WORLD ACADEMY OF INFORMATICS AND MANAGEMENT SCIENCES
ISSN : 2278-1315
financial planning and analysis) are now offered from
preserves value’. This role is increasingly central to the
shared service centres or centres of excellence, causing the
finance function – and explains why the hexagon bulges
central bulge in the hexagonal shape. Here, finance
outwards at the Level 2 tier.
professionals will increasingly work in multidisciplinary
teams, assembled in skills combinations that support the
2. TECHNOLOGY
business. The flat top to the structure shows a move to a
Organizations are using technologies to improve the
collaborative finance leadership approach.
efficiency of the finance function and build new capabilities
for it. An example of this is how organizations are embracing
In our interviews, we asked individuals to describe the
technology to support the automation of management
number of hierarchical reporting levels within their finance
information processes, and provide reporting to the rest of the
functions. This research allowed us to create a composite
business on a self-service basis. In turn, this is contributing to
picture of the reporting levels that sculpt the shape of the
the narrowing of ‘assembling and extracting data and
finance function within the digital age. We found it consists
providing limited insight’ (Level 4).
of four levels. From the top downwards these are:
However, it’s also heightening the need for skills and talent in
Level 1: Leading the finance team
two other levels: ‘specialists generating further insights in
Level 2: Partnering for value to influence and shape how the
their areas of specialism’ (Level 3) and ‘partnering for value
organization creates and preserves value
to influence and shape how the organization creates and
Level 3: Specialists generating further insights in their areas
preserves value’ (Level 2).
of specialism
Level 4: Assembling and extracting data and providing
a. New data sources and analysis methods
limited insight.
When overlaid with the Global Management Accounting
The availability of a wide range of new data sources and the
Principles’ definition of management accounting, we can
means to conduct advanced analytics are providing
start to understand the different responsibilities of these
opportunities to better inform decision-making. By contrast, in
levels. The principles define management accounting as ‘the
the past, these decisions had to be based on personal
sourcing, analysis, communication and use of decision
judgment. Now, for example, predictive analytics improves
relevant financial and non-financial information to generate
forecasting and it is likely that analytics will extend the
and preserve value for organizations’.
financial planning and analysis (FP&A) area of the finance
In this context, the responsibilities of each level are as
function. This is pulling demand for talent into the higher
follows:
echelons of Level 3 – ‘specialists generating further insights
Level 1: To enable and shape the generation and
in their areas of specialism’.
preservation of value for organizations,
Level 2: To communicate the insight and moral of the story,
Our interviews revealed examples where digital centres of
Level 3: To shape the story through the analysis and use of
excellence are providing new insights into customers’
decision-relevant financial and non-financial information,
behavior and experiences, derived from data. These insights
Level 4: To source the information for the story.
are enabling management teams to deal with important
intangibles in a better, more informed way.
Why the shape of the finance function is changing
b. Automation and cognitive computing
Our interviews indicate there are three main reasons why the
shape of the finance function is changing. These reasons are:
A 2016 McKinsey report studied which functions could be
the changing mandate for finance, technology, and finance
automated by advancing technology.
function capability.
Figure 4: McKinsey’s report into the technical potential
1. THE CHANGING MANDATE FOR FINANCE
for automation in the US
The role of the finance function continues to shift in
emphasis towards management rather than accounting. This
emerging mandate is based on twin beliefs: firstly, that the
finance function has a unique end-to-end view of an
organization; and secondly, that the Chief Financial Officer
(CFO) has the business understanding to work alongside the
Chief Executive Officer (CEO) as a co-pilot – explaining the
increasing focus on business partnering. This recognizes the
important role of management accountants who, as
guardians of the business model, apply the discipline of
commercial finance to decision-making and value creation.
The shape of the finance function, and those within it, are
evolving to better enable ‘partnering for value to influence
and shape how the organization creates and
www.waims.co.in
Estimates of extent to which different types of roles could be
automated; Source: McKinsey
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