The rapid rise of technology has changed the way each and every one of us lives our lives. The way we shop, the way we access information, and even the way we find a life-long partner are just three examples of tech radically altering how we do things.
In the business world this is equally true – it is disrupting every industry, every sector and every business function. Finance professionals are certainly not strangers to this pace of change. For example, new tools allow them greater insight into their organisations’ data, to share information more effectively, and to identify the patterns and trends shaping the future.
Yet the adoption of new technology is not evenly distributed across organisations, industries or sectors. Some finance functions are much further along the transformation journey than others. So how can we speed up the rate at which all finance functions exploit new technological tools?
In 2016, a report by Deloitte, Finance in a digital world, identified seven key technologies impacting on modern finance functions. These are:
Cloud solutions, allowing shared computing services online;
Robotic process automation, which reduces costs and improves efficiency by carrying out repetitive manual tasks, such as data entry and report generation;
Visualisation – using technology to turn raw data into pictures and infographics setting out the organisation’s story;
Advanced analytics, which automates the examination of data to discover patterns finance professionals can turn into insight;
Cognitive computing, a suite of technological tools that includes artificial intelligence, machine learning and speech recognition;
In-memory computing, where random access memory (RAM) servers store data; and
Blockchain, the database ledger technology that keeps transaction records on a peer-to-peer network.
These are creating a new finance model, where human intelligence is enhanced by technology – making us faster, more efficient and more productive. In fact, the success of the future finance function will largely rest on how it integrates algorithms and robotics with the creativity and empathy of human accountants.
Increasingly, finance professionals will move away from performing mundane tasks. Their role will be geared towards knowledge collection and creation, and interpreting the information outputs produced by software.
The automation of repetitive tasks will free up their time so they can focus on constructing and preserving business value and determining the context and human story behind seemingly abstract numbers.
None of us can foresee the future, but with the right insight, we can prepare for it. Through ambitious and clever use of technological tools, management accountants can turn data into insight, and insight into strategy.
Inevitably, this will require them to change their mindsets and to adapt to new technologies and working practices. It will also require them to understand how different tools can be used in combination with each other to improve basic finance activities.
For example, cloud and robotic process automation technologies generate vast realms of data. This can be queried by advanced analytics and in-memory computing to provide automated insight.
Certain companies and certain sectors are true pioneers at implementing disruptive technologies within their finance functions. Innovation tends to be led by multinationals and large national companies and, at the other end of the scale, agile and ambitious start-ups run by young entrepreneurs. Furthermore, innovation is more common in certain highly regulated, data-intensive sectors, such as financial services and telecommunications.
Research by consultancy McKinsey, A Future That Works: Automation, Employment and Productivity, highlights five factors that influence the pace and extent of automation within organisations.
These are technical feasibility; the cost of developing and deploying solutions; labour market dynamics; economic benefits; and regulatory and social acceptance. Our own research suggests there is a sixth factor, as well, which is social demand. Put simply, when other members of an organisation’s supply chain implement a disruptive technology, they help to speed up the adoption of similar technologies across the sector.
Management accountants have a comprehensive view of their organisations’ finances and operations, which is why they will play a critical role in developing the digital strategies. To fully seize this opportunity, however, they need to embrace the Fourth Industrial Revolution.
The first step in the process is to understand where their finance function is on the journey towards technological transformation and to assess the technologies most likely to disrupt the business in future. We have developed our own tool, the CGMA horizon scanner, precisely to support this. After that, it is necessary to use the latest technologies to release the full capacity of the finance function, and to widen its remit to cover a broader range of management information.
Organisations need to encourage their finance professionals to develop new competencies and growth mindsets, enabling them to help with creating and preserving value over the long term. No business wants to fall behind in this age of disruption. The conversation around what the future of finance will look like in your organisation should be happening now.
By Andrew Harding, the chief executive of Management Accounting at AICPA-CIMA