Are robots going to destroy the finance function?

Are robots going to destroy the finance function?

Recently I hosted a roundtable with CFOs and Finance Transformation officers of prominent Dutch organizations around the topic: “Are robots going to destroy the finance function?” The roundtable was part of Finance Transformation 2016, an event organized by Alex van Groningen. The discussion was a fascinating one and revealed several interesting facts, opportunities but also threats.

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56% agree AI is a massive opportunity

The event provided a great platform for sourcing the views of finance professionals on what the future Finance Office will look like. When asked ‘what comes to mind when you think about the impact of bots?, answers included “totally underestimated”, “Shared services will become redundant”, “Speed”, “Accuracy”, “Innovation”, “Opportunities”, “Acceleration”, “Transition”, “Operational excellence” and “New functions.” A definite blend of positive thoughts but also concerns.

This response very much aligned with a poll that was conducted earlier that morning in the keynote around the question:”which topic offers the biggest opportunity for your organization?” Artificial Intelligence came out as the number one opportunity with 56% of the votes, followed by Circular Economy (16%), Generation Z (16%), Emerging markets: (9%), and None of the above (3%).

AI will take jobs, but not mine….

Interestingly, when asked “What % of finance jobs will be taken by AI in the coming years?”, the audience settled on a 30% average (with responses varying wildly from 0% to as much as 90%). When asked the same question about their own company the number dropped to 22.1% and focusing specifically on the Professional Services sector to just 21.3%. Does this show that while finance professionals expect their jobs to change, many still have their heads in the sand?

Embrace change to become a strategic player

Everyone around the table acknowledged we’re on the cusp of something big. I firmly believe that everything that’s rules based can be automated – and bots are the ideal candidates to take that role. If you apply this to the areas of responsibility of the Office of the CFO – balancing Compliance with Performance – you can only conclude that it will make a significant impact on the compliance side, and a lesser, but certainly not less meaningful impact on the performance side.

This could be a very positive thing.

Recent studies reveal too much time and effort is spent on standard or unnecessary tasks that don’t add value. Ernst & Young’s study “The DNA of the CFO” states that “56% of global CFO’s cannot focus on strategic priorities because of time spent on compliance, controls, and cost”.

Another aspect is the inability to continue to meet stakeholder expectations. The same EY survey revealed, “47% of global CFOs say their current finance function doesn’t have the right mix of capabilities”. So perhaps accepting some help from bots will free up time to focus on what’s important.

However, organizations will be impacted in different ways and that impact is yet unknown. How they embrace technological innovations in their daily work will help them differentiate and help CFOs become truly strategic players. This is where I introduce a concept that we at Unit4 refer to as the ‘Business Empowerment Maturity Matrix’

The core idea of the maturity model is that finance teams can achieve progressive improvements in their level of empowerment as they advance from one maturity level to the next. Lean accounting and quick, compliant statutory reporting will result in better data and more time for value-adding activities. It recognizes four stages:

  1. Standardize accounting transactions and procedures for accurate and complete data.
  2. Optimize process efficiency by central service lines and compliant reporting tools.
  3. Predict the future and spot opportunities to empower the business for growth.
  4. Drive the future by providing 24/7 intelligence via self-service intelligence models.

It goes without saying that the first two maturity levels (standardize & optimize) will be significantly impacted (for the better) by bots that focus on automating non-value adding repetitive (manual) tasks, reduce manual input and exception management.

However, I firmly believe we are at a stage where technology has the power to amplify people’s skills beyond their natural skills. And this positively impacts organizations that are operating in the third and fourth level of the maturity matrix: Predict or Drive. Here I see an entirely different kind of AI – one that is about augmenting people through providing real-time insightful decision support, giving intelligent recommendations, sensing potential problems and finally prescribing concrete solutions based on best-practice insights.

The team composition of the Office of the CFO needs to change… radically

I asked the roundtable participants ‘what does this mean for you and your team – can you make the jump?’ The group agreed a transformation would indeed need to happen. The biggest hit is expected on the bottom side of the organizational pyramid, the area with people focused solely on transactions. One participant stated this to be at least 50% of the current finance function.

