The finance function faces a new world, as many once-manual tasks such as data entry and processing are increasingly performed by technology.
At the same time, there is growing pressure on finance departments to provide more meaningful insights and analysis from financial reports and extrapolate this information into the future.
These changes will prompt many Chief Financial Officers (CFOs) to reconsider the mix of skills they need in the finance function.
Futurist Michael McQueen is the author of a new book, How to prepare for what's next: A guide to thriving in an age of disruption. He says it's important for leaders to realise there will be fewer people working in the finance function as more tasks become automated.
This is happening right now. For instance Verizon Communications is slashing US$10 billion in spending between now and 2021, and a portion of this will be from the finance department.
“We're seeing the same thing across accounting, actuarial and bookkeeping functions. Anyone in a role that has been about crunching numbers, compliance and data, until recently very manual processes, could be affected,” he says.
But it's not all bad news – the takeover of manual processes by technology will generate big volumes of data which – once analysed – could provide timely and accurate insights into all areas of the business.
This could deliver good outcomes for people in finance teams. While much of their work may be taken over by robots and automation, their talents can be redeployed toward new challenges that require human insight.
Going beyond the data
“Artificial intelligence and machine learning mean that many functions will be taken over by algorithms. There will be an explosion of data, and the role of human judgement and intuition is going to be really important,” says McQueen.
Anyone in a finance role, but particularly CFOs, needs to able to analyse that data and make correlations with other data sets. “Businesses are realising that data alone isn't enough when it comes to getting sensible insights,” he says.
Zara is a good example. It relies on its staff's impressions and insights to develop the brand. Every day before store opening, all staff come together to talk about what consumers are buying – or not. This information is fed back up the business to management to improve buying and manufacturing decisions.
“They are using the gut feel of people who are on the ground rather than just relying on data, which is often a reactive step. You're not looking just at what happened last quarter, last month or last week and reacting to what's happened, instead they are trying to look forward,” McQueen says.
Anyone in a finance role might adopt the same approach; which means people in finance teams may need to rethink their skill set.
“They need to be able to synthesise quantitative information and also move into qualitative analysis. Intuition, creativity and judgement will be the three most important things for CFOs and finance people in the future,” he suggests.
In many cases, this could require a broadening of skills within a finance department. Says McQueen: “Hire people who've got backgrounds in other areas such as market research, marketing or even advertising. Younger people also have a set of fresh eyes, which is often helpful when it comes to challenging the status quo.”
In fact, finance teams may increasingly decide to hire younger people and those with a different perspective, to challenge the way tasks are approached.
“You might need to bring in people from different departments to get new mindsets because people who have been attracted to the finance profession historically have been of a certain mindset, which makes that group homogenous and collective blind spots are rife,” says McQueen, who advises finance chiefs to aim for more diversity within their teams.
Training the team
A conundrum for finance chiefs is how to ensure staff are up-to-speed with changing technology.
McQueen says this starts by ensuring staff are exposed to new tools and methodologies.
“There are so many good events that showcase new technology. Everyone in the room is at the bleeding edge of technology and sharing insights about the impact of tech on the finance profession.”
His advice is to, “go outside the echo chamber of your organisation. Reading magazines and subscribing to blogs is helpful. But getting out of the office and your normal environment to find out what other people are doing is invaluable.”
Another idea is to go to Silicon Valley and tour tech luminaries such as Apple, Google and Uber and see what's coming. Then, think strategically about how to best place the business and develop its skills.
“Expanding people's minds is essential. It's also important to allow people to try new things, implement new processes and technology and give permission for people to fail a few times,” says McQueen.
“Often we're so focused on getting it right the first time – particularly in the finance arena where it either works or it doesn't. Allowing more complexity and realising that often when you work on new ideas, if they don't work the first time it's a learning opportunity rather than an indication of things going wrong, is key,” he says.
While this may not seem like the usual modus operandi of the finance team, the new digital dynamics within the economy mean finance chiefs who are not receptive to new approaches may be left behind.
Ultimately, being open to trying new things, bringing in different people and developing a culture where staff are prepared to take risks are three key strategies that could be employed to future proof the finance function.
- Technical skills are necessary in the finance function, but CFOs can also benefit from intuition, creativity and judgement.
- It could be important that finance teams balance older and younger skills to generate diversity of thought.
- Training staff and exposing them to new techniques could encourage learning about new tools such as robotics and machine learning.