As a finance transformation director with PwC Ireland, Ruth McNamee spends her time working with finance teams in Irish businesses. Her team works with clients from a broad range of industries, across the public and private sectors.

Regardless of the sector or the industry, however, McNamee and her colleagues keep encountering the same issue: many finance teams are so busy dealing with the “here and now” that they are struggling to prepare for the future.

The way McNamee sees it, finance teams have been in “firefighting mode” in recent years, helping navigate their businesses through a host of disruptions – from the pandemic to inflation to supply chain volatility.

However, McNamee believes that if they are to really boost value for their companies, finance teams need to get used to this “new norm” and become more proactive and more strategic in the operation of the business.

Rather than just reporting the numbers, McNamee believes that the finance department needs to be forward looking and pre-emptive; she argues that the role of the chief financial officer needs to evolve into the role of chief value officer, providing trustworthy data, analysis and insights.

In many cases, McNamee said this will involve the department hiring in different skill sets, upskilling existing team members and being ahead of the business. 

“Too much time is spent reporting on the past, and not looking to the future” McNamee said. “That has to change.”

But how can finance teams overcome the barriers holding them back? What additional skills do they need to shift focus? And what steps do companies need to take to transform the finance function?

Skills gaps, technology, and the future

In recent months, PwC has been working with ACCA and Chartered Accountants ANZ on a survey of finance professionals around the world including in Ireland. The report, “Finance Evolution: Thriving in the next decade”, was published in recent days and highlights the need for finance functions to reassess their roles within organisations.

The report suggests that the finance function needs to become more strategic, with just 22 per cent of Irish CFOs having a fully developed vision for their finance function over the next three to five years. This compares with a figure of 29 per cent for their global peers.

Meanwhile, just 13 per cent said that the concept of “value and purpose-focused accounting” significantly influences the strategy of the finance function, far behind the global average of 31 per cent.

The survey revealed that Irish CFOs believe that technology and lack of investment are the key barriers to developing the finance function of the future.

For McNamee, the key issue is around vision.

“You can only take the steps forward if you actually know where you are trying to get to,” McNamee said. “Finance must enable the organisation to achieve its long-term strategy. When shaping the vision and strategy for Finance, it’s essential that the organisation’s goals are clear, embraced, and well-understood. They need to be hand-in-hand.”

McNamee argues that the finance department has to become more proactive within the organisation, and ensure that it is not just reporting on historic numbers.

“Finance deserves a seat at the boardroom table, they are guiding tough decisions and steering the organisation as well as supporting the CEO. They need to provide trustworthy information that will take the organisation forward and enable it to take pre-emptive action,” she said.

Key to this, according to McNamee, is providing “insights, data and feedback” that will lead to more critical thinking. In many cases, she said that this will involve interrogating data to model different scenarios for the future.

“It is about helping the decision-making process,” McNamee said. “Finance functions have come through a tumultuous period where they have been constantly firefighting. Now, they need to create a balance between what is urgent in the short term and the long term value creation agenda.”

According to the survey, some 31 per cent of Irish finance functions have a lack of understanding of the areas where the finance function can add value to the business.

McNamee said that this number is stark, and requires the function to link more closely with other functions within the organisation rather than just operate on a siloed basis.

She said that the finance department needs to align with the wider strategy of the business and then provide forward-looking insights and analysis to support the growth agenda.

“They need to think about where the value is,” she said. “Can the finance function bring forward predictive data? Can they take scenario modelling to the next level? Can they build trust in AI-generated content? Can they bring different viewpoints to the table? And that is where they can add real value in the organisation.”

A big barrier to achieving this, however, is technology.

According to the survey, almost half (46 per cent) of Irish respondents believe that current technologies do not meet their organisation’s needs, and are a much greater barrier to enhancing the role of the finance function compared to global peers (30 per cent).

At the same time, three-quarters of Irish respondents believe that AI could be a useful tool for data mining and analysis activities.

McNamee said that investment in the finance function should be seen as an investment in growing and scaling the company.

