Roundtable debate: ‘How do we design a finance function that’s fit for the future?’

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Automation is transforming the work of finance teams in businesses, removing data-collection tasks and freeing up finance professionals to add value in new ways. The IoD and professional services firm EY invited a group of experts in the field to discuss what this means in practice

Finance teams are experiencing something of an identity crisis. Rapid advances in technology, especially in automation, are changing how data is captured and the way in which many underlying financial processes can be delivered. This is giving rise to a crucial question: will technology remove the need for traditional finance set-ups, or will automation give finance professionals the freedom to become key value drivers for their businesses?

To answer this question and to flesh out what the high-performing finance function of the future might look like, the IoD and professional services provider EY invited leading figures from a broad range of industries to give their thoughts on the subject in a roundtable discussion at the institute’s headquarters at 116 Pall Mall.

Christopher Burke, CEO of management and technology consultancy Brickendon, summed up the problem facing finance teams when he said: “If a business has £1m to spend, does it use that money to improve the commercial team so that it can make £10m more in sales, or does it spend the money on improving a finance function that offers no tangible return on the investment at all? This is the real dilemma facing finance departments: how do they justify their existence?”

This point was picked up by Mike Gardner, executive chair of Claremont, a business that specialises in refurbishing and fitting out commercial premises. He said: “Finance needs to do a lot of soul-searching about where it positions itself, because it could be in serious trouble if it doesn’t. There’s a cricketing analogy I quite like, which asks whether the finance function is the batsman in the middle making the runs or the guy out on the boundary keeping the score. In other words, is it actually creating value for the business or is its job simply to maintain oversight?”

Daniel O'Toole at the EY 'Future of the Finance Function' roundtable

Daniel O’Toole says that finance departments face a single problem: technology

Tackling the tech

What is prompting this significant re-evaluation of the role of finance in organisations of all types and sizes? The cause is straightforward, according to Daniel O’Toole, CEO of Retail Merchandising Services, a development company that supports many of the UK’s biggest high-street names.

“Finance is actually no different from any other department in our business. The problem facing it can be encapsulated in one word: technology,” he said. “Automation and all the efficiencies that come with improved technology are removing many of the function’s traditional tasks. I think that’s a good thing, because they are mundane and no one really wants to do them.”

Paul Phelps, chief executive of the AMS Media Group, a London-based marketing agency, agreed. “Any technology that can streamline the credit-control process, say, and make it less laborious has to be welcomed,” he said. “That’s because there is so much else we could be doing that will have a more positive effect on the business.”

A new beginning

But what could a finance department deliver if it were freed up to focus more on strategic decision-making and growth rather than on the collation of historical data? Hari Punchihewa, deputy chief executive and finance director at the University of Derby, is excited by the freedom that finance departments are being granted and believes that the sky’s the limit for them.

“Finance is no longer simply a back-office concern,” Punchihewa said. “It is a leading function in the business. It’s up front, collating the intelligence and presenting it in a way that is easily understood. In the past it was just about reporting financial performance in the preceding year or quarter, but now things are so different. Today it’s about combining financial data with non-financial intelligence to get a much wider perspective on how the business has performed and to predict how it will perform – and it’s about using all of this to make sound business decisions.”

Hari Punchihewa EY roundtable

Hari Punchihewa is excited by the prospect that finance is a leading function in the business

Finance as a business partner

Jim Jordan, finance director at the IoD, went one step further, saying: “Management accountants don’t really exist now as they once did. They are being replaced with what I would call finance business partners. Accounting was always seen as the boring part of the business, but the new position of finance business partner is much more exciting and creative.”

The creative factor is also important to Brendan McGurgan, who is managing director of CDE Group, a manufacturing, recycling, engineering and design company based in Cookstown, Tyrone.

“I have a background in finance myself, so I’m biased towards protecting the function, but even I think we should automate as many back-office processes as we possibly can,” he said. “This automation will aid the overall delivery of the management reports and core financial information. It will aid some of the compliance and reporting – and it will free up those skilled individuals who were previously doing this work manually to become a value-adding service to the rest of the business.”

Stephen Martin at EY's 'Future of the finance function' roundtable

IoD DG Stephen Martin observes the demand for skilled workers who’re able to interpret financial data

Changing the focus

Chairing the debate, IoD director general Stephen Martin observed that there is now a greater demand than ever for interpreters of the wealth of data produced by the latest finance systems.

“It seems that we need highly trained people to work alongside these new technologies,” he said. “Those who can interpret the data generated by automated processes are going to be vital. It is these individuals who will add the most value to businesses, as they’ll be able to provide the insight that will lead to good decision-making.”

Julie Hadfield, a partner at EY and leader of EY Absolute, which provides clients with finance functions as a managed service, highlighted a professional development challenge, asking: “How do we nurture the finance professionals of the future? Organisations need to figure out what advances in technology and changes in the regulatory environment mean for their business. I have spoken with a number of companies that are working through how to address this.”

