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The new technology reshaping the finance function

Author: ICAEW Insights

Published: 07 Mar 2022

Technological innovations are driving the most profound change in finance functions in modern history, revolutionising every aspect of the traditional finance division.

The transformation of the finance function into a technology-driven hub is, most agree, a positive change, not just for finance departments, but also for finance professionals. Thanks to the growth of cloud, machine learning and artificial intelligence coupled with the explosion of data and advances in data ingestion and visualisation tools, finance teams now have more tools at their disposal than ever before. But to benefit from these comes a need to be more strategic and have a greater understanding of the external world, as well as the internal organisation.

“It’s hard to think of a time where there has been more technology driven changes from the finance function. It’s touching every part of the finance function, whereas previous technology innovations have tended to focus on one specific area. It’s having the most profound impact on finance,” says Patrick Fenton, Partner and Head of Functional Transformation at KPMG in the UK.

Where previously the finance function was dominated by manual processes and month end cycles, increasingly any task that is routine, rules-based and repetitive will be automated, saving valuable time and resources. Monthly cycles are being replaced by continuous tracking of sales, cash flow, inventories, and more. Finance teams will be monitoring data output and quality as machines do the work. Ultimately, finance functions will become seamless, touchless, integrated information platforms.

These new robots, software and apps are pushing the finance function up the value chain in organisations because finance teams will be able to focus on analysis and strategic advisory activities based on real-time business intelligence.

“There are many tech innovations that are changing finance functions but the most prevalent is workflow automation. More than ever, there is a need for connectivity and transparency. The finance function is starting to become structured into the operational analysis of the business itself. Finance departments have the best tools to be able to analyse and make decisions that will affect things like revenue, new markets and opportunities,” says Adam Zoucha, MD EMEA, FloQast. 

What this means for finance professionals is that their skillset must evolve, too. The capabilities expected of finance professionals have shifted away from the more traditional accounting skills towards more advisory, data interpretation and visualisation, and communicating abstract data in context to a wider group of stakeholders.

“There’s more of a premium on human skills. It’s great if you know the tools and how they work, but to be a really accomplished finance professional it’s about exercising judgement, professional scepticism, and having communication skills. Those are the things that the machines can’t do,” says Daniel Clark, head of technology professional development at BPP.

The classic triangular shape of the finance function, with strategy at the top, financial reporting and planning in the middle and transaction processing at the bottom, is evolving into a more diamond-shaped division, Fenton says.

The structure of finance teams is also changing. Whereas there were lots of people in transaction processing at the bottom and fewer at the top, the headcount in modern divisions will also be shaped more like a diamond – with fewer at the bottom and more in the middle where the analysis and data interpretation is carried out.

“An effective financial planning and analysis professional is much more about data interpretation and analytics, and they’ll need a much broader understanding, not just of the inside world, but the outside world and how that could be applied through algorithms to give good insights as to the future direction for the business,” Fenton says.

On the back of the growth of robotic process automation software has come the rise of so-called low-code, no-code tools. Low-code/no-code tools are a quick way to build custom applications without being a coding expert. 

BPP’s Clark, says: “The other thing we’re seeing with automation is the growth of low-code, no-code tools. It means that every individual can essentially build their own apps. We’re going to see a lot of micro tools being built for quite specific situations because it’s quite easy.”

Although affordable, scalable and easy-to-use, these low-code, no code-apps could prove to be a headache for the chief financial officer unless they create a robust governance framework around these new tools.

“It’s a double-edged sword. On the one hand, there’s a real business value in these lo-code tools that operate as a workflow often across existing legacy systems, but you need to set them in a framework where you’re confident you’re not creating control issues,” Fenton says.

With change moving at an unprecedented pace and so many new technologies to choose from, the modern finance function will look nothing like previous finance departments. Nor will it act in the same way. But to get it right CFOs need a clear vision and strategy for finance in a digital world.

The future promises great things for finance but the road ahead is full of challenges and getting that digital roadmap right now is vital to take advantage of future disruption.

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