By Venkkat Ramanan
Technology is disrupting every industry, every sector and every business function. New tools allow finance professionals to gain greater insight into their organisations’ data, to share information more effectively, and to identify the patterns and trends that will shape the future. Yet the adoption of new technology is not evenly distributed across organisations, industries and 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 that are impacting on modern finance functions. These are:
- Cloud solutions, which enable shared computing services over the Internet;
- Robotic process automation, which reduces costs and improves efficiency by automating processes and repetitive manual tasks, such as data entry and report generation;
- Visualisation, in other words, using technology to turn raw data into pictures and infographics that clearly set out the organisation’s story;
- Advanced analytics, which automates the examination of data to discover patterns that 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 are used to store data; and
- Blockchain, the database ledger technology that keeps immutable records of transactions on a distributed, peer-to-peer network.
These powerful emerging technologies are coming together to create a new finance model, where human intelligence is augmented by technology. As technology enables humans to become faster, more efficient and more productive, the success of the finance function of the future will largely rest on how well it integrates the technical capabilities of algorithms and robotics with the creativity and empathy of human accountants.
Increasingly, finance professionals will move away from performing mundane tasks. Instead, their role will be geared towards knowledge collection and creation, and curating and interpreting the information outputs produced by software. The automation of repetitive tasks will free up their time so that they can focus more 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. This is where management accountants come in. Through ambitious and clever use of technological tools, they 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 together generate vast realms of data, which can be queried by advanced analytics and in-memory computing to provide automated insight.
Certain companies and certain sectors are the real pioneers when it comes to 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 within the ecosystem. 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 ecosystem.
Management accountants have a comprehensive view of their organisations’ finances and operations, which is why they are set to play a critical role in developing the digital strategies of the future. If they are to fully seize this opportunity, however, they need to positively 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 that are most likely to disrupt the business in future. We have developed our own tool, the CGMA horizon scanner, precisely to support these kinds of assessments.
After that, it is necessary to use the latest technologies to release the full capacity of the finance function, and to widen the remit of finance to cover a broader range of management information. Organisations also need to encourage their finance professionals to develop new competencies and growth mindsets, which will enable them to help with creating and preserving value over the long-term. No business wants to fall behind in this age of disruption. So the conversation around what the future of finance will look like in your organisation should be happening – and it should be happening today.
Venkkat Ramanan is Regional Vice-President – Asia Pacific at the Association of International Certified Professional Accountants (AICPA).