How Finance will serve the company in 2035
Anders Liu-Lindberg
Leading advisor to senior Finance and FP&A leaders on creating impact through business partnering | Interim | VP Finance | Business Finance
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How could Finance serve the company in the future? ?We can assume some basic principles will still apply.?One of these is that there’s a finance function to serve a business. What the services are and how they’re delivered, though, is constantly evolving. We have outlined the three key components of the finance function in 2035: Finance Operations, Specialized Finance, and Business Finance. We have also discussed how to split the work between AI and humans. Now, we will look more closely at the finance function value chain and what service business leaders can expect to receive from finance in the future.?
First, let’s outline a Service Delivery Model and then get more specific about how it will look in the future. A service delivery model outlines how a function delivers its services. It specifies process characteristics and contact points with the business. Here’s a quick overview of the most common dimensions for processes and contact points.
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Process characteristics?
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Contact points?
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These dimensions provide a concrete framework for making specific choices about where and how a service should be delivered. We could also replace the scale options with a 1 to 10 score. The lower the score, the higher the potential for centralization and automation. The higher the score, the higher the need for services to be delivered locally by humans.?
Detailing the service delivery model?
Based on the dimensions, we can now consider the specific elements of the service delivery model. There are, of course, variations of this, but a standard list would include the following:
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Let’s consider the role and selection criteria for services delivered by each of these elements of the service delivery model.
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Global Shared Services?
Global Shared Services supports everyone else in Finance and deals with all the transactional activities. Historically, this has been outsourced/offshored to reap the benefits of labor arbitrage and task centralization. As we have described, this will be almost entirely automated by 2035, which is bound to increase the quality and speed of delivery. The criteria for placing services in Global Shared Services are high volume, documented, and standard activities; service provided in common languages, e.g., English or Spanish; and global activities.?
Looking at the criteria, it's clear that Global Shared Services is ripe for AI, perhaps except where there’s a voice requirement and a real conversation. However, it’s even possible that this can be handled by AI in 2035. This means these services can be performed from a company’s headquarters, with process experts handling existing and new AI change requirements as close to Specialized Finance as possible.
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Local/Regional Shared Services?
This is mainly like Global Shared Services, with the criteria for placing services here being regulatory requirements and activities requiring local presence. It may take some changes to rules and regulations to replace these completely with AI. However, it’s practically possible, so it should be the ambition.
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Local Service?
As the local element drives these criteria, the finance function would have to make country-by-country plans for automation. Only in those activities where local rules and regulations forbid automation for specific services can a local human presence for Finance Operations be mandated.
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Center of Excellence (CoE)?
The Center of Excellence is separated from Global Business Services because it supports Specialized Finance and Business Finance. Today, they’re not well-established in most companies, but many are in the process of building them. The idea is that they support the mentioned parts of Finance with reporting, analytics, and insights. A center of excellence focuses on building expertise within the areas where they help the rest of the finance function. This means you need functional experts who can leverage technology to deploy their insights to the organization.?
Criteria for placing services here are complex, high-value-adding activities that require highly skilled employees and are predominantly global. Naturally, AI figures to play a vital role in enabling these activities and may be the primary driver by 2035.
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Corporate?
This essentially equals Specialized Finance, which we covered in depth last week. Their role is to set direction for the rest of the finance function and, ideally, the management team. This also required deep functional expertise above the center of excellence.?
The criteria for placing services here are like those of a center of excellence. Still, while the CoE doesn’t need business partnering skills to explain its expertise outside Finance, this is a critical point for corporate functions. If it cannot deploy its insights to non-finance executives, its value addition will be limited.
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Business partnering?
This equals Business Finance, which we also covered in our latest article. Their role is to drive growth and increase profits with business leaders on the frontline. They must be deployed to be aligned with where significant business decisions are made. Business partners must go beyond performance management and work where they can make a substantial value addition.?
Criteria for placing services here are complex business-related topics, closeness to business leaders, and a deep understanding of the business. This sets high requirements for the people working as business partners, which we will get back to in a later perspective.
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Organizing for specific outcomes?
The Service Delivery Model aims to organize the finance function for better outcomes. To fulfill this, in addition to the deep dive above, it must be clear which outcomes the three parts of the finance function are organized for.
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The Service Delivery Model lays a blueprint for building the finance function in 2035. Most companies are already well underway; however, they still struggle with Finance Operations being too expensive, Specialized Finance not being able to deploy their functional expertise adequately, and Business Finance working more as glorified secretaries than profit-driving business partners.?
There’s still a long way to go, but the path is clear. What principles have you used to organize your finance function? Do you have a clear distinction and specific criteria for selecting how you place work in your finance function? Do you think the path is clear to creating the finance function of 2035?
This was the fifth article in our new series, "Finance 2035 - what Finance will look like a decade from now". Find the previous one(s) below. Remember to subscribe to be notified when we publish future articles.
You can catch our previous series, "Hacking the Annual Wheel in Finance." below.
If you want more trends in finance and accounting, you can read our previous series, "The Top 10 Priorities for CFOs in 2024." This series explored what critical issues CFOs should focus on in 2024.
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Anders Liu-Lindberg is the co-founder and a partner at Business Partnering Institute and the owner of the largest group dedicated to Finance Business Partnering on LinkedIn, which has more than 12,000 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 ”, a long-time Finance Blogger, a LinkedIn Learning instructor , and a Top Voice on LinkedIn with 375,000+ followers.
Service with productivity
2 个月Love it
Accomplished CFO with a Proven Record of Solving Problems and Driving Exceptional Results, Especially in Distressed Situations
2 个月Anders, for over 20 years, I’ve emphasized that the Finance function has two key missions: Compliance—the foundation of a sustainable enterprise, and Financial Leadership—critical for the long-term survival of the company. A balance between the two is essential: never underestimate compliance, but also never focus solely on it at the expense of supporting the business. This mindset drives how Finance serves the business.
Finance Director I CFO I Expert in Tax, Risk, ERP, IFRS, FP&A I Start-up Strategist I Top Business Strategy and Corporate FP&A Voice on LinkedIn. I help companies thrive with informed decisions leading to growth.
2 个月Your article is describing the path that finance function will take soon. An important factor is to prepare ourself for a mindset shift. We have to understand the trends that today have only vague contours, and adjust ourself to become Business Partners focused on driving value and excellence. Excellent article!
OK Bo?tjan Dolin?ek
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2 个月The future of finance is evolving fast. Embracing AI and human collaboration will redefine how services are delivered. Excited to see how the finance function will adapt in 2035. Great insights. Anders Liu-Lindberg