In the very near future, it's likely that many organisations will use robotics and artificial intelligence (AI) in analytics, big data, trend analysis and risk management, with the big benefit being the elimination of human error, says Rebecca Livesey, managing director and leadership strategist of business consultancy Achieve-Lead-Succeed.
“AI will free up employees so they can invest more time in the elements in a business that AI struggles to do right now, such as strategy, creativity and forward thinking,” says Livesey.
“Robotics will eliminate the admin work many finance employees do. And with the reduction of human error AI brings, it will also generate higher quality data,” she says.
Financial modelling expert, Lance Rubin, CEO of Model Citizn, says there is a plethora of tasks in the finance function that are already being replaced by robotics in some organisations.
“Almost everything CFOs do today, and every finance role, will either be automated or performed by robotics, which are essentially the same thing – automation via code is effectively a robot,” says Rubin. Management reporting and financial reporting are low hanging fruit when it comes to automation.
There are myriad examples of routine finance tasks that can become more efficient and less time consuming with robotics and AI. These include month-end processing, linking disparate data and operational systems and budgeting.
“The verification and risk mitigation work finance teams spend so much time on should be much more efficient and require fewer resources,” adds Livesey.
Upskilling the team
With the integration of robotics and other new technologies, finance leaders may need to recruit people with new skill sets and re-train existing staff.
As robotics increasingly take over mundane tasks in the finance function, senior finance executives are likely to find they have more time to do more strategic, forward thinking, requiring complex problem-solving skills.
“A CFO with a background in strategic thinking and leadership may be more valuable to a business than someone who has a general finance background, but who lacks this foresight,” Livesey explains.
At the same time, CFOs could find it useful to employ technical specialists such as data scientists, who act as advisers but don't necessarily lead people.
“It is important CFOs are able to lead and connect with people so the human element isn't lost through increased technology and automation,” she adds.
CFOs who hope to improve their leadership skills may find it useful to gain experience not just in finance, but also in other areas of the business.
According to Livesey, “Returning to the finance function with a breadth of new skills as well as operational experience will assist with the transition to increased reliance on AI, and provide a more holistic perspective on how it can help the business overall.”
The advent of robotics may introduce a new challenge for many CFOs: to develop the ability to think differently, not just technically. Many CFOs could also benefit from bringing creative thinking into the finance team, rather than simply employing people with financial and risk mitigation expertise.
“CFOs and their staff will be required to look at problems differently and solve them creatively. This should already be happening to make the most of new technologies. Finance executives must learn how to be the strategic thinker in their organisation and if this doesn't come naturally, they should undertake training,” says Livesey.
According to Rubin, CFOs can make an important contribution by supporting people through this change and ensuring staff are aware of and know how to use new tools.
“Rather than just producing reports, CFOs will need to develop empathy and story-telling skills to be able to influence stakeholders. The role will also need to focus on managing the transformation of the finance function as well as the broader business as new tools are embedded in business processes,” he says.
Business change initiatives led by technology will be more effective when driven by finance executives, he argues. Automation is being introduced not just in the finance function but also across the business, which means the initiatives need to partner with the rest of the business.
“The best way to manage this transition is to devise a strategic roadmap and project plan that brings people on a journey and tells a great story of what the future will be like for them,” says Rubin.
He says, 'what's in it for me?’ will be the main question staff want answered. He recommends that executives think through how they will communicate their response.
“They need to manage people's fears and explain how the organisation will use the savings generated from automation. Most people fear executives will bank the savings and just get people to work harder to account for a reduced headcount, as this has been their experience to date.”
For a CFO in a business that is undergoing a transition to automation, it's possible that managing the expectations of their staff and communicating throughout the change process is equal in importance to the CFO's obligation to manage the business's finances. Understanding this requirement and giving it equal weighting in day-to-day activities, could be key to an effective transition for finance chiefs.