How is the controller function affected by digitalization?
Professor Lukas Goretzki at the Stockholm School of Economics, is researching this question, since the controller function is certainly affected to a significant extent. ”The only constant in the controller function is change,” Goretzki says. So then, is there a future for controllers given digitalisation and automation?
What are the biggest Challanges for controllers today?
"I think the biggest challenge is to really understand what digitalisation means for the sector, department and organisation in which you are active," says Lukas Goretzki. The term "digitalisation”, he explains, can mean many different things, depending to a large extent depends on how far the company has come in the process.
Many companies, Goretzki says, see digitalisation as a monster: a potentially transformative, disruptive creature that they do not want to concern themselves with.
"As a result, companies may consciously avoid talking about the digitalisation aspect of new technology implementation. CFOs in their leadership role must be aware of this tendency and actively work to counter it."
This involves developing what Goretzki refers to as "contextualised understanding of digitalisation". In brief, this means making it possible for people in the control function to focus on the most important things and increasing their understanding of how digitalisation can create value in respective roles," he says.
How big an issue is competence?
"Controllers don't need to be IT or computer experts as such, but it is essential for them to have a basic understanding of new technology and how it can be used to improve the way tasks are carried out. They must also start to think ways to collaborate with other ‘information-handlers’ in the company, such as data scientists.”
Goretzki and his fellow researchers have observed that many companies do not know how to exploit the competence and insights of data specialists, or how this knowledge can create value in different decision processes. They have also noted that this lack of awareness can sometimes result in what is known as "competitive boundary work" – when people or departments set up and maintain boundaries towards others so as to protect themselves and retain their legitimacy.
"Even if this behaviour is understandable, it takes a lot of energy from the organisation and prevents the creation of synergies between different groups," Goretzki says. "Redefining the controller function must therefore be part of the digitalisation process, both at group level and at the individual level.”
How will controllers work in the future?
"The only constant in the role of the controller is change. This might sound like an empty phrase, but I believe it to be correct. A rather provocative question that is sometimes discussed is whether the role of the financial controller will still exist in 10 or 15 years. I think it will, though it will certainly change. We must remember that today's controllers carry out different tasks compared with 20 years ago.”
Previously, Goretzki points out, a controller had to be something of a "jack-of-all-trades". Any management team issue also ended up on the controller's plate – whether it belonged there or not. Used properly, digitalisation can make a difference here.
"New technology will help the controller to eliminate much of the routine and less value-adding work, and to become a strategic business partner. This means controllers will potentially have greater influence in the decision-making processes in which they are involved."
What has been your most exciting discovery?
"How important Excel files and spreadsheets are for controllers – even among large multinational companies. In the academic world, we talk about 'Vernacular Accounting Systems' (VAS). VAS can be described as systems of numbers and flows often made by the controller, which are adapted and developed for one specific workplace.
VAS, he adds, are all about the controller’s own view of the world, reflected in the accounting figures which are calculated and presented in the spreadsheet.
"Our study shows that even if companies often criticise VAS and try to replace them with global standardised systems, they can still be useful in the development phase, helping to give a result that is both local and global.”
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