“It’s pivoting the function from transactional processing and reporting to being insight-driven and forward-looking. Gen AI enhancements are focusing on areas of finance e.g. planning and forecasting, which have traditionally in the past actually not had much technological investment,’ she said. 

In addition to technology, the report also suggests that Irish respondents are more concerned about the skills gaps in key areas compared with their international peers.

However, McNamee said this can be overcome by hiring different skills and not just recruiting accountants in the finance department.

“We’re seeing the hiring of more data scientists and engineers into the finance function, highlighting the changing skill set required. You still need traditional accounting skills, but you need to supplement the overall function with different skill sets,” McNamee said.

McNamee said it is crucial that finance functions are more agile, and evolve as the business evolves. “They need to react quicker,” she said. “You can’t wait for two weeks to get your month-end results anymore. You need to be able to support the organisation in making decisions quickly and that is where they need the right data. They need to be pre-emptive, they need to be forward-looking. They need to see the risks that are coming down the tracks and plan for those.”

McNamee said that the finance team has a pivotal role to play in reporting on past numbers. However, she said the real value lies in swiftly moving beyond these tasks to focus on extracting and leveraging insights from the data.

Overall, McNamee said that companies have to invest in technology and people to help the evolution of the finance function. “More investment is needed,” she said. “And that investment will pay off.

Planning for growth

McNamee accepts that the finance team have been seen as the “number crunchers” in the past, the accountants who keep a beady eye on costs and spending.

In the future, however, she said the function should be seen as a driver of growth, and not just counting costs. With the right technology and the right skill sets, McNamee said that the finance team should be working “hand in hand” with other C-suite executives on developing and implementing the company’s growth plans.

She said that advancements in the field of AI and automation should free up time for finance teams and allow them to concentrate on where they can add value. Much of this will focus on developing insights by analysing trends and data, she said.

“The finance function of the future needs to be able to combine disparate data sources, which is going to mean structured and unstructured information, both financial and non-financial information, internal and external data, in order to bring insights,” according to McNamee.

She gave the example of a finance team modelling demographic trends in potential new markets and the changing nature of existing markets. “Will they still be selling into their current markets in 10 years, or are the demographic shifts really going to change their businesses? And that needs to come from finance – they can support the businesses in interpreting those data sources,” she said.

Another example, she said, was looking at the data to spot profit trends in customers, products, markets etc. and where margins are under threat. “AI will support this but it needs to be driven by the finance team,” she said.

However, McNamee stressed that the transformation of the finance function had to be driven by a clear strategy and a distinct vision.

She said that the finance department needs a clear understanding of how they can support their organisation and how they can create value.

To achieve this, she said that companies need to create a roadmap to develop the right skills and the right technology to enable the function to develop and transform.

“If you don’t move now, one of your competitors will move ahead of you. The survey shows that Irish finance functions are behind. They need to push on and to do that, they need to be clear about where they are going,” McNamee said.

AI and the future of the finance function

A recent report by PwC found that finance departments are well-positioned to be the driving forces behind GenAI and can provide significant momentum for business through a strategic GenAI agenda.

The report, “What the democratisation of AI means for the transformation of Finance”, found that GenAI is transforming the finance sector, positioning CFOs as ‘Architects of Change’. It said that the key steps for leveraging GenAI include setting a strategic agenda, identifying valuable use cases, enabling employees, and implementing a long-term operating model.

Ruth McNamee said that the finance activities with the greatest potential for AI integration that PwC is seeing coming out of the survey are data mining and financial planning and analysis.

McNamee said that companies should experiment with GenAI to see how it can be used and where it can create value. However, she said that companies need clean data to get the most of the emerging new technologies.

“The data in the organisation needs to be clean, and it comes back to the traditional foundations of any function, which is your processes need to be streamlined, your data needs to be clean in order to enable you to get the insights” she said. “That’s what we’re seeing now in Ireland, finance functions actually need to focus on those foundations first of all and get them right before they can move forward and really extract those insights.”

This article is partner content and has been produced in association with PwC.