A new world: The view from Noel TagoeExecutive vice-president – Management accounting, research and curricula
‘Given the technology landscape, the focus of finance professionals needs to shift from data collection and processing to the use of data.’
Digital technology has ushered us into a new business era. Huge volumes of data are being generated at record speed. Business is well placed to exploit this brave new world because it is supported by the right infrastructure for storing data cheaply, and for accessing, processing, and analysing data at speed.
To remain relevant, finance professionals should become familiar with technologies such as cloud computing, robotic process automation, cognitive computing, in-memory computing, advanced analytics, and visualisation tools.
These new technologies change how businesses behave, both internally and within their ecosystems. People have to work in new ways with technology with automation increasing; products and services are no longer sufficient but must combine with the appropriate platforms to provide differentiated offerings for customers. Businesses today will need to focus on their core capabilities, instead of trying to do everything. To succeed, they have to collaborate with partners in their ecosystem. Collaboration is therefore an important driver of growth — 2017 KPMG research reveals that, globally, 75% of CEOs are now more open to new influences and collaboration.
In this digital age, the role of finance and accounting is to enable, shape, and tell the story of how businesses create and preserve value. This requires a deep understanding of data and how it is used. Given the technology landscape, the focus of finance professionals needs to shift from data collection and processing to the use of data. But before using data, finance needs to ensure that data is clean, has integrity, and is secure. This requires an understanding of cybersecurity and how to communicate the potential of cyber risk to the board.
In the future, management accountants will work more closely with data scientists who use advanced mathematical techniques to analyse data and provide insights for the organisation. Management accountants will need a holistic understanding of their business (through knowledge of the business model) to explain emerging correlations and insights from the work of data scientists. They will also be able to have conversations with both external and internal stakeholders to help the whole business understand and use the insights derived from the data. This shift from "doing the calculations" to an influencing role moves many finance people out of their comfort zone.
In brief, finance professionals will be required to use data to support decision-making, understand customers' behaviour, develop customer value propositions, and enhance operational efficiency.
The competencies required to ensure that data is collected, cleaned, processed, analysed, and communicated to the organisation, and its partners as needed, are data strategy and planning; data sourcing, extraction, and mining; data manipulation, modelling, and analysis; and the communication of insight derived from data.
Given the pace of change, finance people need an agile mindset. This includes curiosity and inquiring minds to help them get the story behind the numbers. This will enable them to diagnose root causes, predict probable future scenarios, and help prescribe how the business can thrive in those future scenarios. Secondly, they will need to work at speed and scale — and have the ability to scale up something from a corner of a business to the organisation as a whole.
Finally, the pace of change means that the shelf life of knowledge is very short — much of what we know today will not be relevant in a few years' time. Finance people will need to replace old knowledge with new to remain relevant. Lifelong learning is therefore essential and must be built around three activities: learning; unlearning old things that have become irrelevant and incompatible with new knowledge; and relearning relevant new knowledge.
Noel Tagoe, FCMA, CGMA, Ph.D., leads the Association's Future of Finance project. Click here to read about the project.