If you could start by sketching a finance team on a blank piece of paper, would it resemble in any way the structure we see today? Would the design you come up with still be relevant considering the rapid changes brought about by the ongoing pandemic? Digitization has become a realistic goal for finance functions to remain highly relevant, especially when there is an ever more pressing need to react quickly.

‘The revolution will not be brought to you by Xerox in four parts without commercial interruptions’ | Gil Scott-Heron

To reach their true potential, finance should fully embrace technology and welcome newer possibilities. An average finance professional spends about 70 percent of their time trying to do their job right, whether in collecting, assembling, recording data, or creating spreadsheets. The application of ERP systems, automated analytics, and artificial intelligence (AI) will liberate finance professionals from monotonous and manual tasks, enabling them to make impactful decisions that could add value across the organization.

Evolution of the finance function

So, does that mean the traditional role of CFO will no longer exist? Digitalization challenges are creating a need for CFOs to restructure finance processes and drive the business through big data and analytics. As the environment has become complex, top finance leaders will need to polish their digital leadership and analytical skills. The evolving technology has put more pressure on CFOs to transform from a passive advisers to proactive strategic partners.

There has been a growing realization that technology will change the skills the accountants need and their future roles will differ from what we see today. This requires the top finance leaders to rethink and invest in its talent pipeline and gear up their finance team to achieve the aim.

“What’s really difficult is for people to picture what this digital environment looks like and the roles and terminologies that are coming with this new phase,” as said by one of the speaker in Generation CFO Meet Up webinar.

Will COVID-19 increase the need for a Digital First CFO?

The COVID-19 has taken a tragic toll on the operational and financial side of the businesses around the world. And for all the uncertainty about the future, it’s clear already that the pandemic has significantly accelerated shift to a digital world.

The scale of the speed at which things are happening raises a valid question – are finance professionals willing to embrace digital transformation? While most finance professionals roles require a level of conservatism and risk-aversion when it comes to accepting the value of emerging technologies. As put rather bluntly by one Generation CFO’s community member, “Accountants traditionally haven’t always been brilliant at technical innovation.”

The meet up webinar continued to explain the different reactions using Yin and Yang’s theory. The finance business partner who moves finance up the information value chain using insightful analysis and participates in effective business decision making are seen as the ‘Yin’ of the finance function.

Those same business partners can sometimes see data and digital skills as the darker side of the information ecosystem, the yang, as data and digital skills are something they have not been taught in their accountancy education or trained in their careers. But it looks like COVID-19 has given businesses the opportunity to push their finance professionals in both areas, to deliver more value to the business, and capitalize on this situation.

Finance holds a unique position in every organization to deliver the insights required to make decisions. Despite the immense challenges companies are facing today, now is the time for finance to act and develop themselves in digital leadership, analytical skills, capabilities, and digital tools. “Finance professionals with analytical DNA should be the center of digital transformation and CFO innovation” as quoted by one participant in GEN CFO talk.

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Are digital skills core to finance or will another CXO lead this change?

A question that keeps getting asked and was even addressed in ICAEW’s workshop is how the finance department can make the most out of digital change and in particular, data science? Data science is fast developing that has great potential to strengthen business decision making, and accountants should work out how they can benefit from it. Does that mean accountants need to acquire a further qualification in machine learning, mathematics, and stats?  We don’t believe so, but does it mean they need data and digital literacy and be able to manage the digital finance function transformation, absolutely.

For instance, an HR leader recently said, “Finance professionals should be able to work with high volumes of data, that doesn’t mean becoming a data scientist, but professionals should be comfortable working with big data.”

To achieve a step-change in how accountants perceive and use data, organizations need a digital finance function strategy, and need to partner with tech savvy employees to impact analytics, automation, and any priority business goals.

For example, when finance partners with data scientists, both professionals will learn new skills and adopt new perspectives on how businesses run. Moreover, finance professionals possess commercial and analytical skills that will provide a bridge between data science and the organization.  Business understanding, and operational context is critical knowledge held in finance.  

Needless to say, that organizations need data scientists to manage, model and implement data analytics, but at the same time, accountants should develop project management knowledge to keep these project on track and learn how to embed advanced data analytics capabilities to stay valued and relevant in the business and help the business remain competitive.

How are you adding finance capabilities to your team?

According to the Harvard Business Review study, digital transformation was the #1 concern of top leaders, directors, and senior executives in 2019. But after being hit by COVID-19 this year, the businesses’ financial conditions have been impacted massively. I know what you’re thinking, do organizations have enough budget to allocate to digital developments now.

Given the rapidly changing business trends, companies are undoubtedly stepping forward to transform their traditional finance function, which can no longer operate effectively in today’s fast-paced world. In our recent research, the majority of participants saw an increase in the need to transformation finance.  Some organizations are taking baby steps while some are dedicating huge resources to the effort to digitize and digitalize.

Digital technologies will certainly change the accountants and finance leader’s roles, and the addition of digital finance function strategy and resource like data scientists in to the team will further help finance reach its true potential.

Has your company taken any initiatives to enhance finance capabilities?

This article was written by Christopher Argent, Founder of GenerationCFO.com. For more information on our services, please contact us here.