Finance function of the future

By Adrian van der Merwe, CEO North Wind Digital

The starting point for any accountant is the avoidance of risk. I say this because my background is in accounting – we typically approach work by saying that if the current system is functioning fine, there’s very little reason to change it.

That said, the pressures of the Fourth Industrial Revolution are putting more and more pressure on finance people to provide more detailed insights – faster and more efficiently. With that comes risk – look at the importance of providing accurate information in the case of Steinhoff and the fraudulent reporting that brought about the VBS Bank situation which has had massive negative impact on millions of already-struggling South Africans.

The rise of Cloud Computing, Robotic Process Automation and increasing adoption of Blockchain technologies can solve many of these problems – but not without creating conversations around the impact on the number of employees who could find themselves out of a job, as a result.

Instead of using in-house platforms, a company’s data centres can be moved onto a cloud-based system which doesn’t require a significant capital investment – there are no data centre overheads and consulting costs come down, because of the more standardised approach that cloud delivers. Debtors or Creditors functions follow the same methodology, regardless of the business type, so rather than preaching expensive and unnecessary customisation, software vendors are able to supply standardised solutions that are simply scalable. By going that route, clients are have access to world-class finance platforms at a fraction of the historical cost.

Having said that, because it’s now ‘software as a service’, clients can easily migrate between vendors because of this standardisation – moving is really just a question of migrating data. Instead of spreading the capex investment over three years, they now also have a monthly subscription cost, effectively allowing them to function in an operating lease environment, depending on how the accounting codes are applied. This massively reduces the financial overheads and support structures required by IT.

Robotic Process Automation (RPA) massively reduces mundane, manual, iterative processes and therefore has an impact on staff resource requirements – it cuts down on the number of required debtors or creditors clerks and makes the finance function more efficient, with fewer resources. This raises an important socio-economic discussion in a country with massive levels of unemployment. We don’t want people losing jobs, but it’s problematic for corporates experiencing headcount freezes and asking fewer people to do more work, already. Perhaps a solution is to tax corporates on what they’re saving by automating processes and have them put that money into the education system instead?

In a complex organisation where transactions lack an audit trail, Blockchain can deliver an effective solution, if its implemented properly. While the obvious application is in the financial services sector, there is potential in many other sectors as well. In many of those other industries, the question is around who pays for the Blockchain solution – the customer doesn’t want to pay more and the service provider doesn’t necessarily see why they have to foot the bill either. There’s an opportunity there for start-ups to provide the service – when customers start seeing the value in terms of the trustworthiness of the data they’re getting because there’s no room for manipulation – perhaps that’ll be the tipping point.