Technology is changing the role of the finance director in all types of businesses, as automation and artificial intelligence spread into every function. As a result, finance personnel need to learn new skills and retain their ability to add worth to the business.
Advances in new technologies — such as the cloud, analytics, mobility, artificial intelligence (AI), blockchain and robotic process automation — offer FDs an exciting opportunity to re-imagine what the finance function should look like.
In addition, many FDs are now key players in driving adoption of these technologies more broadly in the organisation, and in leading the transformation that ensues from technology innovation.
But to make the most of new technologies’ ability to save costs, manage risks and increase insight, finance leaders must challenge assumptions, take calculated risks and encourage experimentation. At the same time, they must also manage the risks inherent in each technological innovation.
The old ways of working, where finance and IT operated in separate silos, is becoming increasingly unfeasible. In the traditional model, IT was in charge of processing and finance was in charge of the output. But cloud technology enables the FD to get rid of some of the back-end IT technology, leaving the data part which sits more obviously in the finance department.
The role of the Finance Director
The role of a finance director is undergoing significant change, as technology automates swathes of the finance function in every business. But the shift provides an opening to contribute at a strategic level of the organisation.
Finance people are often seen as merely guardians of expenditure, as they scrutinise budgets and track how and where money is spent. But at a time of disruption driven by rapid changes in technology, the finance department needs to be reinvented as a source of ideas, expertise, and opportunity.
Without adopting such an approach the traditional influence will shrink as algorithms drive greater efficiencies and lower costs. And without finding ways to contribute at a senior level the authority of finance personnel will diminish. For those involved, it is important to review every aspect of the discipline to make sure it stays relevant in a world powered by technology.
Otherwise, the relevance of finance will wane to become a sub-function of technology, as it offers prized insights through the gathering and dissemination of value leaden information.
The need to reinvent the role of finance is driven by a very simple trend: technology. Technology and its vast and ever-growing family of apps and algorithms unsettle everything, not least by reducing the number of staff required to complete repetitive and routine tasks.
The automation of back office activities is of course welcome, as it frees up resources and generates otherwise unfound productivity opportunities.
The management of every business is undergoing major transformation, as the basic reporting of historical data shifts to a more dynamic model that informs and shapes the decision-making process. Such change needs creative and flexible thinking, as the level of disruption challenges those charged with financial responsibility due to the rapid pace of changes in technology.
The focus of finance is also shifting from the passive reporting of profit to that of making sense of, and finding value in, the endless quantity of data that flows through the business. Such insights build on the finance function but also require an ability to interrogate and analyse information and present it in a simple way that communicates effective messages to non-financial managers.
This of course raises questions, as the skills mix of finance people must now include an understanding of how to use technology to improve business performance in all areas of activity.
So, the role of finance director is undergoing significant change and needs to be re-imagined as technology challenges its traditional position in senior management.