We’ve all seen it coming: disruptions everywhere, from radical technology innovations to trade policies, taxation, Brexit, and supply chain risk. In 2018, the realities hit home as the ground beneath us began to shift – for good. How will the finance community adjust to deal with uncertainty, manage risk, and help their organizations stay ahead? How will finance stay relevant in the age of artificial intelligence? How will CFOs need to rethink and reinvent their roles? We polled experts across the landscape to find out what they expect for 2019.
The CFO’s role will further evolve: Henner Schliebs, Global Vice President of SAP’s ERP and Finance Solutions
Let’s begin with my own prediction: The CFO’s role will evolve from strategist to captain. CFOs have already reached the next level, in that they are commonly accepted and poised to lead the company’s strategy. Finance chiefs will guide operational and business units to deliver against the strategy they have defined. As the natural owner of Big Data, and therefore the leader of digital and business transformation, the CFO provides guidance to help everyone make the right decisions, from core finance, accounting, and treasury to supply chain and products to sales and marketing and HR. @hschliebs
Intelligent technology calls for creativity and risk-taking: Todd McElhatton, CFO of SAP’s Cloud Business Group
In today’s digital economy, technology is no longer a luxury or “nice to have”; it’s a “must-have” that sets enterprises apart from the competition. Success will be determined by the level of creativity strategic leaders bring to the field. Understanding where technology is best leveraged – and where it isn’t – is critical for modern corporate leadership and an intelligent finance organization. CFOs must recognize that creative thinking and calculated risk-taking will be the defining factors in leading their organizations through digital transformation journeys.
Digital technology demands stepping up investment in tools and talent: Nilly Essaides, Senior Research Director, Finance & EPM Advisory Practice at The Hackett Group
The Hackett Group’s research indicates that cost reduction will be the top priority for companies in 2019 because of growing unease about economic performance. This will put pressure on finance to focus on optimizing efficiency while retaining its mandate to enhance management decision-making support through better analytics and talent development. While these objectives may seem at odds, they need not be. We expect finance to accelerate its digital-solution adoption rate, especially robotic process automation, advanced analytics, and master data management. By more fully embracing digital transformation, finance can substantially diminish process cost, while successfully redeploying talent to value-added activities.
Intelligent enterprise evolution will require change management: Richard McLean, SAP CFO, Asia Pacific Japan
The intelligent enterprise provides businesses with a major opportunity to transform. With next-generation technologies, executive teams will have a whole new level of trust and confidence that their data is up-to-date and accurate. For CFOs and financial teams, advocating for their vision of the future empowered by accelerated process automation and deep insight analytics will be a top priority. In 2019, I expect finance leaders to embrace their responsibility for assuaging employees’ concerns about change and champion a learning culture. The intelligent enterprise may be powered primarily by technology, but it will need you to win the hearts and minds of your people to unlock its true potential. @McLean_Richard2
Industry disruption will blur lines of responsibility: Martin Naraschewski, GM, Head of LoB Finance Solutions at SAP
CFOs are finding their defined roles and responsibilities increasingly blurred. CFOs are now expected to own not only the financial sphere but to help build an intelligent enterprise with technical fluency. Digital leaders will be tasked with challenging their businesses’ core propositions and competencies and identify new opportunities to disrupt traditional lines of business. How are you exploring opportunities to introduce new services that amplify, or even replace, existing product lines? How are your corporate data assets fueling insights to meet the needs of the 21st-century customer? CFOs will need to actively drive such transformation based on their new additional role as the owner of a company’s digital core.
Zero-based budgeting will take finance back to the future: Brian Kalish, Kalish Consulting expert in financial planning and analysis (FP&A)
In 2019, I predict that finance will reconsider the 1970s concept of zero-based budgeting, tying spending to goals and measuring outcomes against those goals. Why? The world has never been more volatile, and organizations are looking for every possible competitive advantage – and technological firepower is light-years ahead. Those that succeed will take a multi-year approach and start small. They will need to deploy tools that can ascertain data at its most granular level. Access to actuals in real time, and the ability to manipulate the data in a user-friendly environment, are key to speed of adoption. @FpandaBTK
Collaborative enterprise planning will be led by FP&A teams: Michael Coveney, an expert, speaker, and author on FP&A topics
FP&A organizations are steadily moving toward collaborative enterprise planning, with systems and techniques that are continually being enhanced based on real-world experiences. In the future, I predict that systems will one day be fully integrated, enabling sophisticated organizational modeling to respond to actual events. That won’t happen next year. But in 2019, we will see FP&A departments beginning to lead the charge in partnership with technology companies whose experts really understand the evolving role of FP&A. @michaelcoveney
Artificial intelligence (AI) will have far-reaching impact on finance: Prof. Dr. Kai Reinhardt, University of Applied Sciences, Berlin
According to our study The Impact of Artificial Intelligence on Competencies in Corporate Finance and the responses of 164 financial management experts, the common perception of AI destroying many jobs in the future is not a foregone conclusion. While AI technologies will inevitably completely replace associated skills in some standardized jobs within a few years, many finance roles and responsibilities will become much more “intelligent” in terms of data-driven. This leads to entirely new roles and knowledge structures in corporate finance. CFOs will have to go other ways in designing their organizations and managing talent than most HR departments are prepared to deliver today. @kaireinhardt
Culture of analytics will be necessary for data-driven insights: Anders Liu-Lindberg, Head of the Global Finance Program Management Office at Maersk
