Archives For Finance Transformation

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

How will the finance function fare in the face of significant disruptive future changes in our business and personal lives? Broad social changes, the unstoppable rise of digital, the new “technological” industrial revolution, a much more mobile connected and powerful consumer generation, transitioning business models, a much more challenging competitive landscape, the proliferation of risk, and so on. All of these, and other changes, present new challenges, as well as new opportunities, to businesses. By inference, they have significant implications for the future finance organisation too.

At ACCA, we believe the future for the finance organisation is bright, and the changing business landscape presents new opportunities for finance leaders. It is fair to say the historic reputation of the finance department has been biased towards stewardship, the control centre of the enterprise. But in an increasingly complex, volatile environment, whilst control and risk management responsibilities remain essential, too often the nomenclature of “back office” has been used to describe finance activities. This belies the increasingly critical role finance will have to play in leading the enterprise in its growth strategies, and providing the important financial insight it needs to drive value. Smart finance functions will ensure they strike the right balance.

Over the next 18 months ACCA will lead a global campaign to understand the leading practices finance functions are adopting in their goal to becoming smarter. How are best-in-class delivering the insights that make a real difference to corporate performance, whilst continuing to drive effective stewardship and control of the enterprise. The campaign has already identified a number of critical areas in which progressive finance functions must look to excel. Over the next 18 months, it will seek to understand and showcase the good practices, challenges, issues and opportunities corporate finance functions face in working smarter in four key areas: the quality of its leadership, the extent to which it effectively uses technology, its human capital practices, and its ongoing ambitions to transform the function. Visit accaglobal.com/smart for further information and to access our ongoing thinking in this area.

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

To my eternal dismay I don’t really get much time on the iPad these days. I don’t have to look far, however to find where it is – invariably it’s in the clutches of either my seven year old daughter (worrying), or my three year old boy (worrying, but for different reasons). Their relationship with this sort of technology however seems very intuitive, dare I say almost hardwired. Technology will be even more coded into their future daily existence, probably beyond the realms we can imagine right now. It’s fascinating to watch, and it’s an extraordinary time to be alive.

Today’s rate of advancement in technology is exponential but I can’t help but think the technology we are becoming accustomed to in our private lives isn’t quite reflected in our business lives. There is no greater example of this than what’s been happening (or not happening) in corporate finance organisations over the last decade or so. If the finance organisation is serious about driving value and supporting the business in its strategic imperatives, one of the things it has to get serious about is the technology it has at its disposal. I don’t, however, subscribe to the view that technology is the panacea to all of finance’s problems, the one-stop solution to deliver the sorts of financial and operational insights the business is crying out for… but it would be naïve to underplay its growing importance, particularly with the digitisation agenda.

So what’s stopping finance technology delivering on its promise? The obvious one is investment costs and multiple legacy ERP systems not being fit for purpose; too much manual workaround, too much time trying to get to the number rather than understanding and explaining to the business the implication of the number. Where we have seen investment in finance technology, typically the investment is focused on streamlining and driving down cost, rather than investing in the sorts of capabilities that are predictive and insightful. But there are arguably other issues too. Has finance shown the necessary finance leadership in the technology agenda? Does it truly understand and can it explain the business case for finance technology investment? Does a typical finance function “culture” present challenges to really embrace the opportunities that technology provides? Is it because finance is too risk averse? Why isn’t it adopting the cloud much? Is the payback on technology that creates insight rather than headcount reduction just too hard to quantify? Is it a capability issue with finance playing “catch up” on the skills it needs to make technology truly deliver?

Lots of questions, not many answers. We explore all of these issues and more in ACCA’s latest CFO report Is finance function technology delivering on its promise? 

I’ll leave with you a final thought – I think the corporate insight agenda offers CFOs and the finance organisation a great opportunity for internal influence and moving the dial on the corporate reputation of the finance department. I also think embracing and making the case for technology and tools is essential to achieving this. My observation is this: if finance doesn’t take this opportunity to lead the insight agenda, perhaps someone else will…

This blogpost first featured in CFO World, February 2014

Accountancy is looking different

accapr —  6 February 2014 — 1 Comment

Sue Almond-1528

By Sue Almond, technical director, ACCA

I recently chaired a technical conference in Tirana in Albania. Other than the location, there’s nothing particularly new about chairing a conference. That is until one of my fellow panellists commented on the composition of the audience.

I used my privileged position as chair to do a quick scan and headcount – a typical 80/20 gender split in a room of around 100 accountants.

But wait – the 80 looked like me! Well, not exactly, most were much younger. I couldn’t resist pointing out to my (male) panellist that he might now appreciate how I have felt for most of my professional career. Accountancy is clearly an attractive career choice for young women in Albania.

I started to reflect on some of the other things I had noticed on this short visit and realised that this was a very different profession to what we typically see. Things are changing.

The previous day, I had been speaking at a conference organised by the Federation of Mediterranean Accountants. This had attracted an audience of over 220 – in a country with only 200 registered auditors. How often do we get this level of interest?

And the FCM conference attracted huge media interest, with Arnold Schilder of the International Auditing and Assurance Standards Board and Andre Kilesse of the Federation of European Accountants interviewed for primetime TV. It is highly unusual as an accountant to walk into a room with a whole bank of TV cameras, or to have the paparazzi buzzing around during a presentation on audit.

What probably made the greatest impression on me was the clear collaboration between the government and the accounting profession to build the economy for the benefit of all. Both the Albanian Minister of Finance and the Minister of the Economy addressed the conference. Their overriding message was that the accounting profession provides a bridge – that it can transform the past and make it into the future.

