Digital trends like Enterprise Risk Management, Automation likely to transform finance and accounting
In a world that is increasingly virtual, digitalisation has emerged as a top priority for CFOs, as the application of technology to finance becomes clearer by the day. During the pandemic, when remote financial closures became a reality for most finance departments, companies that had invested in digital solutions fared better than those that hadn’t. Having learned their lesson, finance leaders went on to direct greater investments in cloud computing, data integration, and software in 2021 as a result. A Gartner, Inc. survey bears this out. The survey of 173 CFOs in October 2020 highlighted a daunting list of digital priorities for 2021, from the implementation of advanced data analytics and robotic process automation (RPA) technologies to accelerating digital skills among their teams. The survey also revealed that most CFOs were not confident in their preparation to successfully meet their highest priority digital objectives for the coming year.
These digital “must-dos” for CFOs reflect their intent to revive stalled growth investments while optimising costs to better reflect new business realities. Chief among these realities is meeting new customer preferences shaped by the pandemic, including greater expectancy for speed, multichannel delivery, and always-on availability.
At the heart of this digital transformation for finance and accounting teams is the potential for information technology and open data standards to reduce lags and latencies in the operations and processes. Based on these expectations, finance and accounting teams are focused on ensuring that their own function is equipped with the tools, technologies, and talent for this digital transformation, some of which will also support the CFOs’ long-term cost optimisation goals. CFOs and their teams are identifying investments that will drive positive business outcomes and enhance employee performance within new hybrid working models that have emerged during the pandemic. What we are seeing is that data standards, such as the XBRL (Extensible Business Reporting Language) standard, and new digital platforms such as blockchain, cloud computing, and natural language processing, can increase operational efficiency, underpin new competitive opportunities, and notably, ensure auditable data, readying entities for the new world. CFOs and their teams are already beginning to see how data integration across a business is helping to create value; how analytics is allowing for predictive rather than reactive decision-making; and how robotic process automation (RPA) is boosting efficiency by taking over routine human tasks; all of which are gradually helping to transform the finance profession from a number-crunching function to a strategic, data-driven, and digitalised engine room. Here are some of the top digitalisation trends for finance functions in the post-Covid era.
1. Automation will no longer be debated
Manual processes and routine, rules-based tasks will have no place in finance and will be automated. This was true even before the pandemic, with over 50 per cent of finance and accounting professionals anticipating how automation would impact their company’s performance in innumerable studies. An automated process that’s repeatable, organised, and transparent, reduces the exposure to risk and provides confidence in reporting outcomes.
2. Remote working will become the norm for finance teams
Companies across the world are planning to make remote or hybrid working a permanent option. However, facilitating successful remote working arrangements is a two-part process. First, CFOs must commit to providing the right technology tools to their staff. Second, they must champion teamwork and collaboration among individual teams and
cross-functionality, throughout the organisation. And for this, CFOs need to actively lead in building and maintaining a new corporate culture along with the support of HR and IT functions.
3. Upskilling will become the norm
Disruptive digital technology transformation is changing the jobs management accountants do and threatens to replace many existing jobs including those of finance specialists and accountants. New recruits to the finance function will need to embrace new skills such as data governance and lifecycle, programming, business analytics, data visualisation, and more. It is critical that accountants continue building on and evolving the skill sets that are less vulnerable to automation. In the very near future, having data and programming skills may well become as important as accounting skills.
4. Data will be the key to success
A “data-centric” organisation sees data not only as a useful commodity but also as an important factor for business strategy, directly affecting issues such as costs, efficiency, and quality of service. The majority of the F&A professionals in a recent IMA (Institute of Management Accountants) survey said their companies take a “strong” or “very strong” data-centric approach to information technology.
5. Enterprise Risk Management (ERM) becomes a finance accountability
If there is one thing the Covid-19 pandemic has taught us, it is that a crisis can emerge suddenly and completely derail plans for the future. In 2021, companies will be highly focused on mitigating risks be they environmental, economic, social, or other and the role of finance in prevention will become more crucial. In fact, using the COSO ERM framework properly, management accountants can better anticipate and prepare for disruptions and natural disasters with plans and procedures in place for business continuity and remote work.
The intersection of these disruptions will substantially change the way finance teams address the value paradigm required in the 21st century. How well they prepare for this new era will make all the difference in their failure or success in meeting the demands of this next chapter.
The author is the CFO, Institute of Management Accountants (IMA)
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.