Five Reasons Why the Finance Function Is Ready for Disruption
Many finance professionals underestimate the impact of technology—robotics and predictive analytics—on their jobs. As Frank Verbeeten, Professor at the Vrije Universiteit, Amsterdam, put it, “If finance professionals want to prevent their jobs from eroding or even disappearing entirely in the near future, then they must waste no time in sharpening their technical and interpersonal competencies. Finance professionals must act quickly, as disruption is lurking just around the corner.”
This is also clear in the results of a survey by the Royal Nederlandse Beroepsorganisatie van Accountants’ Accountants in Business member group and the post-graduate education Controllers programme at Vrije Universiteit in Amsterdam. Personal interviews and the survey were conducted with senior leaders in finance, such as CFOs, corporate controllers, business controllers, etc., during the second half of 2016 and the first quarter of 2017.
The survey results, Impact of Technology on the Finance Function, were published in May and June 2017.
5 Reasons for Disruption
The results pinpointed five main reasons why the finance function is ready for disruption.
- Robotics and data analytics (big data and predictive analytics) are rapidly gaining ground in each of the finance function’s core tasks (not only in the transactional processes).
- An increasing number of organizations already meet the preconditions for accelerating this development, such as the standardization of financial processes, systems, and information architecture.
- The use of robotics and data analytics is resulting in increased efficiency and effectiveness. Organizations that use robotics are cutting the costs associated with the finance function. Those organizations that use data analytics have a more effective financial function.
- Many finance professionals underestimate the impact of technology on their jobs.
- Competences that are important for finance professionals operating in a digital world, such as data analysis and leadership skills, must be developed before it is too late.
Technology: Rapidly Gaining Ground in the Finance Function
According to the survey, robotics and data analytics are and will continue to rapidly gain ground in all of the finance function’s core tasks. Until quite recently, the emphasis was on increasing the efficiency of accounting transactions. Soon, however, business, financial, and corporate controllers and risk and finance managers will start to see changes in major elements of their own jobs. The necessary preconditions are already in place. As Prof. Verbeeten says, it is because “the majority of organizations have already made great strides towards standardizing their financial processes, financial systems, and information architecture.”
Major listed companies are leading the way in the use of robotics and data analysis, as is the entire financial services sector. Smaller organizations often lack the financial resources to implement robotics and data analytics and, as a result, lack the associated knowledge and capacity. They are often dependent on the opportunities for progression offered by their financial software vendors. Thus, they are expected to follow in later waves of adoption.
Working with Robotics & Data Analytics = More Competitive Rates & Increased Effectiveness
Often, those organizations that make substantial use of robotics are also the ones that are more active in data analytics. According to the study, organizations that use robotics and data analytics in their finance function are usually more cost efficient and effective. Robotics cuts the costs of the finance function while data analytics mainly delivers greater effectiveness due to improved analyses.
Finance Professionals: Waste No Time Sharpening Technical Competencies
If finance professionals want to keep up with technological developments, they must pursue further professional development in areas such as data analysis skills, the ability to use systems thinking, and leadership skills. This is in addition to existing strengths, such as reliability, integrity, curiosity, and communication skills, the importance of which will remain unchanged.
The study also highlight one striking learning: a generation gap. Younger finance professionals attach more value to data analysis and data collection skills than their colleagues over 40 years old do. CFOs, from their helicopter-view perspective, also have a clear view on what the impact of technology will be.
Our clear conclusion? The finance function is ready for disruption and finance professionals, especially Generation X, must act now.