The desire, or necessity, to transform an organisation can be caused by internal or external factors or a combination of the two. In some cases, transformation is a necessary response to an industry-wide crisis or the realisation that existing business models are no longer fit for purpose. In others, an assertive acquisitions programme might necessitate bringing together formerly distinct systems and processes to promote efficiency.
Wider societal factors have also been recognised as catalysts for transformation, with demographic changes to the workforce playing a significant role. Many recent studies have highlighted the impact of an increasingly ‘millennial’ workforce. These digital natives, born before 2000 but shaped by the emerging digital world they grew up in, are demanding new, more flexible ways of working and are swift to move on if their needs are not met. According to the US Bureau of Labor Statistics, this generation will make up 75% of the US workforce by 2030. xii
Following closely behind are their successors, Gen Z, who are now beginning to enter the workplace. According to Bloomberg analysis of UN data (which has defined the generational split point as 2000/2001), Gen Z made up 32% of the 7.7 billion global population in 2019, edging ahead of millennials who account for a 31.5% share. xiii
Research shows that Gen Z employees tend to be competitive, self-sufficient and entrepreneurial. They seek to customise rather than conform to generic job descriptions. The impact this will have on the accounting profession, which relies heavily upon defined roles and responsibilities, could have wide-ranging effects in the coming decade. Change is also apparent at the other end of the career lifecycle as people remain in the workplace for longer. Bottlenecks in the talent pipeline at senior levels mean fewer opportunities for promotion, often causing frustration and disillusionment in middle management. This could inhibit career progression and succession planning at all levels. Five generations coexist in the workforce, not only in the finance profession but also across the wider business environment. KPMG International’s research highlights some of the management issues that the multigenerational workforce raises, particularly differing priorities and expectations combined with succession planning and staff development issues.xiv Longer working lives require professionals to consider the sustainability of their skills and knowledge, particularly in the accounting and finance sector. The ‘half-life’ of a professional finance qualification is now far shorter than previously anticipated, and the ongoing roles of continuing professional development (CPD) and continuing professional education (CPE) will become increasingly important. But to fully capitalise on and action new knowledge, employees also need the right practical experience.
The increasing impact of automation is another issue for finance in the digital age. Traditionally, finance function structures follow a hierarchical ‘triangle’ model (Figure 1) with a broad base and fewer roles at senior levels. Over the past two decades, the shape evolved into a segregated triangle, driven by globalisation and advances in information and communications technologies. This change allowed routine transactional processes to be migrated to shared service centres, represented by the bottom section of the segregated triangle.
Figure 1 The evolution of the finance function
In the digital age, the growth of automation and artificial intelligence (AI) is eroding this traditional triangular base to form a pentagonal shape, as detailed in the diagram (Figure 2). At the lower levels, this change has implications for succession planning, as the basic finance activities which are being automated have historically provided the training ground for new finance professionals.
Figure 2 The shape of the finance function in the digital world
This highlights a significant issue for entrants to the profession and those who employ them – the lack of practical training in the fundamentals of accounting, combined with a lack of progression opportunities. During our case study research, we identified some of the ways organisations are addressing this urgent problem.
Within the pentagonal structure, finance professionals increasingly work in multidisciplinary teams, collaborating as equals to achieve shared corporate objectives. Technology has enabled new, more agile, ways of working.
A further catalyst of change has been the ‘democratisation’ of technology. Even the most mundane of household objects have become empowered by networked communication, sending and receiving streams of real-time data. Organisations and finance functions are continually fuelled with real-time information on their products, services and financial position. As a result, their stakeholders demand ever-more-frequent performance information.
In the era of instant communication and real-time data, a static, one-dimensional monthly report is no longer fit for purpose.
While data streams have revolutionised communication relationships, data itself has become a burden, particularly to large organisations. Our research with Oracle found that over half (51%) of the organisations surveyed spend more time collecting data than analysing it for insights. Moreover, 59% of large organisations say that difficulty extracting data from legacy platforms is a major challenge to achieving their analytics goals. xv While the ways that technology has begun to affect the finance function are clear, with core modernisation tools such as cloud and process robotics enabling greater efficiency and consistency, uptake of ‘new and different’ solutions are still limited. Progress has been slower and less successful than many had hoped, with only 16% of surveyed organisations reporting that robotic automation is driving down costs and transforming process efficiency as expected.
Technology clearly has significant implications for the future of organisations, but the much-anticipated change has fallen short of expectations. KPMG International’s 2019 Future Ready Finance survey found that high-achieving organisations have developed new, collaborative ways of working and are embracing technologies aimed at improving predictive and prescriptive analysis. But only 28% of respondents view their future-oriented initiatives as ‘a great success’, and 38% report difficulty in integrating new tools with legacy systems. xvii
Ensuring that the workforce is up to the challenge is another issue: 67% of respondents to the Harvey Nash/KPMG CIO Survey 2019 believed that a lack of people with the right skills was preventing their organisations from keeping up with the pace of change. xviii
The undeniable impact of automation on the finance profession requires finance professionals to embrace change. Yet organisations tell us that they struggle to reap the promised benefits of technology and that their staff are not up to the digital challenge. Could this be a result of systemic underinvestment in people? We set out to explore this further, through a global survey and conversations with leading employers.
