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Report Maps Out How Companies Can Redesign their Finance Function Amid Digital Transformation

25 Aug 2020

Joint release by ISCA, LKYCIC at SUTD, and EY

  • Within the next three to five years, technologies like robotic process automation (RPA), artificial intelligence (AI), advanced analytics/big data and blockchain will greatly enhance decision making and effectiveness of finance functions.

  • More than half of the 11 job roles in the finance function will be moderately to highly changed by technology in the next three to five years.

  • Those in the two most junior roles, which are likely to be displaced by technology, can explore job transition pathways within and beyond the accountancy profession. 

Technology is an enabler that will increase the effectiveness and value-add of finance functions. Within the next three to five years, more than half of the job roles in the finance function of companies in Singapore will  be moderately changed by the adoption of technologies like robotic process automation, artificial intelligence (AI), advanced analytics/big data and blockchain. While the two most junior roles, the Accounts Executive/Accounts Assistant in the Financial Accounting (FA) track and the Accounting Executive in the Management Accounting (MA) track, face a high likelihood of being displaced by technology, there are opportunities for them to transition to other roles within and beyond the accountancy profession.

These are findings from a study conducted by the Institute of Singapore Chartered Accountants (ISCA), Lee Kuan Yew Centre for Innovative Cities (LKYCIC) at the Singapore University of Technology and Design, and Ernst & Young Advisory Pte. Ltd. (EY). Titled “Redefining the Finance Function with Job Redesign”, the report serves as a guide for companies as they re-calibrate job roles in the finance function while undergoing business transformation to adapt to the changing business environment.

These findings are important especially as the COVID-19 global pandemic has accelerated the pace of digital transformation. In the next five years, the World Economic Forum expects machines to perform more than half of all workplace tasks1. In Singapore, the Government has brought forward its digitalisation plans and increased the projected spend on Information and Communications Technology (ICT) procurement in Financial Year 2020 up by 30 per cent from the previous year2.

To thrive in the New Normal, companies need to accelerate their business transformation efforts to enhance their competitive capabilities as well as capture and deliver greater value. This will involve undertaking job redesign to better align roles with the changing business environment. This study illustrates how job roles in finance functions in Singapore can be redesigned to respond to technological changes in the next three to five years, and to optimise collaboration between humans and machines. The study also recommends pathways for job transitions within and outside of the accountancy profession and identifies the emerging skill sets that employees should have to meet changing job requirements as well as the skills gaps that need to be bridged in job transitions.

Mr Lee Fook Chiew, ISCA’s Chief Executive Officer, said: “With this study, we aim to support employees in steering through the impending changes to their job roles and the changing demand in skill sets. This is especially pertinent in light of the Covid-19 crisis, which has hastened the pace of digital transformation.”

“We hope that this study can enhance business leaders’ understanding of the role of technology as an enabler in job redesign and spur enterprises to adopt new technologies. Technologies such as A.I. and big data can enable faster decision-making and process optimisation, which can sharpen a company’s competitive edge and heighten its business performance. With digital tools such as RPA, finance processes can be redesigned to achieve greater efficiency and productivity, enabling the finance function to focus on business-critical processes.” added Mr Lee. 

Mr Poon King Wang, Director – Lee Kuan Yew Centre for Innovative Cities at the Singapore University of Technology and Design, said: "The LKYCIC is pleased to collaborate with ISCA and EY. Our task research complements and expands the value of the investments in skills that companies and governments are making. Tasks target the concrete steps leaders and employees can take together to reskill and upskill. This is especially crucial now, as leaders and employees expand beyond their conventional expertise to tackle growing business complexity and to become more versatile and resilient against crisis and disruption. In this collaboration for example, ISCA, EY, and LKYCIC identify specific tasks, skills and competency levels for the emerging and adjacent roles needed for the future.”

