The finance function of the future

  • Business
  • Tuesday, 31 Jan 2017

AS disruption unfolds, transparency issues gain momentum and regulation intensifies, the world is in flux for finance leaders. How organisations deliver value is being reset for a digital age.

To reinvent itself, the finance function is transforming into a data-driven decision centre, where smart people and smart machines help make better financial, strategic and operational decisions.

However, such transformation may not rest within the comfort zones of many finance functions and their leaders.

Technological changes like analytics, cloud, artificial intelligence (AI), blockchain, and robotic process automation (RPA), which were once thought to be rather far removed from the finance function, have in recent years, reshaped the operations of finance.

An EY survey of over 760 finance leaders suggests that the future of finance will be one that embraces technological innovations to improve effectiveness, increase efficiency and enhance insight.

The people in finance will make the most of technology, and provide the complementary skills and competencies to drive decision-making to support the organisation’s strategy and business.

Yet the same survey found that many of the finance leaders believe that their current finance function is not equipped to meet the demands the future will place on it.

So is the future of finance one of having new technology, new people, or new leaders?

> Technology waits for no man

It is important that finance leaders understand key emerging technologies and make pragmatic decisions about incorporating new innovations into their processes, in consultation with the chief technology or information officer.

For example, RPA can reduce costs significantly by automating key processes. With analytics, the finance function can improve strategic insight by analysing unstructured data, and improve risk management such as in the case of fraud prevention, by identifying patterns and anomalies in large data sets.

> Rethinking finance talent

However, the success of any technology can only be as good as the skills of the people using it.

While “finance factories” such as shared services and managed service centers have freed up people in the finance team to focus on higher-value activities and allowed the function to be more efficient, finance has to continue to evolve in order to fulfill the role of the business strategist.

For this to happen, finance leaders, must look keenly at the skills profile, as well as ongoing training and education (including exposure to new technologies), career development, and performance measurement and rewards for each finance role on the team.

For example, the leader of a “finance factory” will need skills and experiences in driving process excellence through lean techniques and state-of-the-art technologies. This is a very different profile from a data scientist on the team.

> Equipping tomorrow’s CFOs for the future

And what of finance leadership itself? Organisations will look to CFOs to bring creative solutions to key business issues and drive innovation to leverage growth opportunities. CFOs are no longer just seen as the “No. 2” in the organisation, but as the partner of the CEO and Board.

EY research suggests that in order to meet the demands of the future, CFOs will need to build their capability in key areas in addition to finance, such as operations, customer and commercial focus, business partnering, strategy and transformation.

Organisations need to replace the traditional linear career path of CFOs with a more flexible one.

Aspiring leaders can build their “passport” by gaining a stamp as they secure the roles, secondments or experiences that will build the right breadth of skills - key for success in a future CFO role.

With uncertainty and rapid change, leadership becomes increasingly important in providing vision, direction and inspiration for the finance function.

Future finance leaders will need to motivate high-performing teams, inspire and lead change, shape and embody a dynamic culture, and set out a compelling vision that helps to navigate change - skills that traditionally, CFOs aren’t often called on to build.

> Abandon traditional notions

As finance leaders transform their function’s operating model, they will need to discard traditional ideas about what members of the finance team can bring to the table.

For one, look beyond traditional financial analysis skills when searching for talent. Data gurus – such as statisticians and data scientists, and even behavioral scientists – can help the finance function of the future turn data into fresh perspectives and strategic insight.

In the digital age, digital expertise will be needed not only to lead technology driven changes to the finance operating model, but also to identify the implications of digital for the organization’s business model and growth agenda.

In addition, if organizations accept that finance is a strategic business partner, then the influencing and communication skills that are needed to convey fresh insights to internal clients on the strategic challenges faced by the business, must now become a core competency.

Alliances with universities, start-ups and other third parties can also be useful in providing the ongoing development of finance talent, which will be necessary for the organization to remain nimble.

Clearly tomorrow’s finance function will only succeed if it is agile and responsive, and has the right people who can inspire and lead the technology debate, and are willing to innovate the function.

The finance function has long been said to be risk-averse. It’s time for it to get creative.

Chow Sang Hoe is the managing partner of advisory services in Ernst & Young Advisory Services Sdn Bhd. The views in this article are those of the author and do not necessarily reflect the views of the global EY organisation or its member firms.

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Business , Ernst & Young


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