ICAEW.com works better with JavaScript enabled.

How digital technology is reshaping the role of CFOs

Finance chiefs and their teams need to understand how digital technologies are reshaping business and their role within it. ICAEW’s online learning resources can help, says Lesley Meall

Rapid and relentless digital technology developments are transforming business and presenting finance chiefs and their teams with numerous challenges and opportunities – which seem unlikely to diminish any time soon. Technologies such as cloud computing and trends including digitalisation are being embraced across industries; analytics and robotic process automation (RPA) are becoming embedded in finance functions; applications around blockchain and cognitive computing are emerging; incremental and disruptive changes are growing and accelerating.

“CFOs and finance leaders need to be responsive to the uncertain business environment and continually evolving digital landscape,” says Tim Leung, a Deloitte consultant, who explores why and how during ICAEW’s digital disruption virtual conference. Responding effectively requires an understanding of how digital technologies are changing business and impacting on the role of finance chiefs and their teams, because finance will need to enable and support business as it becomes more digital and make the finance function itself more digital. Finance teams will assess the financial impact on services and business models to support resource allocation and decisions and maximise capital and operating investments – while business demands grow around the speed of innovation and frequency of decision-making. “This is going to require finance to be more agile in how it serves the business and often this will mean that finance functions themselves need to transform to keep up with customer and market needs,” says Leung.

Focus on data

Kirstin Gillon, a technical manager in ICAEW’s IT Faculty, says that many finance functions are still at the early stages of trying to get to grips with digital transformation. “We are seeing much more emphasis on data, its analysis and getting more insights from data,” she reports, as finance extends its business partnering role. “Finance is doing more to help businesses to make better decisions by using more data, better sources of data and more granular data,” says Gillon. This is reflected in a recent project at Glint Inc, which integrated three separate software systems for: analytics and business planning (Adaptive Insights); enterprise resource planning (Sage Intacct); and customer relationship management (Salesforce).

“A traditional finance role means tracking budgets versus actuals, and often doing it in Excel – that’s not the value I believe a finance department can bring,” says Frederick Kurniadi, finance director at Glint. Integration has improved the speed, quality and accessibility of data for finance and the business. “We are able to pull new data in a matter of minutes and provide a daily summary for leadership – or allow our business users to ‘self-service’ and generate reports on their own,” explains Kurniadi. “The countless hours freed up by this integration are now spent showing our value through more strategic forecasting activities that support the company’s business objectives.”

Become more strategic

The objectives of business and the roles of technology and finance are shifting. “So far, investment strategies for digital transformation have been influenced by the desire to improve operational performance and reduce costs. Future strategies will zoom in on more strategic opportunities, such as improving customer experience, competitive differentiation or new products and innovation,” says Srikant Sastry, Grant Thornton’s national managing partner for advisory in the US.

The Grant Thornton survey 2018 CFO Insights on New Technologies found 69% per cent of finance chiefs planned to invest more in digital transformation during 2019; 21% already own digital transformation; and 89% see strong data analytics as key to all of this. So, as finance takes steps to enable business to become more digital and also make the finance function more digital, CFOs will need to understand digital technologies and use data analytics for decision making more than ever before. However, as the speed and scale of change make it difficult for an individual or organisation to keep up with digital technology developments, ICAEW continues to identify the most significant technologies and trends and produce content that could help finance chiefs and their teams.

The IT Faculty’s website, for example, is a great source of advice. Leung says: “It is important that finance teams and individuals learn about these technologies, experiment with them and understand how to combine them to drive business performance.”

Learn as you go

This is not how finance chiefs have traditionally approached technology decision-making. “Working on the basis of long-term plans is increasingly difficult as everything will change in the meantime,” says Gillon, who suggests learning from the approach of big tech companies. “This means focusing more on trying things out, using pilots, rolling out things that work and stopping things that don’t. It emphasises learning from practical experience.” This approach relies heavily on the availability of data – and strong nerves.

“You do not want people not to try things or not to start things because there is a fear of failure. Not everything is going to work. Not everything is going to deliver. But with things like AI and robotic process automation you learn by experience,” says Gillon. Finance can support this by bringing discipline to the process.

“Be clear about what you are trying to achieve. Think about metrics and how you are going to measure success.” Underpinning all of this is data, and many digital transformation projects start by trying to make it more compatible and accessible across an organisation – which can be complex and time-consuming. How a businesses has grown, departmental silos, lack of IT integration and volume and variety of data can all create huge barriers that can be as difficult to overcome as the need to keep up with digital technology developments. Gillon says: “For many organisations, the biggest practical transformation challenge is the reality of their data.”

Fintech innovation

Some cities are global financial hubs and hotbeds of fintech innovation, some are not – but many would like to be. It’s not hard to understand why. The efficiency, convenience and reach of financial services has been significantly enhanced by the development of the fintech industry and services including payments, insurance, lending, capital raising and investment management are among the many to benefit from the fintech boom. Identifying and replicating what’s behind the success of fintech hubs is less easy, as ICAEW’s report Fintech innovation: perspectives from Singapore and London highlights.

“Hubs bring together all the elements that are needed for innovation in one place, and strong fintech centres have all of these elements – talent, markets, capital, progressive regulation and strong government support,” says ICAEW’s Kirstin Gillon. As well as identifying these key elements, the report considers the role and benefits of hubs, compares and contrasts London and Singapore and analyses the implications of fintech for the accountancy profession. It offers tips on how accountants can engage with the fintech sector to help deliver the benefits of innovation and support growth, with practical advice on how to overcome challenges and exploit opportunities.

Originally published in Economia on 6 February 2019.