Finance in the fast lane

07 October 2015

In mid-September, Brian Hatton, Steve Crook and I hosted a dinner for a number of senior finance professionals from a broad group of our clients across a number of industries. The dinner was held with our alliance partner SAP and the topic for debate was around how technology was changing the face of finance.

As a non-technology man, I was surprised (and somewhat relieved to be honest!) that the majority of the debate didn’t talk about IT at all. We quickly moved on to focus on operating model issues, data, the ability of organisations to change to take advantage of the new technological advances we are seeing and the potential inability of those within finance to adapt their skills and develop the new ways of working necessary to been seen as strategic advisors to the business in this “new normal” of rapid development, market disruption and margin pressure. The hypothesis that we collectively developed at the dinner was that “Anything is possible given the technology now at our disposal…..”

Although we all agreed the hypothesis I have to admit I left the dinner with a nagging feeling of having heard it all before and a bit of a doubt about whether what people were telling me was possible. It all sounded a bit far-fetched and as a prudent, some may say glass half empty, accountant all I could think of were control issues, process problems and blockers to this future world.

How wrong I was……..the next day the same group descended upon the HQ of an international motor racing team  for a study tour and to see for ourselves what SAP is doing to enhance their underlying performance. As a manufacturer of hand built, British supercars it seemed slightly odd to be heading over to their state of the art HQ for a talk about finance systems, ledgers and financial reporting. This was partly what we got but I wasn’t prepared for the breadth of things it is doing with technology and data analytics and how SAP were supporting the team in their pursuit of excellence. 

The ability of the team to take mountains of data, analyse it in seconds and use it to drive (no pun intended) key decisions on race day really struck a chord with me and made me wonder how finance functions should be using data to drive business strategy and profitability on a much more frequent basis. It’s no longer acceptable to call yourself a business partner if you only sit down with the business on a weekly basis and talk through historical numbers. Finance teams should be using advanced analytics and visualisation tools to show businesses where they can make the best interventions which will increase performance. What’s more, they should be doing this using simple but insightful graphics on touch screen displays with the ability to run real time scenario simulations of how changes in things like pricing or discounts will flow through to product demand and sales. Long reports and spreadsheets of performance data must surely be dead – for one thing they make it very difficult to see the wood from the trees and to explore some of the wackier hypotheses around performance quickly and effectively.

So what stops finance doing this? Well I’m coming round to the opinion that it’s not technology and it’s not the availability of data. There is masses of data available within organisation and from the outside world – economic data, competitor data, data around mobility of customers and buying patterns, the list goes on. I’m also told that having data structures and hierarchies isn’t a problem now either as systems can handle huge amounts of unstructured data. So for me the problem is more around organisation and people.

As my fellow PwC partner Rob Banham mentioned in his recent blog “The new ‘normal’ for finance” finance really need to focus on people to generate business value. In the future, we won’t need finance people reconciling and cleaning data and most of the accounting we do today is probably capable of being “robotized” too. What we will need in the future are people with inquisitive minds and the ability to think in different ways around a problem. People who trust data, can analyse it and really understand the business rather than people who reconcile data and focus on control. We will need individuals who challenge and ask the wacky questions that just might drive out real insight. The ability to generate this culture within your teams comes from two areas, diversity of thinking and recruitment of people with different points of view is one – Rob mentioned this in his blog.

The other is how we are organised. I was only at the team HQ for a short while but I did notice that everyone had real clarity about the goals of the organisation and how they all play an important part in it. It was one team. I wonder how many organisations can say this? Without it though we struggle to deliver the performance our businesses crave. How many times have you come up against internal silos (even within Finance) that hamper your ability to innovate, deliver change and play your part in improving business performance. Most organisations have too many blockers and too many people saying “you can’t do that”. Often finance is one of those but we’re going to need to change and begin to adopt a more can do outlook…….if we don’t the pace of change in technology and the business itself will mean we become obsolete and others within the organisation or even robots do what we are currently well placed to do.

There is great opportunity for finance to become a strategic partner of all businesses – to drive performance, make processes simple for everyone in the organisation and to do it at lower cost using technology. Finance has a role to play in choosing which technologies are most appropriate and can deliver the greatest value for the organisation. This is not a trivial decision and reinforces our point of view on the next generation of integrated financial reporting.

We’re at a critical time in the history of finance where if we don’t seize the opportunity we’ll become irrelevant as evidenced by a stat I saw on the BBC’s website a few days ago which showed whether your job would be done by a robot in the future………there was a 96% chance of this being the case for accountants.  

If you would like to discuss any of these issues further please contact me directly (contact details below) or Brian Hatton - [email protected] 

Brian Furness | Finance Consulting Lead Partner
Profile |  Email |  +44 (0) 207 212 3917

 

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