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915179274-170667aOver the last year, I’ve hosted roundtables with hundreds of CFOs and finance leaders in cities around the world.  From Johannesburg to London to Boston, finance leaders all sang a similar tune when it came to their greatest pain point: they’re all looking to transform the finance function from a cost center to a value center. They’re keenly aware of the gap that exists between the “old world” of reporting and compliance and the “new world” of guidance and driving the business, and they want to narrow, if not entirely close, this gap.

These conversations and others were part of a rigorous, 18-month research initiative led by the Association of International Certified Professional Accountants, the unified voice of the AICPA and CIMA, that sought to understand how the finance function is evolving and what this means for finance professionals. The report, Re-inventing finance for a digital world, includes insights from more than 5,500 professionals across 2,000 organizations in 150 countries. From this report, three major themes emerged:

Technology is the key driver of change

The proliferation of new and emerging technologies is disrupting traditional business models, enabling startups to upend established businesses. Artificial intelligence and machine learning are automating routine processes and reporting, establishing a responsibility for real-time performance information. This is putting a burden on the finance team to meet these new demands. The value of the enterprise is also shifting from tangible goods (real estate, equipment, inventories) to intangible goods (customer satisfaction, brand, data). Yet, the finance team hasn’t adjusted its reporting to match this value shift.  In fact, our research revealed that hindsight reporting, through descriptive and diagnostic methods, still makes up 65% of a finance team’s report outputs. The use of predictive and prescriptive analytics to optimize reporting capability is only being used by 25% of finance teams.

Technology enables value creation

Our research found that finance and accounting professionals are spending more than half (64%) of their time gathering information and analyzing it for insights and only a third (36%) of their time communicating these insights to influence decision-making and guiding actions that create value for the enterprise. As more and more processes in the finance function become automated (more than half of respondents expect over 20 percent of finance tasks will be automated in the next three years), these proportions will shift. Finance will be spending very little time collecting, cleaning and connecting data and instead will be focused on providing the insights that generate revenue and create value.

Finance teams need to evolve their skillsets.

Technology creates capacity in the finance function, but to capitalize on this, finance teams need to have the right skills and competencies. Half (50%) of finance leaders surveyed for our report said that the competencies of their teams must “change significantly” over the next three years as technology takes over routine tasks. This complements additional research we released this year with Oracle, which found that only 10% of finance teams have the skills to support the organization’s digital ambitions. 

To thrive in our new digital world, finance and accounting professionals need to develop new skills and competencies. Specifically, our research identified three key areas in which they need to focus:

  • Basic digital literacy – the ability to use basic technology to complete tasks
  • Technology know-how – understanding how digital technologies can disrupt business models
  • Mindset and behaviours – the willingness and ability to constantly learn, unlearn and relearn to deal with complexity and operate in an increasingly agile environment.

Finance teams also need to build business and commercial acumen and communication and collaboration skills. These are not new, but the imperative to ensure these skills exist in finance teams is essential.

Preparing finance for the future

So, what can finance leaders do to move along the transformation journey and close this gap between the “old world” and “new world” of finance? The report offers a few recommendations:

  • Leverage technology solutions. Gain an understanding of how digital technologies are disrupting your organization’s business model and then seek solutions. If you need guidance, look to see what others in your industry or your supply-chain partners have done.
  • Commit your team to continuous learning, including helping them develop digital intelligence to leverage new and emerging technologies. Our CGMA Finance Leadership Program offers an on-demand, customized learning platform to help CPAs and other finance professionals hone their digital skills, plus the technical, business, leadership and people skills required in business today.
  • Keep your team’s digital skills broad. Ironically, the more finance and accounting professionals specialize in a specific technology, the easier it will be for a machine to replace them. Our Charted Global Management Accountant (CGMA) Competency Framework, newly updated with a focus on digital skills, can provide you with roadmap for competency development.
  • Develop your team’s ‘human’ skills. Leadership, empathy, creativity, decision-making and judgement are skills that machines cannot replicate. Our Human Intelligence Series provides video and resources to help you and your team develop and hone these competencies and other ‘soft skills’ critical in the digital age.

As the pace of change accelerates and new technologies emerge, it will become more and more critical for you to have command of your own and your team’s skillsets if you want to transform the finance function. This is no easy task but rest assured that the AICPA and the Association will be here to support you along that journey. As we always have, we’ll continue to bring you the tools, resources and guidance needed to usher you into the future of finance.

Ash Noah, CPA, CGMA Managing Director of CGMA Learning, Education and Research, Association of International Certified Professional Accountants

Originally published by AICPA.org