Why the finance and accounting function needs to evolve if it wants to successfully transform

Why the finance and accounting function needs to evolve if it wants to successfully transform
Terry Smagh, Senior Vice President and General Manager, Asia Pacific & Japan, BlackLine

The finance function is often overlooked during an organisation’s digital transformation plan, despite the strategic benefits that can be gained from better data insights. It is also one of the toughest to change.

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With the pandemic, digital transformation has been the mantra for many organisations when it comes to adapting their business operations to support change and growth. However, this need for transformation in the finance and accounting (F&A) function is yet to be fully understood by businesses in APAC and will take time to evolve. 

To understand the state of the F&A industry, importance of transformation, and learn how we can overcome existing challenges, iTNews Asia speaks with Terry Smagh, Senior Vice President and General Manager, Asia Pacific & Japan, BlackLine.

iTNews Asia: COVID-19 has accelerated everything – from digital transformation to cloud adoption. But what is unique about the F&A industry? Was traditional F&A already at a point where it needs change?

Finance is a mission critical function in any organisation and in any vertical. At the end of the day, it is about modernising the process within the finance function.

F&A would require technology that helps accelerate this process in a compliant and governance way. When we bring in GRC – governance, regulations, and compliance – the challenge is that we cannot bring them all together in a very robust platform.

For example, when it is time for audit, there would usually be a group of people at the end of the quarter in one room with boxes. This scenario is gradually dwindling down, with customers asking for transformation. This is what audit firms have been struggling with – to keep their captive market while transforming the F&A process.

Moreover, despite finance being a mission critical function, it is often seen as a back-office function. However, they can do so much more – from forecasting to strategic planning. It would normally take between seven to 14 days to close the books after the month end. Once closed, assuming another 10 days is taken to provide reports, half the new month is already gone.

This lack of data and analytics that could be used for foresight planning and strategic planning confirms the need for the whole process to be streamlined.

iTNews Asia: Setting aside the events of the pandemic, what was making it difficult for the F&A industry to move to automation? What will be the impact on F&A professionals by adopting cloud automation as part of their working process?

There was a lot of resistance to change, as with any technology adoption, and especially with finance. CIOs never planned a transformation journey for the finance function as it was not seen as a priority compared to an organisation’s business or IT transformation.

The F&A industry has been on the verge of disruption for a long time, and F&A professionals are expected to be more credible as thought leaders so that they can become valuable business partners when it comes to business decision making.

To do so, they will need to embrace new skills and technologies. It is about taking the current technology and applying it with the fundamentals of accounting to analyse their data points. (It is about) helping shape the digital transformation journey of an organisation.

Finance is a mission critical function where many of its tasks can be streamlined with automation. By doing so, we free up the bandwidth of this function to leverage analytic tools to allow F&A professionals to be more strategic as they gain more transparency on the business.

It will also give access to more accurate information as technology can help limit the human error from handling the data manually. The increased time efficiency to deliver the financial reports will be an added bonus as it will greatly help with the data analytics; and to gain insights from the data regardless of the volume.  

By adopting cloud automation, F&A professionals will be better positioned to bring strategic value by providing a timely analysis of these insights – allowing key business decision makers to make informed decisions.

iTNews Asia: Given that the processes within the F&A function are often manually driven, what is the first thing to be done for the F&A professionals and finance heads to have a clear sight of the systems and data?

From the management level, there needs to be a clear digital leadership in terms of an understanding of what technologies and capabilities are needed to transform the organisation. Given that there are other transformation initiatives within an organisation, streamlining these digital projects would be key.

There needs to be talks about leveraging emerging technologies as there is a demand for more effective solutions to be deployed. This is understandable as they are aware of the total cost of implementation and the need for a return of investment when adopting these solutions.  

The tricky part would be redesigning the jobs and processes when we proceed with transformation. With job losses being a concern, there will be a need to encourage adoption – by providing skills development training that would empower employees. Competition would be another key motivating factor as we see organisations innovating and evolving. Nobody wants to lag behind.

This leadership from the top is important as this sets the stage for the people below. For the F&A professionals, they will need to understand the importance of enhancing their skill sets as employees.

If we can build on the talent and the people can embrace a culture of skills development and reskilling, the transformation journey to drive innovation and growth will be much easier.

iTNews Asia: What has changed then between pre-COVID and now? We know there is the push for transformation, but what is the main priority for the F&A industry now?

Prior to COVID-19, for most organisations, none of the finance servers were in the cloud. This posed a challenge when the whole world went into a lockdown and organisations adopted a remote working lifestyle.This meant that the F&A function was not able to access their data from the cloud securely.

With the pandemic, many organisations realised it was important to move their data securely to the cloud. That has not only reduced their costs, but also increased their accessibility and efficiency. Organisations were able to pull data as and when needed.

Apart from moving to the cloud, there comes an increased priority for financial scenario planning. The board of directors can find financial insights on the state of the business and know if they are able to move from crisis mode to recovery. The CFOs can help analyse this data and help guide the business during this uncertain climate to deliver the most tangible results.

But to do that – firstly, adoption needs to happen – not only in terms of applications, but also in terms of redesigning jobs and processes.

iTNews Asia: All these changes that are happening have been very push led – with people working remote, everything goes digital. Do you still find that there is a need to spend a lot of time explaining and educating the industry on the benefits of transforming their F&A function?

The cost efficiencies to be gained from moving to the cloud is a strong incentive to move to the cloud, especially in this current COVID era. This is also the period whereby organisations are putting a hold on their budgets. There could be a scenario when an organisation would like to invest in IT but would also like some certainty that there would be cost savings.  

Ultimately, we are working to convince organisations that the technology is there – not to replace their full-time employees, but to help redesign, repurpose and create strategic value.

Instead of having to educate them on the merits of moving to the cloud, we are letting them know how their F&A professionals can act more as their ‘strategic partners’ when it comes to their business.

Reinforcing this idea that with these added financial insights from these partners, their organisations can gain more leverage on their competition.

iTNews Asia: How do you see the industry evolving? How likely or how soon can we cross that curve towards cloud adoption and automation?

The industry now is on its way to crossing this curve. For example, in Singapore, we have the Monetary Authority of Singapore (MAS) working with financial institutions.

There was a recent introduction of a Technology in Finance Immersion Programme (TFIP) to help businesses and individuals gain experience in new technologies. In 2019, the programme had only 70 organisations. Currently in 2021, it reached 119. So the industry is definitely coming up.

What is going to help drive this evolution for the FinTech sector is the rapid expansion of virtual banks, cryptocurrency, and e-commerce platforms. With Singapore as a financial hub, this would create a greater demand for digital finance professionals.

Being in this digital finance space would mean that there is a need to embrace technology, and the market in APAC is huge. The penetration of business platforms, coupled with the diversity of the businesses and cultures in the region, puts the industry in a good position. We can expect it to be the fastest growing region.

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