We often talk about technology in terms of its broad application: to the world, to an organization, to an individual. In reality, adoption of technology occurs in pockets, and at strikingly different speeds.
Accounting, and in particular the Accounting employee, is looking for its place on the technology curve. But, unlike certain functional areas where training presupposes a technological penchant, accounting is focused on knowledge of GAAP, risk management, and process. Of course, there are technological tools that make those areas easier to manage, and the rising tide of technology improvements means that younger employees are entering the workforce more technology proficient than before.
"Value in Accounting is created by identifying repetitive tasks, boxing them into a framework, and automating them"
In some sense, however, Accounting is scrambling to catch up. And arguably it is an area of the organization that, with growing demands upon good, clean data for actionable decisions, needs to get ahead of the curve.
This is in part because Accounting leadership often comes from the “old school” mentality of paper documentation, human processes, and risk management. While the future likely entails Accounting leadership that fully embraces technology (as a matter of necessity if nothing else), only the best and most dynamic of the “old guard” are capable of changing with the rate of technology or more importantly, imparting that change upon their workforce. Think Blockbuster video right when the Netflix wave arrived.
Since all organizations are not capable of acquiring this scarce, senior leadership, who fills the void?
For sure, one alternative manifests through growing demand for operational, analytic, or legal-minded leaders to manage the Finance team, whether at the CFO level or otherwise. We have all read article upon article referencing “The changing role of the CFO” to be a more strategic, data-driven thought leader. And while this is often a meaningful solution, the heart of transaction processing and a critical data creator, Accounting, sometimes creates processes in a silo without clear sights as to how to pass the baton to Financial Planning and Analysis (FP&A), Business Analysis, and Management in the most productive manner.
As business leaders, we want peak optimization of our business, which requires peak optimization of Finance, which requires a strong, forward looking, and technology-driven Accounting team.
By now you may be thinking, “Let the technology guys handle technology, and let the Accountants worry about GAAP.”But in practical terms, let’s chart this out. Let’s take a transaction and consider the constituents.
Company A, a private equity backed company, has a sales team that sells widgets, of various shapes, sized, and colors. As the company continues to grow, the average widget buyer demands new capabilities – they want insurance on their widgets, or customized widgets, or electronic add-ons to their widgets.
Sales wants more to sell. Finance wants to sell more without suffering capacity constraints. Management wants Sales to sell more (assuming the ROI is there) but also wants Finance to scale as efficiently as possible. The missing piece is technology.
Shouldn’t a great IT/Ops team solve the “Finance scaling efficiently” issue? In theory, “yes”, but in practice the answer is “only partially.”
A growing business evolves very quickly. And while you can bring the right players to the table for the corporate good, all players have to be forward-looking to end up with a corporate forward-looking result. After all, a data pipe does you no good if you can’t extract meaningful information from all connection points.
To make matters more complicated, a top-notch Accounting employee will often seek to do what is perceived to be the right thing to get the job done no matter what the workload, irrespective of long-term viability. To be most successful, we need to instill a computer programming mindset into the Accounting employee.
Your accounting processes are a computer program. Your one-offs, un-vetted customizations, and lack of strategic insight will cost you big time. Ultimately, you’ll end up with a big sloppy program that needs to be continually rewritten and breaks when the business make seven a subtle change in strategic direction.
To accomplish a uniform, efficient growth mindset for the Accounting team, endorse the following structure:
• Be mindful about mastering new systems you employ – better mastering one implementation than drowning in three
• Each team member “owns” a sub-area — plowing through transactions alone is not good enough, results in sub-areas matters more
• Support the team members with regular interactions with software vendors, internal systems leaders, and IT
• Reiterate, reiterate, reiterate ownership and results over transactional might
• Reward your employees – one results-oriented employee is worth more than 2 transactional employees. Don’t wait until your best employees realize that.
• Consider what type of employees fit your structure: will they understand/buy-in owning results and efficiency if they have worked in prior models that did not espouse such a framework?
• Are your employees, problem solvers or doers? Will doers accomplish the goals you set with your Board? The answer is likely no. Hire problem solvers.
Perhaps more than ever, raw Accounting skills and work ethic are only a part of the equation toward building a succeeding Accounting team. Particularly in the context of private equity/venture capital backed companies, where intensity increases, the world moves faster, and value-creation is paramount across all departments of the business, the ability to deal with ambiguity and bring it to a viable solution is invaluable.
But let us not be nearsighted. These skills are coveted in any context, in any business. So while they may not be quite as prevalent at a large, public, Fortune 500 Company, where value is measured more closely with insurance/risk management for the organization, the tides are turning as technology is often a substitute for repetitive tasks. And investors of any type crave results.
It may be of benefit for the modern day Finance leader to get ahead of the trend, and recognize that value in Accounting is created by identifying repetitive tasks, boxing them into a framework, and automating them. Doing so frees human capital to focus on what is truly coveted: efficiency, accuracy, and throughput.