But the top part of the pyramid will be impacted too. The Office of the CFO will need a different composition – with more business skills, and less ‘finance only’ skills. As one participant put it, challenging the finding from EY that 56% of global CFOs cannot focus on strategic priorities due to time spent on compliance, control and cost initiatives: “Is this about ‘cannot’… or ‘want not’ (because they are incapable of stepping up)?”

The group agreed there would be a need for “a new type of people.” To put it in psychological terms: More “yellow,” less “blue.” And that’s needed across the board said one of the participants: “80% of the total population in the Finance office doesn’t meet the criteria of the future. They lack leadership skills, influencer skills, business partner skills, etc.…”.

“We have moved from an industrial- to a data-driven society that’s faster and more volatile, this requires a different mindset and skill. We have been talking about becoming a business partner for years. If you haven’t arrived at this stage yet, you should question whether you will ever get there.”

Where to begin?

One piece of advice seems an open door: Start small, allocate people that ‘like it’ and get started. Some concrete examples mentioned:

  • ASML, a well-known manufacturer of chip-making equipment, suggested running a pilot within the constraints of the finance function to facilitate the creation of data, reporting and process optimization.
  • A Financial Services organization participating in the round-table implemented bots to aid with the credit request process to achieve higher response rates, higher accuracy, and naturally lower cost of processing. “In total credit decisions to a value of $55M are automated this way daily.”
  • and finally, Randstad started a project with a bot they named “Rob,” who focuses on reconciliation of data across various systems – a job very much in the category of “non-value adding, repetitive tasks.” “Rob” is loved so much inside Randstad already that ‘he’ has recently been voted ‘employee of the month.’ Just think about that….

This brought up the topic of ‘redundancy.’ The technology is there; it’s the people that need to make the big shift. While we are all in charge of our own destinies, businesses have to take responsibility for their people too. Not only because of market pressure  but also to avoid reputational damage and decreasing loyalty of people. Change management needs to be planned for, and programs need to be developed to educate staff about their revised (future) roles.

Schiphol Airport, for example, started years ago with people transformation in anticipation of the massive impact automation/robotization would have (and is having) on how they operate. They analyzed their workforce, built specific programs and from there offered targeted skills training. The mobility of staff is vital for success. It’s an essential KPI to monitor. C&A highlighted a similar initiative in their business where Designers needed to step up and become data analytics professionals as well.

And the same needs to happen around the Finance function because things we have always taken for granted are changing right in front of us. The panel offered some thought provoking answers when asked how this will manifest itself:

  • “The term ‘Finance’ will move out of the door, the role will transform into a more commercial function where you bring business insight.”
  • “Shared Services will cease to exist” and “We have to re-assess outsourcing. Outsourcing doesn’t mean ‘not owning the problem,’ it’s still people executing, just different people, but that doesn’t mean it eliminates problems. Bots might be the best of both worlds.”
  • “Accounting processing roles will reduce even further.”
  • “month-end close needs to be considered a given. It should just happen.”
  • “Transactions need to become ‘self-driving’ as much as possible – just think about requisitions of goods and services to the processing of invoices, raising invoices, reconciliation of bank transactions, payroll processing, or for example travel claim reviews and processing.”
  • “Controlling will shift in focus, and some aspects are better off being dealt with by bots – think about project /budget variance analysis, scanning for fraud and inconsistencies, flagging compliance risk or even delivering statutory reporting – all areas where bots will make their inroads.”

A shift is needed in mindset and skills for every member of the Finance Office. The time consumption of the team needs to change from ‘create and process’ to ‘analyse, advise and act’. Mainly that area requires different skills: leadership skills, influencer skills, and business partner skills.

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So back to the original question: “Are Bots going to destroy the finance function?” The conclusion should be no, it’s not about destroying, but about transforming the finance function. The real power will surface when we blend human with AI, allowing finance teams to accelerate the way they step up in the maturity curve and move away from ‘Standardize’ and ‘Optimize,’ to settle on ‘Predict’ and ultimately the ‘Drive’ phase. That’s where 1+1=3 because the combined power of Human and AI can grow exponentially, helping to create the new leaders of tomorrow.

My advice: Start planning and taking first steps. The moment a bot or digital assistant is voted “employee of the month” in your team you know you are on the right track.


Image credits: 85Fifteen