Mr Samir Bedi, EY Asean Workforce Advisory Leader, said: “The accelerating technological adoption in the finance function will impact jobs at all levels, from displacing junior data entry roles to catalyzing the evolution of the CFO’s role. Finance leaders recognise the urgency of planning and managing this transition, as disruption is already happening and will pick up over the next three to five years. The key is to systematically analyse the extent of impact on each task, while supporting employees to upskill and move into higher-skilled roles. Organisations will need to understand both the job skills and tasks in order to successfully map the job transition pathways within and outside the accounting sector.

Implications for Entry-level Finance Roles
Apart from the finding that current junior roles will be displaced by technology, the study also found that finance tasks performed by those in junior roles will shift towards providing insights from data analytics and providing input to train machines.

To guide companies in redesigning roles for junior finance executives, the study mapped out Job Transition Pathways and Lateral Transition Pathways for these individuals. First, these roles can be upskilled to assume next-level roles, for example as accountant, senior accounts executives, financial planning and business analysts. Second, the two most junior roles may converge, as new technologies take over more tasks in both FA and MA tracks. Third, both roles could move to the Internal Audit track to take up the Senior Internal Auditor/Internal Auditor role. These suggestions are aligned with pathways in the national Skills Framework for Accountancy.

The study also suggests lateral transition pathways outside the accountancy profession. The FA Accounts Executive/Accounts Assistant can explore transitions to Clinical Data Manager, Business Intelligence Analyst or Customer Service Representative. The MA Accounting Executive can consider transitioning to Quality Control System Manager, Logistics Manager or Compliance Manager.

These options are generated using an algorithm, based on maximising the overlap in tasks and minimising the number of dissimilar tasks which would require training, considering both the nature of tasks and degree to they are core or supplementary to the job role such that similar core tasks are given greater weightage. The algorithm also prioritises roles which are more resilient to automation as well as those belonging to high-growth sectors which are in greater demand.

Implications for Mid-Level Finance Roles
While digital solutions provide useful outputs, human intervention remains essential, such as in the areas of problem-solving, exercising commercial acumen, identifying strategic insights and conveying them across the organisation. Another aspect would be to manage the digital systems, troubleshoot, validate outputs, and ensure compliance with internal policies and controls. Hence, the impact of technology on mid-level roles such as Finance Manager, Financial Planning and Analysis Manager, and Treasury Manager, will be more measured.

Mid-level roles will require redesign to incorporate use of digital tools. For example, the Finance Manager’s role in supporting the organisation as a business partner will be enhanced through leveraging advanced analytics/big data and AI. Their role will shift towards problem solving and using digital tools to respond to business issues. This will require Finance Managers to upskill in utilising emerging digital solutions.

Implications for Senior-Level Finance Roles
While the most senior roles are least impacted by emerging technologies, with change happening more incrementally, there is still a shift in their role.  

As the finance function becomes increasingly digitalised, senior-level roles will be expected to address a growing need to provide insights on-demand rather than periodically, respond increasingly with greater agility to fast-changing business environment, as well as to collaborate more closely with other business units such as the information technology department to maximise the potential of technology. It will become vital for them to know about these digital tools and their usage possibilities relevant to the business.

At the senior level, the Chief Financial Officer (CFO), for example, will move away from being the custodian of financial reporting to focus on optimising resources for business growth. New technologies enable predictive and prescriptive analyses which, when combined with the CFO’s established stakeholder management skills, experience and personal influence, can elevate the value-add of the finance function.

Implications for Human Resources  
Employers will need to rethink their strategies regarding recruitment and talent development. Concurrent with the diminishing of junior roles is the demand of the emerging millennial workforce for higher-skilled roles as fresh graduates, armed with increasingly higher and diverse qualifications, enter the workforce. This synergises with the emergence of technologies such as AI, blockchain and advanced analytics/big data processes, which require different skill sets from employees, in addition to competencies in accountancy.

Greater clarity on training courses, especially in defining learning outcomes and key takeaways, would help accountancy and finance professionals evaluate the costs and benefits of the time and money involved in undergoing upskilling and reskilling. Training courses could be tailored to meet the specific needs of employees, if companies and employers are able to identify the exact tasks their staff need training for.

