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The future of finance and the CFO's role

The future of finance and the CFO's role

In a disruptive and technological age, CFOs and finance teams have the opportunity to support innovation, embrace automation, leverage data, lead strategy and recruit differently – helping their organisations to be prepared for anything.


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A new vision for CFOs

In a world that is increasingly driven by disruption and technology, Chief Financial Officers (CFOs) face the challenge of redefining their roles, the purpose of their finance functions, and their overall impact on their business.

Mo Treadway, Global Head of Financial Management Advisory, KPMG, based in the United States, is adamant that it is not a time for CFOs to apply ‘safe’ thinking. He visited Australia in August 2017 to host a series of roundtable discussions with CFOs from leading organisations, and spread the message that CFOs must take a bold approach to value creation.

Treadway said that as finance functions become more automated, CFOs must shift their focus to becoming more ‘technology savvy’ – embracing robotic processing and artificial intelligence , owning enterprise performance management data and analytics, deploying predictive tools and building business partnering skills.

Drawing on insights into the latest innovations in disruptive technology, he presented KPMG’s fresh vision for the future role of CFOs and finance operations.

The changing landscape

Disruption can no longer be seen as an abstract concept. Instead, Treadway said, “to disrupt is to exist”.

According to KPMG’s CEO Outlook 2017 survey, one in three Chief Executive Officers (CEOs) believe their sector will see a major disruption in the next 3 years as a result of technological innovation. This includes big data, emerging technologies and the convergence of industry models which drive change. Coupled with the need for customer centricity, changing workforce demographics and a shifting geopolitical and regulatory environment, CFOs must look to new ways of working.

“These business disrupters are changing the demands on finance,” Treadway said. “The strategic importance of the CFO’s role is increasing.”

Supporting innovation

Today’s CFOs play an integral role in the success and sustainability of their businesses, Treadway said. However, a key responsibility in the disruptive context will be to support innovation.

“Typically, we see finance help to develop a capital plan, administer that capital plan, prioritise where those dollars are spent, and then be a police force around that capital spend,” Treadway said.

He thinks CFOs need to think “more like venture capitalists”. They need to drive evaluation, allocation and monitoring of strategic investments in new platforms, customers and products.

Integrating ‘extreme’ automation

As ‘extreme’ automation becomes a reality, it is up to CFOs to embrace the possibilities it presents, Treadway explained. A CFO’s role in data management, for example, will no longer be an aggregation of performance data. With that task handled by automated technology, finance will instead lead strategy by using the data to drive deeper prescriptive insights.

Blockchain will be key for CFOs to understand, he said, as it can accelerate transaction recognition with increased efficiency. When integrated with cognitive technologies (the ability to reason and infer trends and patterns in data), its potential use is vast.

Cloud technologies, robotics, machine learning, natural language processing and mobile will push organisations towards extreme automation. The key, according to Treadway, is integrating these technologies to fully unlock their potential.

“We see a lot of companies looking at individual initiatives, doing proof-of-concepts here, proof-of-concepts there, but without an integrated program.”

He thinks it’s up to CFOs to have “that end-to-end vision”.

“Think about them holistically, and how they transform what we do in finance.”

Insights and analysis

It’s up to CFOs, said Treadway, to use data and analytics to understand and wield potential disruptors – and this requires working with both financial and non-financial data.

“The CFO needs to be the data steward. Anything that impacts the enterprise strategy and impacts enterprise performance, the CFO better have a good grasp of.”

CFOs must equip their teams with the right tools, skills and capabilities in order to provide leading insights and analytics, and answers to critical questions. This means moving beyond descriptive and diagnostic analysis to predictive and prescriptive analysis, he said.

“A lot of companies aren’t leveraging descriptive data to its full capability around in-memory computing and the visualisation that exists. Other organisations are forging ahead, using data to lead their evolution.”

In industrial manufacturing, for example, firms are collecting wear-and-tear data on infrastructure in real time to determine component failure rates and develop predictive servicing and maintenance schedules.

Consumer market organisations are also enhancing their forecasting ability through predictive modeling of consumer behavior and trends.

Key roles in the future of finance

The impact of extreme automation and increased data availability will see a shift in organisational structures, Treadway said. While maintaining the traditional functions of control and increased process efficiency, CFOs and finance functions will be responsible for leveraging digital technologies and data.

These changing responsibilities will create new roles in finance, including the Business Partner and Strategist, who will leverage threats and opportunities into strategic direction.

Treadway also sees the Data Scientist as an “absolutely critical” role, advising the business on the impact of different scenarios. The Business Planning Analyst will also play a key part.

“This is somebody who has to work across multiple groups and multiple functions – marketing, operations, finance, production – to collaborate on business planning,” he said.

Financial and Regulatory Accountants, Innovation and Investment Strategists, and Business Solution Architects are other emerging roles. These will be supported by “bots” – automated technology that delivers data and executes tasks.

“This is a very different view of finance than most companies have today,” Treadway noted.

The importance of behavioural skills

With most technical tasks becoming automated, strong finance teams require behavioural skills, Treadway advised. Strategic thinking, relationship management and communication are becoming just as important as technical finance skills and data utilisation.

“They need to understand the business, understand the industry, get out and work with people, collaborate with them, and tell a story.”

To build talent, Treadway advised CFOs to look beyond their traditional recruitment strategies.

“What we’re looking for are data scientists, computer scientists, even a liberal arts person who can tell a good story.”

The way forward

One CFO asked Treadway about the potential barriers to these changes, including the cost of technology. The business case, he said, must be made on an enterprise-wide level.

“If you think about how it’s going to simplify the organisation, reduce the labour force and improve insights, you can drive a stronger business case.”

He said to consider: “What are the questions you’re trying to answer, that you can’t answer today? What are the decisions you’re trying to make, that you struggle to make today, because you’re not getting the insights you need? That will tell you what kind of analysis you need. Then peel back to what specific data you need.”

In summary

In the technological age, CFOs and finance teams cannot simply focus on being stewards of finance and cost managers. They have the opportunity to support innovation, embrace automation, leverage data, lead strategy and build future-ready teams with these skills at the core. Rather than reacting to external disruption, CFOs can instead be responsible for evolving financial operations in their own organisations, and to help their organisations stay a step ahead.

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