Ambrose Shannon explains how CFOs can play a lead role in limiting the future impacts of climate change during what he describes as “the decade of action”. Throughout the summer of 2021, heat waves, wildfires, droughts, and hurricanes served as stark reminders that we should not take our planet for granted. The recently published report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC) has made it very clear that unless immediate and large-scale actions are taken to reduce greenhouse gas emissions, these weather patterns, and the corresponding commercial impacts, will only become more severe. In Ireland, like elsewhere, companies are looking at their own commitments to environmental, social and governance (ESG) objectives (see sidebar) encouraged by both regulatory initiatives and wider societal pressures. For example, the Climate Action and Low Carbon Development (Amendment) Bill 2021 is intended to achieve net-zero carbon by no later than 2050 throughout the entire Irish economy. This entails the introduction of five-year carbon budgets on a rolling 15-year basis. In China and South Korea, where similar measures have been deployed, companies have seen significant impacts on their business models, strategies, and performance. Furthermore, the required Local Authority Climate Action Plans are expected to set out ambitious measures to significantly increase renewable energy production, decrease transport emissions, and reduce the impact of agriculture on the environment. Irish businesses have a critical role in achieving this climate-driven transition. And CFOs can play a pivotal role in areas such as leading strategic reviews, allocating capital investment, securing funding lines, protecting credit ratings and driving sustainable business performance. According to Accenture’s 2021 report, CFO Now – Breakthrough Speed for Breakout Value: 73% of respondents claim that the CFO is best placed to ensure the resilience of the organisation in today’s operating climate; and 68% of CFOs globally are now responsible for ESG monitoring and reporting. And momentum is accelerating. In November, the United Nations Climate Change Conference of the Parties (COP26) will bring world leaders together to accelerate movement toward the goals of the 2015 Paris Agreement. We expect agreement on ambitious goals, meaning that politicians, policymakers, regulators, and investors will need to work together with businesses to deliver on ESG objectives. Failure to act on climate change represents an existential risk to society and the global economy and poses a clear financial risk to businesses themselves. The impetus for business to act is time-sensitive and will likely be driven by four key factors: Governments setting legally binding emission reductions and net-zero targets; Investors and financiers wanting to understand climate-related financial risks and long-term business model viability; Employees placing increased importance on the ESG values and actions of their employer; and Customers placing ever more importance on the sustainability of the products they consume – with many seeking “champion brands”.  For business to meet these demands, CFOs and executives need to create and operationalise a comprehensive ESG strategy. Key considerations Regulators have for some time now warned about the threat that climate change poses to the stability of the financial system. Mark Carney, formerly Governor of the Bank of England, is leading a World Economic Forum (WEF) initiative to explore the risk posed to global financial systems associated with the energy transition. According to the Bank of England, as much as $20 trillion of assets could be at risk from climate change alone. The progress of delivery against ESG transition plans varies greatly from sector to sector and geography to geography. A report by Arabesque S-Ray found that just 25% of public companies worldwide are on track to deliver on their ESG-related commitments. Our research and work in this space suggest that CFOs and the wider finance team are uniquely positioned to guide their organisations in the following ways: Assessing the ESG impact on existing business models. CFOs can play a crucial role in assessing and measuring the potential impacts of ESG on current business operations. For example, identifying and modelling risks could include scenarios on the P&L impacts of a 1.5-degree world, the impacts of a higher carbon tax on profitability, the introduction of subsidies, or pricing signals to parts of the supply chain. Highlighting risks associated with ownership of certain assets. It is rational to expect the valuations of certain assets on the balance sheet to fluctuate as we progress through the transition towards net-zero. For example, we have seen large write-downs in valuations among many of the global oil majors. On the other hand, it is equally rational to expect certain asset classes to rise in value, such as those parts of the economy that support the electrification or home insulation agendas. Either way, CFOs will want to avoid holding stranded assets and will need to make more material bets on a more frequent basis over the coming decade. Identifying where investment will be needed to transition to a sustainable economy. Ireland’s transition to a more sustainable future is expected