The Art of the Possible for Finance 4.0

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I will be speaking more about what is possible for Finance 4.0 at a webinar with Jedox on 15 June at 1230 CEST. More specifically we will discuss how to move beyond Finance by going xP&A. You can sign up for free here.

The last couple of years have seen major technological breakthroughs in the Finance Function. Advances in the technology itself, along with an increasing willingness on the part of CFOs to throw their weight behind digital transformation, have meant that automation, machine learning, and associated techniques are now gaining ground in the field.

In fact, a recent report from Accenture found that 60% of traditional finance tasks are now automated - a significant rise from the 34% seen in 2018. This has brought major efficiency benefits, along with higher-quality data and reporting.

But this is just the beginning. These technologies are in their comparative infancy and, more pertinently, many CFOs and other leaders remain under-informed about their applications and potential. The transition towards Finance Function 4.0 is gaining pace, and we are just getting a hint of the long-term implications.

What's next for technology and the Finance Function?

From a technological perspective, it's true to say that more or less anything is possible. The question is not 'can the technology do this?', but rather, 'how can we make the best use of it?'.

As such, the most important trend in Finance will be the percolation of digital transformation knowledge throughout organizations. CFOs will take on a greater role in digital transformation at every level of business, and they will be required to gain a deep understanding of the new possibilities presented by tech.

As a result, we will see the rise of 'intelligent' Finance operations, with the application of advanced data science and machine learning driving even greater efficiency gains. We've already seen that some 60% of finance tasks are now automated; with the addition of OCR and the opening up of ML techniques to a broader range of participants, it's likely that we can push that figure to around 80% in a very short order.

Value creation is the key

But the real value of technology in the Finance Function is associated not only with cost savings but also with value creation. In fact, I think this is the most important element of digital transformation - it enables Finance professionals to take on a more fundamental role within their organizations, focusing not just on technical accounting tasks but on contributing to strategic vision and enabling better decision-making that brings more profitable real-world outcomes.

According to Accenture, CFOs are already leveraging data and automation to drive real operational benefits. The efficient application of these technologies is yielding valuable new insight. Advances in the Finance Function are helping every layer of management to understand their organization more deeply, and providing better visibility of important but hitherto ignored markers and metrics.

These techniques are also being used to identify new value propositions for businesses, and to enable decision-makers to seize and respond to new opportunities. Just as importantly, the Finance Function is becoming more deeply involved in planning for future volatility and mitigating associated risks.

As Accenture says, the application of new technologies is helping and encouraging Finance professionals to transition into a new, more embedded role as "economic guardians" with fundamental responsibilities in strategy development and value creation.

Where are the limits?

Finance professionals might be concerned about the rapid automation of their field; as we've seen in other articles in this series, some estimates suggest that as much as 75% of the average Finance department's workload will be eliminated by automation.

But businesses do not and cannot run on technology alone. We should embrace the huge benefits that tech brings, but we must never assume that it is a replacement for human work.

And that doesn't just mean that humans will be relegated to exception handling, or simply 'tending to the machines'. Instead, technology should be seen as a way to free up people to do what they do best: building relationships; making decisions; understanding and navigating group dynamics; sensing and capitalizing on individual capabilities, and setting and implementing the strategic vision.

Technology is already transforming the Finance Function, but it has its limits. The organizations that succeed in the new tech-enabled paradigm will be those in which there is an understanding that technology is a tool - a powerful tool, but not a panacea. Efficient human-digital collaboration is the model of the future, and it's the approach that will shape Finance in the coming decade.

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This was the fourth article in my new series "Finance Function 4.0". You can read previous articles in the series below.

Welcome To Finance Function 4.0

The Finance Professional 4.0

Career Paths in the Modern Finance Function

Do you want to learn about the changes that are happening in Finance and Accounting these years then I have few recent articles for you that you might find relevant. Check them out below!

A Week In The Life Of An Accountant Post Finance Transformation

Re-Imagining Finance In The Face Of The Pandemic

Data Agility Is The New Competitive Advantage For Finance

The Top Ten Priorities For The CFO In 2021

Take An Experimental Approach To Discover The Impact Of Tech In Finance

How Technology Enables The Future Of Finance And Accounting

Finance Is On A Change Journey - Here Is How To Take Charge

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.

All Successful Business Partners Are "Leaders" (the last article in the series about our new capability model)

Should We Keep Talking About Business Partnering? (part of a 17-article series where we deep-dive on the WHY, WHAT, and HOW of business partnering by putting it on a formula)

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 9,500 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 57.500+ followers.