By Tony Klimas, Global Finance Practice Leader, EY.
In my previous post, I discussed how CIOs and CFOs can work together to aid the introduction of the latest technology into the larger enterprise, including the CFO’s key role in supporting the investment decision process. However, new technology investments only drive value if the people using the technology have the skills to exploit its potential.
Now, more than ever, complex enabling technology plays an increasing role in driving business value. To help realize that value, employees must be capable of understanding the potential of technological innovation and embracing the rapid pace of change that comes with that new capability. Recruiting, retaining and developing the right people to meet these demands is pivotal. As workforce demographics shift from an aging, experienced workforce, to one populated by enthusiastic, more digitally-savvy, inexperienced millennials, these pressures increase further.
The challenge for CFOs of the future is to harness new technology, new skills and enhanced business processes to build a more forward-looking, adaptable and resilient finance function. The operating model needs to support this shift, allowing the finance function to exploit technological capabilities further while reinforcing business partnership activities. Going forward, this will become even more critical as much of the routine finance activity is automated. The focus of finance will shift further down the path away from processing data to making data-driven decisions in a highly connected business environment, where the lines are blurring between customers, suppliers and other stakeholders.
The future finance operating model. Source: EY study, Is the future of finance new technology, or new people? Preparing for the future finance function
A recent EY study, Is the future of finance new technology, or new people? Preparing for the future finance function, discusses the finance function of tomorrow having several distinct attributes when it comes to the new operating model, including the following:
- The ability to automate finance processes in outsourced or captive finance factories, with small teams managing exceptions
- Insights driven by combining finance data with external information to help model and predict business outcomes, and identify opportunities
- Better alignment with business, with employees working more alongside key internal stakeholders and participating in strategic decision-making focused on helping manage uncertainty through strategic risk management
Amid so much change, the CFO is facing the task of hiring the right people for the evolving roles in the new operating model, while educating existing staff about shifting responsibilities.
The CIO is in a good position to support CFOs going forward, helping ensure the finance function is equipped with the right skills, tools and knowledge. As is increasingly the case, there needs to be close collaboration between the two. Some thoughts on what the CIO can do are as follows:
Help CFOs define and find the talent they need
CIOs are well positioned to help CFOs deal with the increasing influence of digital technology on the finance operating model. Skills related to data and the use of data — including statistics and data science, and even behavioral science skills — will be critical in helping the finance function of the future turn data into strategic insight. CIOs can work with finance to help define the profile of the right talent and assist with recruitment and retention. If done correctly, this will allow the hiring of blended skillsets with strong finance and accounting knowledge, coupled with expertise in emerging technologies, such as blockchain and artificial intelligence (AI). These cross-functional people will be positioned to lead technology-driven changes to the finance operating model and to identify the implications of digital for the business model and growth agenda.
Help build external partnerships
Software and technology companies, key suppliers, customers and other important stakeholders are playing an increasing role in day-to-day business as companies become more connected. As a result, organizations are often looking to partner with third parties to address business challenges and stay on top of innovation. Alliances with universities, start-ups and other third parties are also essential to remain nimble and adapt continually. When these external alliances are made to meet technological ends, the CIO’s participation will be invaluable: advising on the right partners, level of partnership and technology advantages that are to be gained. By working closely with the CFO, the CIO can ensure the right technologies are used to drive value for the overall business in a cost-effective way. This will help avoid the pitfall of pursuing technology for technology’s sake.
Plan ahead to face tomorrow’s talent needs
As the increasing automation of transactional finance tasks alters the finance professional’s traditional career path, finance leaders will relook at how they intend to develop people to acquire the breadth of skills necessary to progress through the finance function, and nurture the finance leaders of the future. Demand for certain IT and digital skills will continue to grow for the next decade, but for future generations, the skills needed may be different. Many jobs that are done today will be largely automated by then. CIOs and CFOs will have to work together to predict these trends and come up with a long-term talent development road map and plan to address them, making sure the finance function is well equipped with the right people in the long run. This is another aspect of the finance resourcing where the CIO can team with the CFO, potentially creating rotational assignments and the loaning of resources across both business functions.