Get Ahead: Build Your 2030 Finance Capabilities Today

I bet you don’t know what a ‘saggar-maker’s bottom knocker’ did for a living? And there’s really no need to know. But it was the unskilled person who worked alongside a more skilled ‘saggar Get Ahead: Build Your 2030 Finance Capabilities Today image 272156 l srgb s gl 300x197Get Ahead: Build Your 2030 Finance Capabilities Todaymaker’ making saggars – supports for pottery in traditional kilns in the heigh-day of UK manufacturing last century. They will have worked alongside fettlers, scollopers, puggers and a host of other jobs that have long since disappeared as industries and economies have changed over the decades. According to a new report from Price Waterhouse Coopers, Finance Matters; Finance Function of the Future, the roles that we are familiar with in financial management are set to change too. They suggest that financial skills that we know today are likely to survive but suggest that the CFO and others in senior roles need to adapt to a future where businesses will have to become more connected and interactive across business units in order to seek out synergies that will deliver value.

With the increasing demand from the business for better data and analysis to support strategic decisions, they see performance and risk management becoming ever more important to the CFO and reporting Get Ahead: Build Your 2030 Finance Capabilities Today image pwcthemesGet Ahead: Build Your 2030 Finance Capabilities Todayactivities evolving as stakeholder groups seek a better understanding of how sustainable profits are and how the organisation impacts the economy, wider society and the environment. Although this transition is already happening and is already much written about, PWC say that it involves more than just providing better insight and lowering costs and involves Finance leaders playing a much more dynamic and facilitative role to build adaptive, agile and resilient businesses that need orchestration rather than simply execution and control. What I particularly like about the PWC paper is the way they structure their predictions around four key themes: Navigation, Mediation, Resilience and Connectivity.

Navigation is about providing more flexible and adaptive processes with near real-time reporting, rapidly produced analytics and dynamic and integrated forecasting. In the way of benchmarks, PWC say:

  • Top performing Finance teams spend 17% less time on data gathering and 25% more time on analysis than typical functions.
  • Top performing Finance teams take just 7 days to produce their forecasts. The typical function needs 19 days.

In 2030 PWC suggest that no time at all will be spent on data gathering as Financial data will be available to all stakeholders, real time, from a robust data source – and real time forecasting will be common with the budget as we know it no longer used.

Mediation is how Finance engages with a broader set of stakeholders who are hungry for more interactive information through increasingly diverse media about wider aspects of company performance.

As benchmarks, PWC say:

  • Top quartile companies take up to 40% less time to close and report to executive management with 9 business days being the top quartile average.
  • 49% of companies already have relevant metrics for sustainability reporting, with 27% reporting detailed actions on their strategic priorities, and 44% reporting on a segmental level about their business mode

In 2030, the PWC prediction is that the ‘close’ will no longer exist. Financial information will be available to management on a real time basis to allow business performance and direction to be assessed at any time and from anywhere via the latest available technology.

Resilience is ability to absorb and bounce back from internal and external shocks, by better risk mitigation planning and the use predictive analytics to rapidly identify and respond to emerging issues. In terms of benchmarks, PWC say leading Finance teams:

  • Have already automated 70% more of their key controls than typical functions.
  • Employ nearly 40% more people in ‘business partnering’ roles and pay around 25% more than typical functions to help attract quality professionals.

In 2030, all controls will be embedded in end-to-end processes and the Finance team as we know it no longer exists. Finance has the adaptive capacity to rally around new challenges and help the business solve them more rapidly.

Connectivity relies on using technology to unify information across different functional silos to create a connected organisation. PWC report that:

  • Leading Finance teams have reduced the amount of time they spend on transactional activities by 20% in the last 3 years.
  • But still around 60% of participants still rely on manual spreadsheet manipulation for reporting.

In 2030, all transactional components of Finance will be either fully automated or outsourced. Invoices will no longer exist; organisations electronically message transactions seamlessly through utility hub providers.

2030 is not that far off – just 18 more year-ends and budgeting cycles away – and we can already see some of these predictions coming to bear so what PWC suggests is more a continuation of current trends rather than a qualitative difference to what we have today. It is pointless quibbling with PWC’s predictions as to what will come to pass and what won’t. (Personally I think we’ll always have some form of electronic invoice and no matter how much we automate someone still has to sort out the inevitable anomalies. Likewise, stakeholders will always want guidance on future performance and to me that means one of the real-time forecasts being flashed up as an annual budget at some point in the calendar even if the current budgeting withers away). The real message that comes ringing clear out of their predictions is that technologies such as real-time computing, predictive analytics, mobile and automated compliance that underpin this vision are already available from companies like SAP today – (see my attempt at mapping them to PWC’s four themes below) – and the task for Finance is to start adopting these to systematically build the capabilities that will deliver a more connected and cohesive Finance function for the future. Not stand still, clinging to old technologies like the UK pottery and other industries did.

PS. I was trying to think of any Finance roles that have become obsolete over the last 30 years or so but didn’t get beyond ‘bookkeeper’ – any suggestions?

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