She continued: “One thing we all agree on is that employers need to develop finance professionals who can build relationships and partner with the business to deliver value. Alongside that, the technical skills required are changing: finance functions need staff who can understand, implement and use the new technology to drive value. With the right systems and skills, finance business partners can generate strategic insights. This does, of course, come at a price – such skills are often in short supply.”

Getting interpersonal

There are other skills the accountant of the future will need, according to O’Toole. “Finance professionals will need to be more rounded. They can’t simply rely on their qualifications and technical knowledge now. Those things are important, obviously, but finance professionals need to have so much more to them,” he said. “It is about the interaction with other parts of the business. If you do not possess the skill to understand the nuances in the data at your disposal and the emotional intelligence to connect with other people, then you won’t be able to make the decisions required to drive the organisation forward.”

Every member of the panel agreed that interpersonal skills would become the key asset for anyone forging a career in the finance function.

“The traditional skills are largely becoming automated,” McGurgan said. “Now it is all about communication. It’s about how to take vast volumes of data and extract the pertinent elements that will aid the business decisions that need to be taken. I remember when I used to take great pride in producing 50-page financial reports, but that isn’t good enough now. A financial report for a massive global company must be on one page only these days because that is what people in other parts of the business, who don’t understand finance, need. That’s a key communication element of the job now.”

Rajiv Ranjan at the EY finance roundtable

Rajiv Ranjan says that training is key to automating finance functions

The right direction

Jordan expanded on the point, saying: “There is a real need for the ability to communicate the findings from data to other parts of the business. This obviously goes horizontally across all departments. But there is also a requirement to communicate vertically through an organisation and to transfer financial insights to junior staff all the way up to the big decision-makers.”

“The key to this transition – where the automation of finance is possible – is training,” said Rajiv Ranjan, commercial/ finance director at HTA Design, a multidisciplinary consultancy specialising in architecture and planning. “Rounded training in business management and tools, right from the start, would equip finance professionals to interpret relevant data and communicate their value-adding insights.”

The panel’s unanimity about the ongoing need in business for finance professionals – albeit those with different skills – signals an optimism that has largely been missing from the general debate about the continued effectiveness of the finance function in the digital era. And it goes further too: for those finance professionals who can adapt to the demands of the digital era, the future is not only bright; it may also contain opportunities for them that we can’t even imagine yet.

Brendan McGurgan at the EY finance roundtable

Brendan McGurgan advocates for automating back-office processes

Mind the skills gap

Training providers and recruiters need to raise their game to equip finance professionals adequately for the future

One of the big problems facing the wider accountancy profession is a lack of skilled people. Skills shortages have continuously come up as one of the top three barriers for growth for IoD members over the past year, as identified in the IoD’s monthly Policy Voice surveys. A number of panellists at the roundtable confirmed that this was their experience too.

“There is a skills gap in accountancy – it isn’t always seen as a fashionable career choice,” Hadfield said. “I also hear from many companies I have worked with that they are losing people from their finance functions and are struggling to replace them. As a result, we are seeing more businesses engaging professional services firms to fill that gap through the provision of finance functions as a managed service.”

She continued: “I think we’re approaching an inflection point: there is strong competition for financially savvy people and, while a career with the big four is still a very attractive proposition for many students, we at EY are certainly having to work hard to develop our proposition to compete for talent against hi-tech companies and fast-moving start-ups.”

Jordan agreed, noting that the various accountancy training bodies were trying to bring their syllabuses into the digital age.

“The training I received 20 years ago is no longer really relevant,” he said. “We were always trained to look at the past while we were doing audits, but technology may well remove the need for that. Instead, training for the finance professionals of the future must focus on how to look forward and use insights to power decision-making.”

Hadfield observed that, while the problem was certainly addressable by taking a different approach to professional training and development, employers could still do more to make a career in accounting a more enticing prospect – and that her firm was making a concerted effort to do just that.

“The evolution of companies such as EY is going some way towards redressing the imbalance,” she said. “The way we are using technology, delivering services and working with clients is innovative and really changing the landscape of accountancy. I believe this is an important way in which we can address this skills shortage. We need to put the profession at the forefront of innovation and, ultimately, make it attractive for people.”

McGurgan stressed that employers need to spend more on training. “It is all about investment. Companies have to take responsibility for training their own employees,” he argued. “If organisations want to have the right employees in the future, they have to invest now. CDE Group wants to attract the brightest and best people out there, both into our finance team and also into the wider business. In order to do that, we have created our own purpose-built training facility in mid-Ulster.”

McGurgan added that the short-term cost of such an investment would be more than recouped by the long-term gain of having a custom-made production line of future talent.

“Having the brightest and the best in our organisation will eventually pay off by giving us an ongoing competitive advantage,” he said. “I believe the best way to recruit those creative individuals who will add value to our organisation is to invest in them now and show them how valuable they are to our future.”

Click here to read Julie Hadfield’s summary

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