To meet the demands of the business for data-driven insights, finance organizations need to build a culture of analytics. They need to move from the role of commentator about what, where, and why things happen to what might happen and how to make it happen. Within 12 months, I expect to see finance teams taking small steps toward this objective. They will adopt analytics systems that can create forecasts to cut time on budgeting and make room for discussions about business strategy and informed choices. @liulindberg
Procurement will move to the cloud and generate more value by integrating spend analytics, e-sourcing, and contract management as end-to-end source-to-pay suite: Dr. Marcell Vollmer, SVP and Chief Digital Officer at SAP Ariba
Digital transformation has the power to turn procurement into a critical change agent over the next couple of years. Yet according to The Hackett Group study The CPO Agenda: Expanding Procurement’s Influence Through Change and Innovation, 95% of chief procurement officers are concerned about shifting to a digital model and risks to cybersecurity, access to talent, and more. Still, I predict that in 2019, chief procurement officers will recognize that transitioning to integrated source-to-contract in the cloud can help them improve margins, reduce costs, and manage risks. @mvollmer1
Blockchain will further gain in usage and acceptance: Tony Klimas, EY Global Finance Performance Improvement Leader
Use cases for blockchain are limited today, but we expect that broader usage and wider acceptance will come with experience – and progress will continue accelerating in 2019 as more are developed and proven. Examples include intercompany accounting, fraud prevention, and various compliance frameworks for industries ranging from pharma to consumer products. While performance issues with large public ledgers are still being addressed, consortium models of more limited scope are quite viable. While still early days, the use of blockchain to secure ledgers and achieve trust by design is on the rise. @tonyklimas / @EY_Alliances
Rewards of intelligent cloud will prevail over risks: Joel Bernstein, CFO, SAP Global Field Finance
It’s easy to overlook the importance of cloud computing as the foundation for intelligent technologies: the Internet of Things (IoT), AI, 3D printing, augmented reality, and more. However, security continues to be a concern. I expect that more CFOs will recognize that service providers do have the edge in security and will help their organizations run the risk/reward calculus of cloud computing. Within 12 months, they will find themselves in a very different place, with a lot more expertise using technologies such as machine learning and IoT, and will be much more comfortable using the cloud to push further.
Risk management will use intelligent technology to predict and alert: Bruce McCuaig, Director of Product Marketing, SAP GRC Solutions
GRC professionals must focus on the effective use of intelligent technology to manage risk. Intelligent technology can monitor patterns, predict outcomes, assess risks based on incidents, suggest or implement corrective actions, raise alerts, and so on. It’s not the controls that matter anymore; it’s the ability to intelligently detect or predict deficiencies that’s important. In 2019, GRC professionals will begin to rethink GRC standards, adopt and use intelligent technologies to serve their customers, and align practices with business performance. @brucemccuaig
“RegTech” will bring new technologies to traditional tax solutions: Marc Hoessels, Co-Leader, Belgian Tax-TPC Team and Indirect Tax Technology Director at PwC Europe
As tax laws become stricter, many startups are developing “RegTech” solutions that combine taxes with cutting-edge technology. While traditional ERP software providers deliver the latest solutions, completed by traditional consulting companies offering state-of-the-art business and legal competence, the startups’ agile innovations fit perfectly. They can enhance the overall offering with technologies like blockchain for a new, unprecedented level of accuracy. This could mean exciting times ahead for companies fulfilling the promise of RegTech.
Global trends in taxation, trade, and compliance
Economic growth will slow only slightly worldwide: Adrian Cooper, CEO and Chief Economist, Oxford Economics
We expect the world economy to defy predictions of a sharp slowdown next year with 2.8% global growth, only slightly down from 3.0% for 2018. We do expect expansions in the U.S. and China to ease. But U.S. growth should stay above trend, underpinned by fiscal stimulus. In China, policy support should keep 2019 growth at 6%. The Eurozone has slowed sharply, but next year will see fewer headwinds while a lower oil price will lift incomes. Cheaper crude will buoy oil-importing economies, and a weaker dollar from mid-2019 will support trade and emerging markets. With monetary policy still accommodative, managed U.S. and China slowdowns will cap recession risks.
Brexit will require changing systems and processes: Pablo LeCour, Partner and Lead of Deloitte’s Global Export Controls & Sanctions Practice
With the UK set to leave the EU March 29, 2019, new trade barriers will likely lead to significant supply chain disruption. To mitigate the impact, organizations should automate international trade compliance processes and focus on an alternative sourcing strategy. Changing trade environments may reduce the profitability of businesses that continue to use pre-Brexit supply chains; they could look beyond the EU, or even within the UK, to optimize supply chains. In the future, the UK may strive to create multiple new independent trade agreements with non-EU countries. Changes could be dynamic and rapidly evolving, and cross-border trade will likely become more complicated.
FP&A and tax teams will realize value from new technologies: Andrew Hwang, Managing Director, PwC’s Global Transfer Pricing Practice
With tax and trade policy in the daily news, finance leaders seek to ensure compliance with new rules and regulations while continuing to optimize the global value chain. Given the recent tax changes in the United States, there are significant opportunities to create competitive advantage through more robust and dynamic planning and modeling. The new technologies in planning and analytics can provide more integrated, streamlined solutions for finance and tax teams to address these opportunities.
Major new taxation policies will lead to embedding compliance in core processes: Michael Bernard, Chief Tax Officer for Transaction Tax at Vertex, Inc.
2018 saw an unprecedented shift in U.S. tax law, clearing the way for states to begin collecting sales and use tax for remote sales. Meanwhile, governments worldwide are turning to new forms of compliance like e-invoicing regulations, which require IT departments to embed workflows in core processes, and real-time VAT compliance checks. In 2019, finance organizations will begin to factor tax considerations into their digital transformation strategies. An effective roadmap will include actions for using data to link business processes and tax compliance obligations.