What role could the finance function play in a 4.0 world?

Transcription

1 What role could the finance function play in a 4.0 world? April campaign 2017 The better the question. The better the answer. The better the world works.

2 Contents 1 2 What role could the finance function play in a 4.0 world? About EY Page 2

3 What role could the finance function play in a 4.0 world? Page 3

4 The finance function in a 4.0 world Digital disruption is accelerating and is anticipated to impact all industries to varying degrees. Smart technologies will likely redefine industry and operating models. Automation may continue to replace manual work, while also creating new jobs and sectors. This automation is likely to help to aggregate and analyze vast amounts of data to generate new insights. To be prepared for a 4.0 world, finance leaders should understand how technology is anticipated to evolve and impact the finance function. Page 4

5 The finance function in a 4.0 world The business environment has constantly faced technological change: The first industrial revolution introduced water and steam power The second, electric power And the third, electronics and information technology As we enter the fourth industrial revolution, with rapid developments in digital technology, finance functions and their leaders should plan to respond to disruption and the way it is affecting them. Page 5

6 The finance function in a 4.0 world The finance function should address: How could digital technologies change the finance operating model? How might this impact the size and shape of finance? How might reporting change in a 4.0 world? How does finance communicate the value of what the company generates to its all stakeholders? What type of people may be needed in future finance? FAAS can support you on this journey to understand how you can take advantage of new technologies. We can help you as you develop reporting to meet your stakeholders needs and support you, as your organization evolves, to keep pace with innovation and meet the increasing demands for business insight and strategic guidance. Page 6

7 Managing communication in a 4.0 world A new role for the finance function A key role of finance is to communicate the value of the organization to its stakeholders to help them make decisions. However, what should be measured and communicated has changed considerably over recent years with the increasing importance of intangible assets (e.g., brands, patents, IT and knowledge), which are often not recorded in the same way as tangible assets. Accounting and reporting systems do not always support intangible assets, which may lead to a value gap that can undermine the completeness and relevance of financial performance and reporting. Stakeholders increasingly seek real-time information, including future trends in strategy and how risks are being managed, which the annual report does not provide. The finance function in a 4.0 world should evolve to deliver more relevant information, more quickly and with a forward-looking view, to meet the needs of shareholders and stakeholders alike. Page 7

8 Managing accounting and regulatory change Companies face an increasingly challenging reporting environment as a result of the pace of accounting and regulatory change. Furthermore, there is often a disconnect between information available internally to managers and that provided externally to investors and other stakeholders. The advent of big data and advanced analytics capabilities, coupled with the rise of new technologies including robotics and artificial intelligence, provides opportunities to: Enhance transparency Produce more relevant and insightful financial and non-financial reporting Further standardize and automate reporting Page 8

9 [optional] Key considerations for the CFO As the CFO, when planning how your function will be fit for a 4.0 world, you should be considering: How might the finance function respond to business disruption in the digital age? What will be the size and shape of finance in a 4.0 world? What could be the role of the CFO of the future? What type of people may be needed in future finance? How can the finance function provide trust over nonfinancial data? How can we explain long-term value to our stakeholders? Page 9

10 [optional] Key considerations for the financial controller As the financial controller, it is likely that you will be responsible for making sure that the finance team can operate in a 4.0 world. You should be considering: Is your reporting fit for purpose to meet the challenges of the future business environment? How can you meet increasing regulatory and compliance requirements? Do you have the right people, with the right skills, in place? Do you understand your future technology requirements to support reporting? Page 10

11 [optional] Key considerations for the treasurer As the corporate treasurer, you may have some specific considerations: Do you know who your stakeholders are in a 4.0 world, as you could be required to become more integrated with the business? How can regulatory change and increasing risks (operational and competitive) impact your treasury organization? Can you manage these to support a competitive advantage? Can you access data and provide projections in the way and in the time frame your stakeholders demand? Can you provide a future view? Page 11

12 How can the finance function prepare for a 4.0 world? With the emergence of digital technologies such as analytics, cloud and robotic process automation, finance leaders should consider evolving the finance team capabilities and adopting new tools, processes and procedures to be ready for a 4.0 world. Data and analytics can provide the finance function with the tools to provide more insight by extracting value from large amounts of data. This can help the company evaluate predicted outcomes to better understand the financial impact of key decisions. Cloud technology can provide the opportunity for organizations to replace outdated, fragmented and inflexible legacy systems with a connected, flexible system. New risks will need to be managed, including data security and compliance in different regulatory regimes. Robotic process automation (RPA) tends to be a fast, reliable and always-present method that can replace routine manual processes. This work may provide a more efficient audit. AI makes sense of large structured and unstructured data sets. It can recognize patterns and learn and adapt to new accounting or tax regulations. Blockchain records transactions using a distributed ledger, which gives every network participant a secure audit trail of all transactions ever made in near real time. It allows trade directly between parties without the need for intermediaries. Page 12

13 The size and shape of finance is anticipated to change Page 13

14 Why EY The future for all organizations is uncertain, but we believe that digital disruption is coming. The environment for the finance function is increasingly complex and fast-moving, and that pace is likely increase. Having a better understanding of what the future could hold, and starting to work with your stakeholders now, can help your finance function have a smoother transition to a finance 4.0 world. FAAS can support you as you refresh your vision for finance to be ready for a 4.0 world. Certain services and tools may be restricted for EY audit clients and their affiliates to comply with applicable independence standards. Please ask your EY contact for further information. Page 14

15 Why EY Our highly integrated multidisciplinary teams can help you: As you address the disruption that you may begin to face Understand how new technologies and analytics can support you as you meet the growing needs of your stakeholders, whether it be for more nonfinancial information, for real-time data or for a view into the future. Assess the overall health and maturity of the finance function in light of today s disruptive technologies Define your digital finance journey and the impact on the financial reporting operating model Identify key stakeholders and the financial and nonfinancial outcomes they may desire Meet current and future operational and reporting requirements As you design and implement the changes required Page 15

16 About EY Page 16

17 Financial Accounting Advisory Services EY contacts Americas Myles Corson Europe. Middle East, India and Africa Mike Cowan Asia-Pacific Geoff Rooney Japan Yoji Kawato yoji.kawato@jp.ey.com Page 17

18 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com EYGM Limited. All Rights Reserved. EYG no GBL BMC Agency GA ED None In line with EY s commitment to minimize its impact on the environment, this document has been printed on paper with a high recycled content. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice. ey.com