How CFOs can get the best from future technology

In the modern world, finance departments will need to digitise to survive. In fact, without technology investment, 93% of businesses are expected to go out of business.

“We’re in a period now where cost pressures are a constant,” says Mark Jenkins, CIO at MHR. “The labour market, while not quite as volatile as it was, is still not stable. Skill gaps plague finance departments, and the pressure is on to deliver business-driving insights.”

What future trends should your finance department be looking out for?

The rise of AI

Any discussion about modern technology would feel a bit empty without mentioning artificial intelligence. Finance departments cannot ignore this technology, and its potential to help streamline assorted financial processes.

‘We do have to be mindful of what the technology is about. As a point of reference, it’s fine, but I wouldn’t rely on it to tell me about trends,” says Jenkins.

AI has the potential to streamline data, but it could never replace the human element entirely. It is great at producing numbers, but it struggles to contextualise those numbers in a way that is easily understandable across the business. “We don’t add value to a business by churning out these month-end numbers. It’s the interpretation of those numbers and using them for effective decision-making that matters,” Jenkins adds.

Joe Norley, research engineer at MHR, notes that this renewed focus on high-level thinking can boost employee engagement. “There are parts of every job that people can’t wait to automate away. That’s going to be the aim, I think,” he says.

With that said Norley drew attention to one of the chief concerns people have with AI. Without these mundane jobs, how can people find entry-level jobs and get a base level of knowledge? There’s no easy answer to this but, it’s likely that AI will reach the point where it can be used to train people more effectively than an entry-level job ever could.

More than AI

It is not just shiny new technology that needs to be considered. While AI is currently grabbing the headlines, Jenkins discussed technology that can help with extended planning and analysis (xP&A) right now.  More and more of this process can be automated, meaning it’s much easier to get data from diverse business systems that provide context to the financial metrics.

By combining people data, operations and financial data into one single source, you can demystify your numbers, and produce information in a format that other departments can get use out of. That includes chiefs and directors too, meaning you can help drive informed financial decision-making.

By pushing xP&A you don’t have to rely on untested technology. All the tools for accurate real-time data are available now.

Backing the right horse

As Jenkins points out, “you can’t run a business by being a jackdaw and chasing after anything shiny that you see. You have to really get the best out of what you’ve got.”

Not every so-called “game-changing” technology has delivered on its promises. Norley recalls the hype cycle of cryptocurrency, NFTs and the Metaverse – a cycle that has ultimately not delivered much real-world use.

“The problem is that these concepts tend to be marketed to those of us that are a bit too close to the technology. We’ll get on board with it, but then how do you sell that to the average person out in the real world? You have to look at what the benefit for the business as a whole is.”

Likewise, Jenkins notes that departments can develop a bugbear about a particular piece of technology without considering why this is the case. “Excel seems to be the devil of all applications, but that’s because it was being used for everything for a while. We regularly hear the refrain of ‘we need to stop using Excel’. Businesses will never stop using it. But we can find better ways of collating data and generating reports,” he says.

So, how can you identify where those technology benefits really are?

It’s about people first

A finance department needs to leave legacy systems behind and invest in digitisation to survive and thrive. But with so many developing technologies competing for your attention and investment, where do you start?

A CFO doesn’t want to go all in on a technology that is not going to deliver, but equally does not want to stay stuck in a rut because that is how things have always been done.

Jenkins has a key suggestion. “Businesses can invest in training people to understand the benefits of tech. We need to be open to these different ideas. Some of them are going to be fantastic. Some will hit the wall and just won’t resonate at all. Others will be amazing for one sector, but dead on arrival for another, even within finance departments.”

He adds the key is investing in employees so they are able to make the most out of whatever tech is out there. “This will make them open minded enough to consider bringing it in and then being able to use it to its best,” he says.

Giving your team the tools to evaluate a new technology for themselves and the freedom to experiment is the key to driving innovation.

Final thoughts

It is crucial that finance departments recognise the importance of digitisation, or they will risk falling behind their competitors. By using bleeding edge technologies like machine learning, or artificial intelligence, you will transform key finance functions from cash management to budgeting to financial planning.

For more information on the technology that can transform your finance department into a high performing team that delivers real insights for your business to work with, check out the results from our Evolution of the Finance Function survey.

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