to have a wide-reaching impact on key sectors of the economy. For example, Ibec’s report, Building a Low-Carbon Economy, suggests that Ireland’s electricity and transport systems will need to reduce emissions from 1990 levels by up to 92% by 2050 and that buildings and factories will need to reduce emissions by up to 99%. Decarbonisation needs to go hand-in-hand with technological innovation, and CFOs will play a key role in identifying where investment is needed to ensure that business outcomes are achieved in a way that is economically and environmentally sustainable. Responding to investor demands and attracting investment. In the US, one-third of the $50 trillion of assets under professional management is invested in ESG strategies, according to research by the NewClimate Institute. ESG considerations are increasingly being adopted in assessing the sustainability and risk of investment decisions. At the same time, investors and pension funds are applying pressure on companies to provide products and services aligned with the UN’s Sustainable Development Goals (SDGs). Turning ESG commitments into action. Credibility is not a new concept to finance but is vital in the ESG space. As a profession, we can help our organisations avoid even the suggestion of ‘greenwashing’. Credibility is enabled by robust transition plans with regular and transparent disclosures on progress against them. Some CFOs are investing now to create enterprise-wide data provisioning and analytics solutions for ESG. This will enable them to model multiple commercial scenarios and inform the optimal pace and sequence of the pivot. Conclusion While executing a successful ESG pivot depends upon a strategy that is unique to the qualities and context of the organisation, there are a few best practices you can leverage: Conduct a materiality assessment. These sometimes behind-the-scenes assessments are a data-driven, holistic view of ESG risks and opportunities to identify gaps and prioritise the issues of focus against business and stakeholder importance. Build an effective communication method for the company’s ESG commitments and progress. This typically takes the form of a disclosure with a newly crafted framework and reporting metrics for standalone ESG disclosures, leveraging industry-leading practices. Formalise ESG governance. Stakeholders must be identified as explicitly responsible for new associated ESG activities. The company needs to craft a defined governance model and roadmap for execution, mobilising internal resources and data for ongoing assessment and reporting. These three steps have helped organisations successfully navigate and focus an ESG pivot and capture the associated resiliency and revenue potential. This is the decade of action to dramatically limit the future impacts of climate change – time is of the essence, and the time to act is now. Ambrose Shannon is a Managing Director at Accenture and CFO and Enterprise Value Lead for Ireland and the UK.

People management has been evolving over the generations, paving the way for productive development conversations that benefit both the organisation and the employee, writes Michelle Halloran. There has been a gradual sea-change in the role of the people manager over the last few decades, but it has taken a global pandemic to catapult us into a new way of working. Now, as we optimistically enter the post-pandemic world, it is time for a radical break with the past, to ditch our outmoded perspectives on people management and take a hard look at the role of the 21st-century people manager. From the top down, organisations must stop pretending that managers with staff reporting to them can perform a fully loaded, 40-hour-a-week job, with a bit of ‘HR soft stuff’ thrown in on the side. Organisations need to start budgeting – in terms of time and money – for the investment required for their people to properly function and perform well in the new world of hybrid working. Old habits die hard Many of us have inherited a view of ‘people management’ involving uniform nine-to-five working hours, little flexibility, a strict dress code, and the expectation of often-unquestioning respect and compliance. Structured, objective performance management and review processes are a relatively new replacement for the once-a-year ‘quick chat’ to be told whether or not you were going to get the much longed-for pay rise. Your boss was typically a white male in his forties or fifties – benevolent when you did well; strict and disciplinarian when you did not. This model of people management has its roots in the traditionalism of the generation born from 1928 to 1944, at a time of economic hardship, when the old class system was still prevalent, and you respected authority unquestioningly. Evolving workforce generations The ‘Baby-Boomer’ generation (born 1945 to 1964) wanted much more from their working lives. They had learned from the experiences of the previous generation, seeing them gain very little in terms of improved quality of work and life in the post-war years, despite their sacrifices. However, while they may have done some hell-raising in their youth, and instigated the beginnings of a more equitable society, by the time they hit their mid-twenties, most were settled down and working even harder than their