The digital future has already arrived in the production sector. For some years now, manufacturing companies have already been focusing on state-of-the-art information and communications technologies for the intelligent networking of machines, processes and products, under the buzzword Industry 4.0. And it is certainly paying off. Thanks to digitization, they are now enjoying the benefits of faster, more flexible, more tailored and more cost-effective production. In finance divisions, too, smart solutions represent an opportunity for increasing digitization and for automation of value creation. This will allow CFOs to increase productivity, process quality and compliance within their organizations, and to tackle growing pressure for efficiency head on.

At the same time, allowing robot software to take over more and more rule-based routine activities – such as for accounting or reporting – will free up valuable resources in the finance division. In the future, these capacities will then be available for faster, more efficient corporate performance management. Furthermore, thanks to real-time access to a steadily growing pool of data and highly efficient advanced analytics processes, digitization allows for more effective corporate performance management, moving from reactive/analytical to proactive/forecast-based approaches.

CFOs wishing to succeed in taking advantage of these opportunities will need to completely transform their organizations. This is because the automation that is becoming possible as part of the digital transformation is revolutionizing finance divisions to an unprecedented extent. “As well as technological innovations, in the future there will also be demand for completely new processes, roles and skills that will change the finance division and the field of corporate performance management from the ground up,” stresses Kai Grönke, a partner at Horváth & Partners. Those who leave it too late to switch tracks risk getting stuck in a siding.

The recent “Finance Excellence 2020” study by Horváth & Partners shows that the majority of companies see a need for action. According to the study, reorganization and the automation of processes is a top priority for 91% of the CFOs surveyed, with 89 % perceiving the automation of performance management tasks as a must – more than 120 CFOs participated. However, corresponding process optimizations have only been implemented by 42 % of companies, while just 29 % have implemented controlling optimizations.

So CFOs are facing the question of how to best prepare their organizations for the age of automation. “We recommend setting up a comprehensive re-engineering program,” says Kai Grönke. “This should involve a number of other aspects in addition to the digitization of processes. These aspects include a future-oriented model for the CFO function, a clearly-defined role model, a lean organizational structure, and the development of sustainable skills.”

Many chief financial officers find it difficult to judge where their organizations stand in terms of digitization. However, determining one’s position is the prerequisite for reorientation and for defining a suitable model. Horváth & Partners has therefore developed an assessment radar that structures the degree of digital maturity of finance divisions based on quantifiable criteria, and classifies companies in relation to one another. The strategic actions that make up the transformation processes can be prioritized on this basis.

The digital transformation will radically change tasks within the CFO organization. Since the creation and supply of information requires skills that differ from those required for the utilization of data, specialized roles will develop in order to fulfill the different requirements as well as possible. While employees in governance & leadership roles will be responsible for defining standards, methods, and systems, and for ensuring these are respected, business partners will act as strategic partners for management. Transaction-related financial activities and data procurement processes will be amalgamated within the production role, whereas data scientists will extract relevant information from large quantities of data, and prepare this in a manner appropriate to the target groups involved. The different roles will be anchored in critical control points within the company, while data analytics will be an independent area of expertise. “This division of tasks is necessary for standardized, automated processes that offer increased efficiency and consistent quality,” Kai Grönke explains. Furthermore, the differentiation will strengthen the business partner function, which in turn will ensure that the finance division can contribute better to the success of the company.

In order to meet the requirements of these specialized roles, the CFO organization will need new skills in the future. For example, there is demand for highly qualified experts who can translate technical questions into data models and develop evaluation algorithms. Controllers whose workloads have been lightened thanks to process automation will be able to concentrate more closely on their roles as business partners in the future. To this end, they will need the skills to collaborate with data scientists and will need to trust in their methods. Furthermore, they will still need a deep understanding of the company’s business model, as well as the ability to develop forward-thinking, implementation-oriented performance optimization measures.

In view of the extensive upheaval that is underway, accompanying change management is inevitable. If a company is to succeed in entering the 4.0 era, all employees must be involved and must develop a “digital mindset”. “Digitization can only work if the transformation is anchored deep at the heart of the organization,” emphasizes Kai Grönke. How quickly a CFO can implement the digital transformation will ultimately depend on how willing his or her team is to change.