
- Start date
- Duration
- Format
- Language
- 14 May 2025
- 9 days
- Class
- Italian
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By adopting technological and organizational innovations, the Finance Administration and Control function can be even more strategic in a company
Analytics, blockchain, advanced robotics: in companies today, every aspect of the way people work is becoming more permeated by new digital technologies and the enormous quantity of data made available by these technologies. The Finance, Administration and Control function is also directly affected by the ongoing change, at the level of both structure and skills – so much so that more and more often we hear talk of an actual Finance Evolution enabled by digitalization.
To fully grasp the evolutionary dynamics at play, we need to take a closer look at what the real impact of digitalization is in individual companies. Is it simply about integrating new tools in well-established processes with little added value? Or is it total, systematic revamping of the activities that the Finance Function performs? A transformation that leads to extending this department’s range of action and overall role in strategic choices?
In fact, the Finance Evolution has a dimension that is not only technological, but organizational as well. What’s more, the type of information (hence decision-making) that’s available/possible thanks to this evolution may be limited to financial indicators relating to the company’s business, or could instead encompass other kinds of data, even data external to the company. This would expand the scope of change considerably.
To understand the concrete effects of the Finance Evolution, we interviewed the Chief Financial Officers (CFOs) of 16 Italian companies and Italian divisions of international groups. Our primary aim was to track their progress in terms of adopting new technological solutions in Finance Functions. But we also wanted to identify possible drivers of the transformation, both external (at the level of market and individual industry), and internal, within the company. In addition, we examined the processes of organizational alignment and the competencies that the new technologies activate within the functions in question.
Generally speaking, we can characterize the evolution that is underway in light of two fundamental dimensions: the perimeter of change and the scope of change. As far as the perimeter, change can impact various phases in the informational process, depending on the circumstances. As a rule, the greater the variety in the type of data being processed (to include non-financial, non-structured data external to the company), the broader the perimeter of the change. This is also the case when data are used to build predictive models and to make strategic decisions for the entire company.
The scope of change, instead, is defined in both technological and organizational terms. From a technological viewpoint, companies need to consider not only the diverse evolutionary potentialities that new technologies offer for the Finance Function, but also how they can be incorporated in the department itself and in the corporate context as a whole. Integrating new technologies cannot be done without revisiting the company’s IT systems, followed by an assessment of how to modify the pre-existing infrastructure to ensure homogeneity with the innovations slated to be introduced. In addition, innovations made to the Finance Function must be consistent with the overall corporate strategy.
At an organizational level, the introduction of new technologies has differentiated impacts. When processes are automated, normally the company needs fewer blue-collar workers and more highly specialized personnel to fill the growing need for analytical skills. In fact, technological innovation also means the company has to align the necessary competencies in the function: not only technical skills (i.e. relating to finance or data analysis), but also soft skills in terms of managing relationships and communicating new insights outside of the department.
Starting with these dimensions, we can identify four different evolutionary stages of the Finance Function (Figure 1). When innovation is limited to automating single processes, in general inside the function (for example creating a database for the company’s financial information), we refer to Finance Automation. When the change also encompasses a more strategic role for the function, for instance by providing reports and predictions in near real time, we are talking about Finance Integration. One step further and we have Finance Re-engineering, which involves adopting new analytical tools to build models and come up with alternative scenarios to support the decisions of top management. The final evolutionary stage is Finance Transformation, where the Finance Function is a driver of change at a company level, leveraging the analytical and predictive potential of new technologies to the maximum.
The four stages should not necessarily be seen as mandatory transitions for every company. Each one needs to be aligned with a series of external and internal dimensions and variables that taken together constitute the CFO’s approach to digital. One of the most interesting findings of our research also shows that the same technology can be leveraged using different approaches in the various stages. An example is robotic software (RPA), which serves purely as automation in the first stage but can also support process evolution during Finance Re-engineering.
Figure 1 Dimensions of the Finance Evolution
The rising strategic relevance of the Finance Function enabled by the Finance Evolution is also a reflection of the fact that the role of the CFO has gradually been redefined over the past few decades: from a primarily technical position to an essential voice in strategic decision-making in the company.
In each organization, to implement the various levels of Finance Evolution, the role of the CFO is to map out a specific path to change. The first step along this path is to delineate a clear, strategic vision that can translate into a plan for change, which should be continually monitored. In this way, obstacles will be promptly identified and removed as soon as they arise, not only at a technological level but an organizational one as well. Guaranteeing a constant alignment between technological infrastructures, organizational structures and skill sets available in the company will be essential.
Only by carefully and proactively managing the change can companies drive the Finance Function along an evolutionary path that is well-aligned with the corporate structure and with internal and external demands. This will make the Finance Function a key player in decision-making processes throughout the entire company.