There was also a strong recognition at government level of the value that audit quality and oversight bring to the development of a strong and credible financial market. The emphasis is very much on reliable – trustworthy – financial statements, and the recognition that everyone has a part to play in generating confidence.

At home, back in the UK, I was listening to a news item on Radio 4 about the latest report from Cranfield School of Management, which reveals that women now make up 19 per cent of FTSE100 and 15 per cent of FTSE 250 board positions. The BBC reported that this is the highest participation rate since the university started keeping track in 1999.

This immediately reminded me of the conference in Albania, and that change for the accountancy profession is happening on a number of levels.

All this has made me realise that accountancy is looking different – a world where governments and the profession collaborate for the public good. Where accountancy is seen as critical to the future. Where accountancy is in the news for all the right reasons. Where women are the future of the profession. AND where the sun shines.

This blogpost first featured in The Accountant Online, November 2013

social technologies

By Warner Johnston, head of ACCA USA

People have been using computer-based networks for decades to create, share and exchange information and ideas. The rise of social media was driven by people, not organisations. Historically, IT innovation was driven by big business and the military, but blogging, instant messaging, and sites for sharing pictures and music have become established as popular personal communication and collaboration tools. These have then attracted the attention of businesses, government bodies, charities and other organisations that also wanted to exploit them to improve communication and collaboration with and between their many internal and external stakeholders.

As more organisations explore the possibilities offered by public social media and ‘enterprise’ social tools they are finding that they can help to:

  • improve communication and collaboration (inside and outside the enterprise)
  • enhance decision-making and productivity
  • open up new routes to investment
  • support the development of new products and services
  • improve understanding of customers and clients
  • personalise customer experiences
  • analyse and respond faster to feedback
  • tap into and exploit intelligence outside the enterprise
  • source, attract and engage talent, and
  • develop a brand and build brand loyalty.

When businesses began exploiting social technologies they tended to focus on many of the same types of social media as had gained popularity with personal users. At one end of the spectrum businesses are using LinkedIn for recruitment and Facebook for brand management. At the other end, sites such as Crowdfunder and Kickstarter are being used to raise investment for start-ups and established businesses. The Securities and Exchange Commission in the USA has announced that social media outlets such as Facebook and Twitter can be used to make disclosures to investors (SEC 2013).

The appeal of a Facebook-style interface tends to be generational, but research shows that social technology ranks second behind analytics as a technology innovation priority. Adoption is expected to increase as accountants in practice and the finance function understand what social collaboration can do to improve their performance.

Research by ACCA on the technology trends that will impact the profession shows that a significant portion (59%) of respondents expect widespread adoption by the profession within the next two years, and 29% within the next two to five years. Over 9% expect to feel the impact on the finance function between five and ten years from now, and just 2% expect no impact on accountants and the finance function.

As enterprise social functionality improves, social tools will become more useful to the finance function. In an ideal world, collaboration software will develop situational awareness that enables it to contextualise processes and the roles and relationships of participants. In the context of finance, for example, software needs automatic understanding of the difference between general exchanges and any that must be tightly controlled – such as exchanges between tax and finance departments.

Read more about the technology trends that are impacting on the accounting profession at http://roleofcfo.com.

Digital service delivery

By Jeff Thomson, CMA, CAE, IMA President and CEO

Automation: we’re seeing it everywhere – from checkout lines at supermarkets to the way accounting departments file reports. These days, it seems that most organisations across a wide array of industries are employing some kind of digital service delivery. The goal: to increase efficiency, customer satisfaction, and market penetration.

While some new companies may be fully digital from the start, most organisations are at an intermediate stage, adopting tools such as self-service bots on retail websites, finding value in the analysis of large data sets, or using the eXtensible Business Reporting Language (XBRL) to file statutory returns electronically.

Exploiting such emerging technologies as web-based business processes, e-commerce, mobile commerce (m-commerce), and cloud-based software and services can enable an organisation to:

  • automate repetitive and time-consuming tasks
  • streamline complex business processes
  • replace human interaction with machine-to-machine and person-to-machine interaction
  • reshape business models to make the most of available resources
  • access and provide public services more easily and cheaply, and
  • monetise underused assets.

Take XBRL, for example. So far, most XBRL adoption has been driven by regulatory compliance. This has improved data access for investors and other stakeholders all over the world. But it could do even more to enhance the automated exchange of data internally and along supply chains. How? If businesses and professional bodies around the world can co-operate to produce the required taxonomies, if software developers strengthen their existing products and create new ones, and if businesses advocate for change – the positive impact of XBRL could be even greater. (Of course, it’s also possible that another technology could come along and make XBRL obsolete).

Further, as more and more accounting services are provided digitally, there may even be a dis-intermediation of the accountant’s role in regulatory compliance. The systems of businesses and those of regulators could eventually become so interconnected that they can exchange information automatically after it has been verified by smart software.

The fact is, if firms don’t embrace automation and enhance their services, they risk obsolescence. According to a report by ACCA and IMA, Digital Darwinism: Thriving in the Face of Technology Change, the majority of accountants intend to avoid this: 64% said they expect to embrace digital service delivery within the next two years and 31% said they’ll do so within two to five years.

While some firms and organisations are using digital technologies to provide real-time collaborative advice and services, others may need to do more. Those that miss the window of opportunity risk becoming casualties of ‘Digital Darwinism’. Fortunately, the evolutionary process brings both good news and bad: No entity is too big to fail or too small to succeed.

Read more about the technology trends that are impacting the accounting profession at www.roleofcfo.com.