In 2013, two Oxford researchers, Frey and Osborne, opened a worldwide discussion with their paper, “The future of employment: How susceptible are jobs to computerization?”1 In their research, which was based on analysis on the U.S. market, they predicted that almost 50% of current jobs will vanish in the years to come because of the ongoing digitization of our economies. Other studies for the European market reached similar conclusions.2
Although controllers, accountants, and auditors are more at the end of the probability list, there will be a fundamental change in the finance world because of digital developments. “Odd finance activities” like moving data, creating spreadsheets, and validating correct figures will disappear because of real-time activities and automatic bookings. New technologies will help reduce closing time because there are no longer balance differences between the accounting and controlling view, thanks to one universal journal for finance and controlling processes.
The “digital finance” revolution: insights through data modeling
However, the finance function will take on a more “creative” role in the future. Finance people will become trusted advisors who can interpret the data more intensively. Furthermore, the ability to work with a huge amount of data will open a door to very good simulation models that can provide a better base for decision-making in a very short time. The dependencies of internal business processes could be combined to show patterns. “Digital finance” could be a revolution comparable to the Big Data models in the weather forecast, which inform decisions on travel and logistics and help farmers gain better results, just as two examples.
Another aspect will be the increasing value of optimized processes. Even in the finance world, controlling combined with process knowledge can help to reduce cycle time and thus increase cash flow. The finance and IT departments will work more closely than ever before.
Revelations: collaborative opportunities
But the most important challenge will be digital transformation: How can a company gain additional advantages by using data to create new business opportunities, even with partners they do not yet know or that they never considered candidates for project collaboration? How could a rental model based on clicks work optimally for finance, for instance? How can IP rights be booked in an acceptable manner to reflect the business development from a controlling perspective? What else can we do with Big Data?
Partnerships and bridge-building: good communicators required
In the end, the finance job will change as follows:
- More IT knowledge, alongside finance and controlling know-how, will be required.
- Networking will be important for sharing knowledge quickly about complex topics with experts worldwide.
- Partnership (external as well as internal) will be a very important challenge. The finance staff will thus need to be better communicators than ever before.
- New topics like social media controlling, real-time booking, analytics, and so on will come more into focus. However, typical controlling approaches will not work anymore and thus will have to be redesigned
The finance functions will not be a “must-have” anymore, but an important bridge between the business and the digital world to understand, interpret, and communicate about the transformation process and the finance point of view. However, in the end, it is as John Maynard Keynes said: “We cannot, by international action, make the horses drink. That is their domestic affair. But we can provide them with water!”
Oxford Economics recently surveyed 1,500 finance executives to understand the attitudes of finance professionals toward the function’s changing requirements and challenges. The full study, “How Finance Leadership Pays Off: Six Ways CFOs Stay Ahead of the Pack,” will be published in early June. Click here to request a copy.
- Frey, Carl Benedict/Osborne, Michael A.: The future of employment: How susceptible are jobs to computerization?, Oxford 2013
- Bowles, Jeremy: The computerization of European jobs – who will win and who will lose from the impact of new technology onto old areas of employment?, July 17,2014