parents in evolving white-collar roles – you didn’t have to be American to buy into the American Dream. While their style and tone were less formal, and there was a shift in the gender balance at work, they (male and female) continued the patriarchal style of people management. Generation X (born 1965 to 1979) threw down the gauntlet in the area of gender equality, and achieved some real change in terms of family-friendly working hours. They also introduced and implemented performance management in the workforce, a concept driven by increased global business competition, where pay was linked to the achievement of targets, and an employee review was conducted once a year at which an employee’s rating was discussed and explained. Then came Generation Y, or the ‘Millennials’, (born 1980 to 1994). Since 2016, ‘Gen Y’ has comprised the majority of the workforce; therefore, knowing how to lead and motivate them is vital to the success of any people manager. The first ‘digital natives’, with access to vast resources of information and opinion, they do not unquestioningly accept what their boss tells them. With businesses driven hard to compete by rapidly advancing technology and globalisation, Gen Y has to work smarter, harder and faster than any previous generation. To maintain this level of productivity – adapting to unprecedented levels and speed of change – today’s employees need a lot of time, emotional sustenance and practical support from their managers, without which they will feel let down and move on to another employer. The early indications for Generation Z, born after 1994, are that they view being an employee and having their own professional ‘gigs’ on the side as not being mutually exclusive. Understanding how precarious job security can be, they are emerging as self-reliant and flexible but needing at least as much emotional support at work as Gen Y. The 21st-century people manager As a 21st-century people manager, your language and approach needs to move away from performance reviews towards ‘development conversations’, or even, simply, ‘check-ins’. These should be planned and scheduled. The more frequently you, the manager, make these calls, the shorter they will be, as they become part of a running conversation between you and your team member. This is especially important in a hybrid work environment where we cannot avail of ad hoc, informal conversations as we could pre-pandemic.  Allocate roughly a day a week into your schedule to have these employee check-ins. These should be strategic, not tactical conversations, with the emphasis on how the team member feels they are performing and coping with their work. This discussion must sit outside other routine discussions and communications about what needs to get done. In Table 1, I set out a suggested plan for managing development conversations with each of your team members (reporting to you as their line manager), outlining the frequency and purpose of each conversation, and useful questions to ask. (Quarterly and monthly meetings can encompass weekly check-ins as they fall due.) The business case So, you may be asking, if I am going to spend all this time talking to my team members, helping them to perform, how do I get my own job done? I can’t afford to spend a day a week on employee development conversations! Well, you can’t afford not to. There is extensive research on the positive impact of proper employee engagement on profitability and productivity. For example, a comprehensive report published by Gallup in 2017, involving meta-analysis of 339 research studies across 230 organisations in 49 industries and 73 countries, found that business or work units in the top quartile of employee engagement outperformed bottom-quartile units by 10% on customer ratings, 17% in productivity and 21% in profitability. Work units in the top quartile also saw significantly lower staff turnover, theft, absenteeism, and fewer safety incidents and quality defects. Taking as the baseline Gallup’s 21% increase in profitability as a result of higher employee engagement, if one day per week is allocated for people managers to have development conversations with their team members, costing 20% of the organisation’s people managers’ time, the impact on profit will be positive. Further gains and savings are available from increased productivity and customer satisfaction, lower staff turnover and absenteeism, reduced wastage, higher quality adherence, and so on. The business case for allowing people managers time to manage their people is clear. Human nature being what it is, however, such change will be resisted, despite the pressures from the generational transition outlined and the recent acceleration towards complex, individually tailored working arrangements. An organisation could introduce such change through a pilot scheme, evaluating results after 12 months using metrics like internal and external customer satisfaction, team productivity, absentee rates, staff turnover and quality of output. Budgeting time for people management is a change in approach that is long overdue. We have the motive – a more profitable business and a happier place to work – and with the shift towards hybrid working, we now have the opportunity. Michelle Halloran is an independent HR and people management consultant.

