The entire world of work has been turned on its head over the past few years — not just as a consequence of COVID-19, but also due to the digitisation trend reaching far and wide. CFOs haven’t exactly been immune: they’ve seen their finance departments change beyond recognition.
If you told a CFO two years ago that their closing processes would have been completed fully remotely, they would undoubtedly have thought you had lost your marbles. In the meantime, however, finance departments around the world have had no option but to reorganise, and closing processes can run without a single soul being present in the office.
Digitisation is creeping into finance departments ever further too. The terms ‘microservices’, ‘RPA’ and ‘low-code’ are no longer just the sole domain of IT types!
What will finance departments look like in 5 or 10 years’ time? What other developments can we expect? Will finance departments even be around still in 10 years’ time? (Spoiler alert: we’re pretty confident they will be! :-))
Of course, no one is able to predict anything with 100% accuracy, but we’d still like to take a look ahead to the future. We asked our CFO Gerbrand what he thinks the future of finance will look like, and we would like to share his predictions with you.
five predictions about the future of finance departments.
One thing is certain: drastic change is set to come to finance departments over the coming years. While today, most finance employees mainly spend their time working magic with numbers, we believe their role will evolve towards providing strategic business advice in the future.
What’s more: we believe that digitisation, automation and cloud computing will accelerate this trend.
We’re already seeing lots of employers relying on citizen development to build their own apps, instead of knocking on the door of the IT department to help them do so. We believe this trend will not be slowing down, and that more and more useful financial applications will see the light of day as a result.
Another thing we’re confident about is that there will always be a need for a strong finance department, whichever organisation you’re at. The employees of that department may be spending their days doing entirely different things, but we believe that getting rid of finance departments is simply impossible. However automated the processes generating the figures at your organisation might become, no one will ever be able to take on the role played by finance departments in terms of checks and balances.
1. the role of automation.
Lots of day-to-day tasks at finance departments have already been automated as a consequence of IT development and cloud computing. Even though business software systems have been a mainstay of finance departments for years, we’re now witnessing the emergence of tools that go beyond merely processing data. We think that this trend will continue over the coming years, and that it will deliver applications that offer genuine added value to finance departments.
So, what kinds of things do we have in mind? To start with, we’re noticing that lots of finance departments are opting for stand-alone tools for specific processes that are not optimally covered by ERP packages. Expense reporting and timesheet logging tools are just a few examples of this. Instead of ERP customisation, these teams are choosing to integrate off-the-shelf solutions that do meet the high UI/UX expectations of their internal organisation.
After all, the customers a finance department serves also have an impact on digitisation. The times in which a static report two weeks after the closing date was more or less the norm have long passed. Stakeholders have come to expect real-time reports and want to be able to perform their own analyses. Accuracy and independence remain the most important features of a well-functioning finance department, but the emphasis is shifting more and more towards speed and state-of-the-art dashboarding.
This trend is facilitated by automation and will only be continuing to evolve over the coming years, whether as a result of citizen development, robotics, microservices or connected systems (based on APIs). If you’re going for automation, don’t get all fixated on a single solution. Instead, listen to what’s possible and what the benefits and drawbacks of each solution are.
The far-reaching role played by automation is also making it ever easier to work remotely. Employees like nothing more than to take up the options offered in this respect and have come to expect a digital workplace that is absolutely flawless. Finance departments will be managed remotely more and more often too, so companies will need to up their investment in cybersecurity.
Hang on a moment, you might say, just how far can we take this automation trend? Will there be a time when we no longer need ‘human’ employees, and the finance department is entirely run by robots?
Absolutely not. Instead, we believe the tasks of CFOs and their colleagues will evolve towards a more strategic role.
2. digitisation will potentially cause finance departments to shrink, but also to diversify.
Digitisation and automation will lead to employees being relieved of certain (boring, repetitive) tasks. These will be handled by RPA bots instead, for example.
Fewer people in a department automatically means lower costs. That said, certain functions will remain essential. CFOs are one of them, for example, and you’ll also need people to supervise RPA bots and adjust them where necessary.
