A Look Inside the Future Finance Function, Part 1

As the finance function moves further into the digital era, one of the biggest questions CFOs are asking is, “Are we ready?” Technology advancements and the proliferation of data are dramatically reshaping the role of the finance function. As companies face increasing competition and ongoing change, they expect finance to leverage technology and turn data into insights they can use to guide strategy and support decision-making.

With access to unprecedented amounts of information, finance teams will drive planning and support management across the business.

But while data and technology can create greater value, there will be no real benefit to the business without the right people with the right skills to use them effectively. CFOs and finance leaders should begin preparing now for the team they will need in the future, or risk falling behind.

In this two-part blog series, we will look at the future finance function and explore what skills will be needed to support it based on research from multiple studies and industry experts. We’ll also discuss the current readiness of finance teams, and how finance leaders can find and develop the talent they’ll need.

Data and Analytics

While traditional accounting and finance skills will always be important, the finance team of the future will look very different than it does today. According to the study “The DNA of the CFO 2016” from Ernst & Young, the “next evolution for the finance function will be to become a data-driven decision center.”

With access to unprecedented amounts of information, finance teams will drive planning and support management across the business. Finance will focus on looking forward and using predictive analytics to model and predict the future, forecast performance, and manage risks. According to the study, 57 percent of group CFOs believe that delivering the data and advanced analytics for business intelligence and management information will be a critical capability for tomorrow’s finance function.

Finance will also look to bring in different types of data to plan and forecast—such as data from clinical staff scheduling systems in healthcare or student systems in higher education—for a greater perspective on the business.

Business Partnership

Closer partnerships with other parts of the business will be an imperative. Future finance teams will need to work closely with executives and operational leaders across the business in a number of different ways. According to Naved Qureshi, associate partner in the Finance, Risk, and Fraud Center of Competence at IBM Global Business Services, “Finance will partner with CEO and C-suite executives to accelerate performance by supporting appropriate value areas such as profitability and economic analysis, pricing, demand planning and forecasting, product and services development, and mergers and acquisition.”

Many finance organizations look to improve in this area. According to “The DNA of the CFO 2016” study, 67 percent of CFOs worldwide believe that improving business partnering between finance and the business is a major priority.

The study suggested one potential model could include a finance business partner, data scientist, and a leadership team member working together. Leadership identifies a problem and shares with the finance business partner; that person then works with a data scientist to analyze the data, identify reasons for issues and trends, and model different scenarios for solutions.

Technology

Technology will play a significant role in supporting the future finance function in two main ways: automating traditional functions and enabling more sophisticated analysis and insights. According to the “The DNA of the CFO 2016” study, the future of finance will be one that embraces technological innovations to improve effectiveness, increase efficiency, and enhance insight.

“Finance professionals need to be equipped to focus more on the substance and less on the compilation of financial reporting.”
—Dan Giurleo, financial systems consultant at Care.com

Digital technologies—including cloud, in-memory computing, mobility, and cognitive computing—will have a big impact. Cloud models are helping to streamline and automate business processes and transactional activities that have held finance teams back from focusing on strategy. In fact, the study predicts that all transactional finance processes will be fully automated in “captive finance factories,” a model based on shared services, managed services, and outsourcing.

Greg Acevedo, business development manager for Workday Financial Management at Alight Solutions, describes how automation is impacting the role of finance. “Thanks to the continuing automation and consolidation of financial systems, the finance team is evolving from an organization centered on transactional responsibilities to one tasked with providing the business with analytics and strategic insight,” he says.

Finance systems leveraging in-memory computing also allow finance to transact, analyze, and report on live data, enabling real-time consolidations and dramatically shortening the financial close process. Easy and fast access to data, along with the required controls for proper access, will be important in supporting future management and statutory requirements.

“We are living in a much more complex world, and that complexity is translating into more stringent requirements for timely and accurate information, both for management and different government agencies and tax authorities,” says Dan Giurleo, financial systems consultant at Care.com. “Finance professionals need to be equipped to focus more on the substance and less on the compilation of financial reporting.”

Technological advancements are also improving the planning, budgeting, and forecasting process, and helping organizations achieve business outcomes and mitigate the risks of underperformance. For example, new approaches are bringing together planning, forecasting, reporting, transactional finance, and workforce data in a single system, stored in-memory, to give finance accurate and immediate access to business data and the capabilities to effectively collaborate with stakeholders across the business.

Cognitive computing will also grow in importance, especially in planning and forecasting. According to the report “Redefining Performance Insights from the Global C-suite Study – The CFO Perspective” from IBM, 38 percent of CFOs single it out as one of the technologies most likely to transform their enterprises within the next few years.

Check out part two of this blog series, focusing on the current readiness of finance teams for the future and how finance leaders can find and develop the talent they will need.