Building a finance function fit for the future

This article is sponsored by Planful . Planful’s cloud-based solution helps the Office of the CFO take a faster, more flexible, more collaborative approach to financial performance management. It’s used by finance, accounting, and business users at more than 1,300 companies around the globe to streamline business-wide planning, budgeting, consolidations, reporting, and analytics, including 23andMe, Bose, Boston Red Sox, Five Guys, and Zappos.?

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We are at a key inflection point for the future of the Finance Function.?

As I've explored in many articles here on LinkedIn over the last several years, the next phase of the Finance Function is upon us. Businesses that will win over the coming period are those that embrace the new ways of working in this new phase.?

The same is true of Finance professionals. In the face of wholesale change in almost every facet of industry, Finance professionals need to ensure they are active participants in that change if they are to survive and thrive. We may go as far as to say it’s a Golden Age to be in the finance function as was discussed between Jack McCullough , President at the CFO Leadership Council, and Grant Halloran , CEO of Planful in a recent Forbes article .?

The new operating model?

Finance Function 4.0 is the name given to the emerging paradigm in Finance. Under this new operating model, organizations make increasing use of technology to augment the skills and expertise held by their human workforces.?

There are many forms this may take. Automation is the headline-grabber, although there remains much confusion about what it is that we are automating and how. In the Finance Function, though, we are already well-versed in automation technologies and the related fields of machine learning (ML) and artificial intelligence (AI). These disciplines are finding their way into the back-office processes of businesses of every size, whether through automatic transaction sorting, various FP&A tasks, or much else.?

The technology we need to build Finance Function 4.0 is already here - indeed, it has been for some years. Now it's time to bring the future into the present day.?

Augmenting, not replacing?

If the technology is already here, why isn't Finance Function 4.0 already the accepted operating model??

There are several reasons for this, including under-investment and a lack of knowledge and expertise among business leaders.?

But amongst those organizations that have adopted the new model, the benefits are clear. According to McKinsey's recent landmark study , the average Finance leader is now spending nearly 20% more of their time on value-add work than they were ten years ago - and this is almost entirely down to the mindful application of technology.?

Contrary to the various catastrophic narratives you might read, the future isn't about "robots replacing humans", either in the Finance Function or elsewhere - at least not yet. Instead, the medium-term outlook is defined by cooperation. Humans are irreplaceable. The point is to augment our unique skills with the processing brawn of automation, AI, and ML, to produce better real-world outcomes.?

Six elements for transformation?

Finance is a complex and crucial function with deeply embedded processes and what we might call a long "cultural memory". Old habits die hard, especially in business. It's not as simple as just 'launching a new Finance Function'. There are many moving parts.?

We can split those parts into six broad categories. Each of these must be addressed to smooth the transition to a Finance Function fit for the future.?

• Process: Automation and digital transformation are causing us to revisit almost every business process, and to consider how they can be streamlined and improved. But just as importantly, when we entrust key tasks to machines, we have to focus even more intently on the ways in which we design those processes. To generate the results we want, we have to understand the processes we are building.
• Technology: Digital transformation is no longer a point of debate, but instead an absolute and immediate necessity. This requires forethought and courage amongst business leaders, as well as cooperation with expert third parties.
• Governance: How do we ensure tech-enabled businesses are run in safe, compliant, and equitable ways? This is a growing field of scholarship, and an important priority for every organization operating today.
• Culture: How do we build and maintain strong organizational cultures in a changing world, both for the people we work with and the customers and clients we are creating value for? The idea of business 'culture' was a bit of a joke until a decade ago, and we all paid the price. Now we have the opportunity to build businesses fit for the future, on a strong foundation of shared principles.
• Organization: Automation and digital transformation are completely changing the ways in which we structure businesses, and Finance is at the forefront of this. A clear-eyed view of the implications of new technology is crucial if we are to build strong and resilient organizations.?
• People And finally, the most important one. People are and will remain at the heart of successful organizations - in fact, they are the only indispensable element. But we must be mindful of our changing relationship with technology, and the way that impacts the people that make up our businesses. This, for me, is the most important piece of the puzzle.

Finance Function 4.0 is enabled by technology and driven by people. For many organizations, it's here already, and for others, it's on the horizon. Throughout the rest of this series, I'll be looking at how we build a Finance Function fit for the future in a careful, mindful, and pragmatic way.

This was the first article in my new series "The Finance Function of the Future". While you await future articles you can read my latest series about the "Data to impact journey" below.

From data to impact - the Holy Grail of Finance

The power of harnessing data for Finance

What cleaners and finance professionals have in common

The limits of data visualization for the Finance Function

Have you been dead by analysis?

Analytics is a marathon - and you're falling a the final hurdle

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Anders Liu-Lindberg ?is the co-founder and a partner at the?Business Partnering Institute ?and the owner of the largest?group dedicated to Finance Business Partnering ?on LinkedIn with more than 11,000 members. I have ten years of experience as a business partner at the global transport and logistics company?Maersk . I am the co-author of the book “Create Value as a Finance Business Partner ” and a?long-time Finance Blogger ?on LinkedIn with 115,000+ followers and 200,000+ subscribers to my blog. I am also an advisory board member at?Born Capital ?where I help identify and grow the next big thing in?#CFOTech . Finally, I'm a member of the board of directors at?PACE - Profitability Analytics Center of Excellence ?where I support the development of new analytics frameworks that can improve profitability in companies around the world.