We strongly believe we’ll also be seeing increased diversification at finance departments. Accountants and controllers will remain the mainstays of the team, but data architects, data engineers, automation specialists and other digital natives will slowly start finding their way into finance departments to strengthen the team.
Tasks will disappear and roles will change, but most functions will stick around. However, we do believe that a well-thought-out training plan is a must for every finance department of the future, as that will help the team anticipate these changing roles. There will be less of a need for AP accountants to put their knowledge of VAT to good use, for example, but they will need to possess better communication skills than before. The same applies to controllers who previously mastered the ins and outs of complex Excel sheets, but who will need to be able to work in PowerBI or raise their own queries in SQL in future.
3. employees at finance departments will evolve towards a more advisory role.
We also believe that we’ll soon need colleagues who no longer see accounting from a purely number-crunching perspective, but rather from a strategic point of view. In other words: employees who take up more of an advisory role when it comes to finance. So, how do we view that evolution?
The latest cloud software enables businesses to manage and implement powerful, integrated operational processes with just a single click. For smaller businesses with more limited budgets, this means they are able to create strong, scalable systems without being limited by their size or cost. In turn, larger organisations will be able to save on the time and cost of checking, recording and managing transactions.
On top of that, we’re also witnessing no slowdown in the emergence of software-as-a-service (SaaS) models, and number analysis and data storage are being shifted towards the cloud as a result. SaaS has one main role in the corporate world: increase efficiency and productivity.
Finance departments will no longer be reliant on manual processes for their day-to-day tasks: corporate and accounting software will streamline and automate these processes, eliminate any hiatuses and free up staff to concentrate on boosting business growth.
As we touched on above, this far-reaching automation of finance departments will (potentially) result in reduced headcounts. On top of that, we are also predicting that the average employee on a finance team will move towards a more advisory role. They will no longer be focused solely on entering numbers, but rather on insights surrounding these numbers and market forecasts. In other words, finance employees will evolve to become genuine business analysts in the future.
4. finance goes real time: periodic reports will fade into the background.
Digitisation will ensure that forecasts can be generated at any time, and the traditional finance cycle will become increasingly less relevant as a result. The traditional end-of-month processes we are familiar with today will most likely make way for real-time analyses and forecasts.
The difference between operational and analytical data will also gradually vanish. Investors will request data on a much more frequent basis and will be less reliant on monthly reports as a result.
That said, there are many obstacles to be overcome in terms of data processing technology. Today, reports are being generated monthly, as there simply isn’t any alternative to doing so. When information starts becoming accessible at any time, finance departments will no longer be reliant on these traditional cycles. In turn, that will give finance employees more room to perform broader analyses and provide advice based on the insights they gain as a result.
5. an intelligent data model as a forecast for all companies.
The use of data models is strongly on the rise too, and we believe that all bottom-up forecasting processes (on turnover, operating capital, profits etc.) in use today can eventually be bettered by a well-trained data model. That said, to do so, a high degree of interaction will be required between traditional controllers, who know the business drivers inside out based on their experience at the company and within the sector, and data architects.
The above assumption is not based on the ever-accelerating rise of AI, but on the availability of ever-greater volumes of internal and external data instead. The role played by data engineers in this cannot be underestimated. Consequently, we’d like to share one final piece of advice: invest in data today to facilitate the digitisation of tomorrow!
conclusion.
A huge number of changes are coming our way over the next few years. Automation will start playing an even bigger role at finance departments, and tasks will change and a more diverse range of colleagues will be required as a result.
Choosing the right technology to drive this automation is essential. An aspect that can be solved using robotics at one company might be better approached at your business by building an interface between two existing systems or by using a microservice or low-code application.
One thing should be clear by now: the future of finance has a lot in store for us. That said, we’re feeling resolutely optimistic about it!
We’re more than happy to help you set out or implement your digital strategy to prepare your current finance department for the challenges it will face tomorrow, so please don’t hesitate to get in touch with us. We’re happy to help you explore the options!
gerbrand van zeebroeck
cfo