for the future, and 47% said that their current function did not have the right mix of capabilities to meet its future priorities. Digital transformation requires a consistent focus on people – on culture, on retraining, and on consultation. This requires strong leadership, a clearly articulated vision, and an empowered workforce that actively takes part in the changing environment.

Yet despite this necessity, skills training is limited in practice. In research conducted amongst CFOs by the American Institute of Certified Public Accountants and Chartered Institute of Management Accountants, “two-thirds of respondents said they either had no training programmes or very limited programmes in place. Only 6% considered that their organisations had a mature skills-building programme.”

With qualified and experienced chartered accountants in short supply in South Africa – just 43% of the country’s latest cohort of aspiring CAs passed the SA Institute of Chartered Accountants (Saica) examination – technology promises to become an even more important enabler of the finance function.

As the role of the modern finance professional becomes increasingly fluid, and they are expected to be able to morph easily between being an accountant, business partner, and strategic enabler, it will require a deep reappraisal of skills and roles, and a change-management programme that can support people to adapt.

This is especially true because with expanded roles comes increased pressure, particularly if the finance function finds itself stuck using outdated tools or ways of working. There is pressure to provide strategic decisions to support initiatives, to find funding and deliver return on investment, and to eliminate inefficiencies. As finance moves from a back-office to front-office function, real-time integrated reporting is required (month end is no longer an event!) as is one source of truth for master data.

It’s not about finance systems anymore, but business systems, and that requires a streamlined, effective, focused finance function. If a finance function has not adapted to its new expectations, it is going to battle to stay relevant.

Covid-19 has exposed the lack of digitisation in companies; but even if the pandemic had never broken out that gap was going to be exposed in time. Accenture estimates that 60 to 80 per cent of accounting activity could be automated, and that just 34 per cent currently is automated. Those who are embracing robotics, machine learning and artificial intelligence, cloud computing and consumption-based models, big data and advanced analytics, are going to see exponential benefits from their early adoption.

The key to success in the evolving finance function is allowing people to bring out the best in technology, and technology to bring out the best in people. It’s a challenging journey that, done well, is going to result in a qualitative shift in the role of the finance function, and in the value it can offer organisations.

Megan Pydigadu is EOH CFO.

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