2 minute read 17 Sep 2020
Car light trails scenic

For CFOs, cultural issues are a brake on digital acceleration

Authors
Katie Burns

EY Ireland Associate Partner Consulting

Passionate about addressing challenges faced by finance functions.

Tony Klimas

Partner, Business Consulting Finance, Ernst & Young LLP

Focused on bringing the best we have to offer to CFOs and other finance leaders.

2 minute read 17 Sep 2020

As we look to a future that is radically altered by the events of the last six months, there are plenty of reasons for hope. Despite the suffering of recent times, we can be optimistic that even under the most difficult circumstances, people are capable of adapting and responding in new ways to the challenges they face. 

Just as the shock waves continue for society, the business environment is now one where change is constant. Those who can adapt quickly and with agility and take the lessons they have learned into a broader transformation drive, will stand a better chance. 

The DNA of the CFO

A recent global EY survey of 812 global finance leaders, the DNA of the CFO, taken at the beginning of the COVID-19 pandemic, lays bare the issues for CFOs in responding to change.

Front of mind unsurprisingly for finance leaders is balancing numerous competing demands, and within that one of the main areas of concern is balancing the potential of talented people with the capabilities of smart machines.

The findings reveal that:

Behaviours and mindsets

71%

say that traditional back-office behaviours and mindsets are slowing the modernisation of the function. The number one driver of change is ensuring a strong purpose inspires finance employees and attracts top talent.

Finance Automation

30%

say they have advanced capabilities in finance automation

RPA

38%

say they have made ‘excellent’ progress in using RPA to automate data-gathering

More than a third (38%) say that roles in financial reporting are under significant threat from AI and automation, and upgrading skills is the number one priority for ensuring finance teams can thrive in an augmented environment.

Prioritising cultural change

In the future, finance will become more open as it works as part of an extended ecosystem, with deeper collaboration and a more fluid operating model that extends beyond the enterprise’s four walls.

To deliver this bold vision for the future, CFOs will need to drive a major cultural shift in their teams to align finance culture with the culture and purpose of the wider enterprise. Overlooking the area of culture change has the potential to put a major brake on finance leaders’ ambitions for the future of their functions.

Partnerships with external parties will be vital across a range of finance responsibilities and the finance operating model will need to change to support this increased openness.

Digital acceleration

The importance of digital acceleration is reflected in the experiences that CFOs say they will need to succeed in the future. The top places are occupied by tech-focused experiences and major enterprise-wide transformation or technology projects.

Reflecting CFOs’ wider focus on cyber-security as a critical risk, finance leaders are also focused on cyber vulnerabilities as they move to this open operating model. Finance will need to be increasingly vigilant to the risk of cyber-attack and manipulation of financial data and reporting.

Finance leaders say traditional back-office behaviours and mindsets in finance are slowing the modernisation of the function. Finance teams can still be seen by some people within organisations as being overly risk-averse and cost-conscious. In response, finance leaders are beginning to understand that making culture change is a priority.

Thrive in an automated future

Alignment with enterprise purpose is a key asset in this cultural transformation. Ensuring a strong purpose inspires finance employees and attracts top talent. It creates a more inclusive and diverse workforce and creates a viable and compelling career path for finance and accounting professionals.

To drive cultural change in finance, CFOs will also need to deliver a new approach to learning and skills in a digital environment.

Some finance roles could be fundamentally altered by automation and AI over the next three years in areas such as financial reporting, FP&A, financial control, and accounting.  A skills upgrade is critical to ensuring the finance workforce can thrive in an automated future.

Conclusion

Alongside people and cultural change, CFOs also need to accelerate the digitisation of finance if they are to turn data into a competitive advantage. There is still a long way to go before most finance functions have advanced and sophisticated capabilities in place.

A finance culture based on reporting the past rather than predicting the future, where data platforms are not harmonised and there’s a lack of ownership of data governance, will foster a decision-making pattern that is weighted towards intuition over data.

For many CFOs, culture is major barrier to finance deploying new technologies and driving real-time, sophisticated data analytics insights.

How satisfied are you with your progress? Over the coming months, we will be examining the evolving role of the finance leader and how CFOs can balance the competing priorities of today. 

Summary

Finance leaders say traditional back-office behaviours and mindsets in finance are slowing the modernisation of the function.

About this article

Authors
Katie Burns

EY Ireland Associate Partner Consulting

Passionate about addressing challenges faced by finance functions.

Tony Klimas

Partner, Business Consulting Finance, Ernst & Young LLP

Focused on bringing the best we have to offer to CFOs and other finance leaders.