Our latest insight examines how the CFO can ensure the finance function is fit for a 4.0 world.
The World Economic Forum is calling Industry 4.0 the fourth industrial revolution. Characterised by increasing globalisation, demographic shifts and rapid development of digital technologies, it presents new opportunities to transform finance.
Analytics, cloud and robotic process technologies will enable the finance function to add significantly more value to the business – quickly, in real time, at greatly reduced cost, with higher levels of automated control and lower risk.
Looking at a range of influences, we explore three key themes today’s CFO will need to master in a 4.0 world:
- Digital disruption: both in the business and the finance function
- The relevance of reporting: what is reported, and to whom
- Trust: finance’s role as trust-giver in an increasingly transparent world.
We also aim to understand how the CFO will need to respond to this new environment, both in terms of supporting the business in the face of disruption, and ensuring the finance function is fit for a 4.0 world.
Listen to Mike Cowan, Head of Finance 4.0, EY discussing the report’s findings.
Digital technologies will drive the next wave of disruptive transformation in finance
The role, size and shape will change – finance will be smaller, more efficient and cost less, but with a higher proportion of highly skilled people.
Robotic process automation is already taking over monotonous work, allowing the next generation of centres of excellence to focus on advanced data analytics and provide insights about the business to enable better decision-making.
New roles will emerge around data, performance and value, with the CFO becoming more of a chief performance or chief value officer.
How can finance stay relevant in a 4.0 world?
Reporting the past will become more efficient and less resource-intensive, allowing finance to shift its mind-set to the future, and create value for the business.
To stay relevant to those who rely on it, finance will need to define its different stakeholder groups and their requirements more clearly, and explain how it creates long-term value for all of them. The finance function will need to ensure systems and processes capture, record, and report these broader assets, as well as meaningful performance drivers in the form of relevant non-financial information – all of which will need some form of assurance.
Trust and transparency in a 4.0 world
With the erosion of trust in institutions and businesses, purpose, trust and transparency will become central to the way they interact with stakeholders, and the CFO will be crucial to providing transparent information to those with a stake in the business’ outcomes. The CFO will increasingly become the trust-giver to stakeholders around non-financial information, in much the same way as finance gives investors trust and confidence around financial data.