Implications for SMEs
Technology adoption often comes with a high price tag, to the detriment of small and medium-sized enterprises (SMEs).

SMEs may face challenges such as a lack of clarity regarding the relevant return-on-investment and/or a lack of data for model-building, which weaken their motivation to make the requisite investments. To help SMEs better cope with the issue of funding in relation to technology investment, monetary assistance schemes for SMEs are available and can be more actively promoted to potential candidates. SMEs themselves can also be more efficient and effective in their transformation efforts, such as by specifying exactly the tasks that their workers are already equipped to perform, and the new tasks and corresponding skills they must be trained in.

If companies are unable to fully automate tasks, they could also explore the option of right-shoring certain finance tasks or roles.Right-shoring is based on establishing competitive advantage and enhancing value to the business by bringing operations closer or back to home base. This involves outsourcing simple and manual-intensive work processes while retaining higher-value roles locally. This could be an alternative for SMEs who may find it difficult to justify the return-on-investment in technology.

Scope of Research
The scope of research in this study covers common job roles in the Financial Accounting (FA) and Management Accounting (MA) tracks of the finance function that are found in most companies in Singapore. The study references the Skills Framework for Accountancy, in which a total of 11 common job roles were mapped out for the finance function. There are six roles within the FA track, four roles within the MA track and the CFO role that oversees FA and MA tracks. The research focused on companies in Singapore from the top five industries based on percentage share of Singapore’s Gross Domestic Product contributions in 2019. They are Manufacturing (22.0%), Retail & Wholesale Trade (17.6%), Business Services (14.9%), Finance & Insurance (13.0%), and Transportation & Storage (6.7%).

For companies which have not started on their digital transformation journey, this study aims to raise awareness of the imminent impact of technological changes on business. For companies which are ready to undergo business transformation, this study can serve as a guide to help them redesign their finance function.

For companies which have started on digitalisation of their finance function, the findings provide a reference point to validate existing job redesign initiatives, uncover blind spots and fuel considerations for improvements.

View the full report on Redefining the Finance Function with Job Redesign.
 


1 Cann, O., World Economic Forum. “Machines Will Do More Tasks Than Humans By 2025 But Robot Revolution Will Still Create 58 Million Net New Jobs In Next Five Years”. 17 September 2018.

2 https://www.tech.gov.sg/media/media-releases/thirty-percent-increase-fy2020-ict-spend-to-accelerate-digitalisation-and-support-businesses

About the Institute of Singapore Chartered Accountants

The Institute of Singapore Chartered Accountants (ISCA) is the national accountancy body of Singapore. ISCA’s vision is to be a globally recognised professional accountancy body, bringing value to our members, the profession and wider community. There are over 32,000 ISCA members making their stride in businesses across industries in Singapore and around the world.

Established in 1963, ISCA is an advocate of the interests of the profession. Possessing a Global Mindset, with Asian Insights, ISCA leverages its regional expertise, knowledge, and networks with diverse stakeholders to contribute towards Singapore’s transformation into a global accountancy hub. ISCA is the Designated Entity to confer the Chartered Accountant of Singapore – CA (Singapore) - designation. ISCA is a member of Chartered Accountants Worldwide, a global family that brings together the members of leading institutes to create a community of over 1.8 million Chartered Accountants and students in more than 190 countries.

For more information, visit www.isca.org.sg.

About Lee Kuan Yew Centre for Innovative Cities (LKYCIC) at the Singapore University of Technology and Design

Established since 2012 in the Singapore University of Technology and Design (SUTD), the Lee Kuan Yew Centre for Innovative Cities (LKYCIC) is a university interdisciplinary research centre of excellence to advance understanding of the critical issues facing cities, and leverage on technology, design and policy to identify evidence-based solutions for effective urbanisation. The Centre collaborates with leading experts and academic researchers at SUTD and other institutions across different disciplines in the study of urbanisation and cities.

For more information, visit lkycic.sutd.edu.sg.

About EY

EY is a global leader in assurance, tax, strategy, transaction and consulting 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.

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