Digital Finance Transformation programmes often focus on major technology implementations, process rationalization, and automation. Critically, however, no such changes are sustainable, nor will they deliver lasting benefits, unless the Finance Team has the right skillset to rise to current and future challenges.
A look back at the evolution of the Finance team
The people organization in the Finance function has been subject to significant change and transformation in the last 30 years and it is worth reflecting on these major shifts.
In the 1990s, large global organizations led a wave of offshoring as companies rushed to take advantage of cost reductions through wage arbitrage. But this was often a race to the bottom as companies just lifted and shifted their operations without making fundamental improvements in their processes and over time companies saw local wages and turnover increase. Skills of Finance staff rarely changed and were at best “salami-sliced” to carve up the service delivery model and take advantage of cheaper wage locations.
The 2000s brought a first wave of new and onerous regulations and accounting standards across industries in the form of Sarbanes-Oxley for SEC registrants, International Financial Reporting Standards for EU listed companies, and, towards the end of the decade as a result of the financial crisis, increasingly onerous reporting regimes. In response, CFOs shifted their focus and budgets to regulatory requirements and building the teams and the Finance architecture to meet compliance and control obligations rather than transform their functions. Regulatory and accounting skills continue to be at a premium.
During the 2010s, technology started to be revolutionized in a number of areas (Big Data, Cloud Blockchain, Robotics Process Automation, Machine Learning etc.). However, CFOs struggled to take advantage of these technologies and failed to see benefits if they did try to implement them piecemeal or in the absence of a wider strategy. (As I suggested in a previous blog post, the Finance RPA programs of the last few years automated mundane, repetitive tasks at the lower end of the value chain, but CFOs failed to look beyond those quick fixes never refining existing processes nor transforming the Finance operating model as a whole.)
Now, in 2022, relatively free of compliance programmes (or at least better equipped to deliver them efficiently), Finance transformation programmes have, once more, become about delivering value through enabling Finance to deliver a better service at a cheaper price point. Critical in this isn’t just the technology but also how Finance professionals and teams develop and innovate their skills to embrace and use technology to deliver value efficiently and effectively.
Finance teams are taking control of their technology
Traditionally, and for most Finance functions today, an organisation’s IT function is in charge of technology-related decisions (procurement, implementation, maintenance etc.). However, the more innovative Finance functions now expect at least an equal voice in Finance technology decision making, and increasingly the mandate to procure, implement and maintain Finance technologies. The modular nature of composable architectures and the ability to more easily integrate best-of-breed is also beginning to put Finance in the charge of its technology destiny.
A shift in skillsets
These new technologies and the increasing digitalisation of Finance is, in particular, enabling the Finance function to access a wider set of data more regularly and more instantaneously. In addition, the low cost of data mining and cleansing routines are rendering the data more useable at a lower cost point. Lastly, ubiquitous visualization tooling now puts Finance professionals in the driver’s seat.
As a direct consequence, this necessitates a shift in the skills required by Finance professionals: the best Finance teams will exhibit skills of both highly qualified chartered or public accountants (guardians of the control framework as well as ensuring compliance with accounting standards and regulations) and Chartered Finance Data Scientists, individuals who can distill, build, and visualize data stories that bring insight to all stakeholders within and outside their organization. This will be particularly relevant as the ESG data set will materially increase the data the CFO function will need to be reporting on over the next decade.
A recent study from organizational consulting firm Korn Ferry, found at the 1,000 largest U.S. public companies, the portion of CFOs who are certified public accountants fell to about 36% last year, down from nearly 50% in 2014 (source). The same study also found that almost half (45%) of the CFOs surveyed said the two capabilities most critical to the future of the finance function were operational information (such as reporting and analytics) and strategy enablement—both beating out more specialized finance skills.
This trend has significant implications on how Finance functions recruit and train their people. The Chartered Finance Data Scientist does not yet exist. Just like the Systems Accountant of the 1990s, this is a specialized skill and experience that is not equivalent to the generic skills of data scientist but will require an equal combination of accounting expertise and data science. Accounting Institutes and corporate training courses should focus on developing curricula and work experiences that will ensure individuals are equipped to fulfill this vital role in Finance functions of the future.
In conclusion, the acceleration in the digitization of the Finance function will also drive a fundamental shift in the skills required in Finance and it is critical Finance functions future proof their people’s skills by ensuring their training curricula and work experiences are aligned with this trend.
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