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What Big Data and AI mean for the Finance Professional

Big data and artificial intelligence (AI) continue to affect many elements of the human endeavour, and finance and accounting are no exception. Here we explore the opportunities big data and AI can bring for finance industry professionals.

The Future For Finance

Robotisation is increasingly affecting the way humans interact, how work is done, and identifying tasks that can be automated. Businesses will still have roles in which insight, transparency, stewardship, and ethical corporate conduct are valued, and strategic finance professionals can fill these roles. Those who fail to embrace this change and appreciate the new tools will get left behind.

By embracing AI, analytics and big data finance professionals are presented with vast opportunities within this developing, disruptive, but opportune environment. By harnessing the power of big data and analytics a finance department can significantly transform itself and the wider organisation.

Changing Traditional Finance Function

In today’s age of digitisation there is a major shift in the way transactional data is captured, recorded, verified, and converted into information. All of this is about to change even further with the advent of technologies such as blockchain and distributed ledgers.

Transformation can manifest itself in a number of ways across the entire finance spectrum, from the transactional space of the finance pyramid to the top end of knowledge and value generation. The two figures below contrast the traditional finance function and the emerging future.

The Rise Of Robotics In Transaction Processing

The processing area is being hit hardest by digitisation and automation.

Processes involving data sharing and distribution from one point to another are digitally verified, and thereby dynamic controls have been embedded. Therefore, the significant involvement of finance professionals in the traditional controls space is disappearing.

Inventories and inventory transactions are another example. Inventory receipts, issues, stock-takes, and valuations are today automated and digitally tracked using radio frequency identification (RFID), which can be reflected directly as transactions in ledgers and financial statements. Human involvement may no longer be required at all in this once major role for organisations.

The rise of big data means that massive volumes of organisational data can be accurately captured quicker and more efficiently. This includes data from customer, supplier, human resource, as well as myriad external data. The challenge now is deriving value from all these data.

A Reduction In Human Reporting

Technology could spell the end for the era of preparing periodic accounts – e.g. month-end, quarter-end, etc. Instead an organisation’s financial position will be able to be accurately ascertained at any point. 

Reporting will take an entirely different meaning in organisations. A report, by definition, is a backward look. A move towards self-service reporting will mean professionals will have to know how to extract the information they need. 

Self-service reporting will replace the need for defined periodic reports. Instead, smart finance professionals will be required to provide insights into the future. Once again the human element of processing reports will decline, but a different human element will be called for. 

Reporting will be automated and dynamic. It will take the form of intelligent dashboards based on data visualisation techniques that engage the audience. Traditional reporting must give way to a much more insightful understanding of organisational performance. 

Already in world-class companies a greater proportion of the remaining reports are forward-looking insights, and the volume of standard reports being produced has significantly reduced.

Changes In Controls

Historically, finance departments have had a significant impact on organisational controls from simplistic reconciliations to audits, forensics, and even governance.

There is a need for finance to shift its focus to dynamic and perhaps preventive controls, as well as risk management, and other challenges which derive from using significantly more sources of data.

With this shift the transformed finance function could play an even more important role in stewardship and governance within organisations. Working financial professionals will face new challenges as a rise in AI and big data changes their everyday controls practices. 

In comparison, next-generation finance professionals are far more familiar with newer ways of working, and a more analytical and strategic role.

Transforming The Finance Profession

The top of the pyramid is the space where big data and analytics must play the most significant role in the transformation of the finance function and the shift of the finance professional to the role of a trusted and valued business partner.

The current era of big data and analytical platforms has opened up an entirely new opportunity in which finance can get involved: strategic decision support. This is perhaps where the future of finance and the finance profession lies. 

Increasingly finance professionals are called upon to play an expanding role in organisational strategy as well as integrated reporting. It is in this context that big data and analytics have the most influence. By broadening the quantity and span of data, and taking a strategic look at your organisation’s data, finance professionals will have the potential to add value.

Thus, budgeting will no longer be a simplistic spreadsheet exercise of transposing a set of sales figures provided by the sales and marketing manager to a financial spreadsheet. But rather, will involve working closely with the business managers to add significantly more robustness to operational projections based on multiple sources of internal and external data. These will have been analysed and related to drivers that influence the bottom-line outcomes.

Utilising Tools To Add Value

Next-generation finance professionals should be able to combine their powerful management accounting skills and exploit management accounting tools in order to convert data into predictive insights. 

In this way, finance can definitively claim that it is influencing the organisation’s strategic direction.

Combining the analytics and the AI perspective, performance management will not only be dynamic, but also be customisable in order to influence different parts of the organisation.

A number of analytic and data visualisation software platforms allow finance professionals to provide the strategic decision support demanded of them. Many other value-adding opportunities can open to finance professionals in this space. The limit is beyond imagination.

The challenges for finance professionals in the fast-shifting era of big data, analytics, and AI are many. The most important being a willingness to keep an open and changing mindset. The other factors are improving and enhancing technical skills in analytical sciences, such as statistics, as well as in the use of analytic software platforms. Embrace such changes and your organisation will be sure to reap the rewards.