David Swinburne outlines the practical considerations for members as they prepare to deal with the Small Company Administrative Rescue Process. With the much-anticipated legislation for the Small Company Administrative Rescue Process (SCARP) ready to be enacted, it will be interesting to see how the process evolves. SCARP aims to rescue struggling businesses that form the backbone of the Irish economy – small and micro companies. These SMEs provide the greatest number of jobs in Ireland. The process, by and large, mirrors the successful examinership process, which has been around for 30 years. However, the costs associated with SCARP are expected to be significantly lower than those associated with examinership. Under SCARP, there is no automatic involvement of the Court. Therefore, the costs associated with legal representation for both the company and the examiner are not applicable. Under SCARP, a company does not have protection from its creditors. However, there is the comfort that the Court is there should it be required. Of course, if recourse to the Court is required, costs will increase. What should a company or its external accountant be doing now? In a typical examinership case, there is invariably some event that occurs at very short notice or an unforeseen shock that pushes the company into insolvency. This, in turn, leads to an urgent application to Court for protection and the appointment of an examiner. Thus, the process for the duration of the examinership becomes a pressure cooker. For SCARP to be successful, planning at a very early stage and engagement with an insolvency practitioner (known as the ‘process advisor’ under SCARP) is vital. The insolvency practitioner will need to quickly assess whether or not the company is a suitable candidate for SCARP. The company can only be a suitable candidate if it has the prospect of survival, which means that it must be viable. Before commencing the SCARP process, the company will therefore need to determine (in as far as it can) that there is a strong likelihood that it will emerge successfully out the other end. For this, it must have a viable core business and source sufficient financial resources to fund the SCARP (if its creditors are to be settled immediately instead of over a period of time). The company’s stakeholders will want certainty on the outcome for them. This will form their decision as to whether or not they will support, and therefore vote in favour of, the SCARP. Fail to plan, plan to fail Early engagement with an insolvency practitioner will also allow them to identify creditors that are likely to be more challenging to deal with in the SCARP due to the complexity of the contractual relationship between such a creditor and the company. Such creditors may include landlords and others to whom the company has more onerous obligations. These creditors can be dealt with under SCARP (subject to their consent). However, if the issues are likely to be difficult to resolve, an application to Court may be required. Identifying such creditors before the process begins will be crucial in setting out the options and, consequently, the further anticipated costs that may arise in dealing with them. Based on recent applications before the High Court, it is evident that the Court will want the company to endeavour to engage with creditors and attempt to resolve difficulties before bringing the matter before the Court. Therefore, the Court should not be the first port of call in resolving issues with any creditor. Excludable debt The possibility for State creditors (with a particular focus on Revenue, which is likely to be a creditor in any SCARP scheme) to opt-out of the process has generated mixed reactions. In my experience, however, Revenue is not a blocker. Instead, it is – and will continue to be – supportive of company restructurings, whether informal or formal (i.e. SCARP or examinership). For Revenue to take such a supportive stance, the company and its directors will need to have a compliant and transparent record in their dealings with Revenue. Therefore, companies must continue to meet their Revenue filing obligations – even in circumstances where the company has warehoused debt and is not in a position to discharge its ongoing taxes as and when they fall due. Directors’ duties Under SCARP, there is a requirement for the process advisor to report any offence to the Director of Public Prosecutions (DPP) and the Office for the Director of Corporate Enforcement (ODCE). It is therefore vital that all directors act honestly and responsibly at all times. When will SCARP cases commence? There is a view that as long as COVID-19 State supports are in place, companies will not succumb to the pressure that they may face after the removal of all State supports. However, not all Irish entities are receiving State support. And those that are not are heavily reliant on their trading partners to discharge their obligations to ensure their own survival and future success. Formal insolvencies are at an all-time low. Given the impact of the last 17 months on the economy, you would expect insolvencies to have increased, not decreased. There is no doubt that the various extensive State supports, coupled with payment breaks and holiday periods from other key creditors and stakeholders, have ensured the continued survival of businesses that would otherwise have run out of cash. As the ‘new normal’ continues to be rolled out and we all adjust and adapt, creditors will be forced to become more active in their efforts to collect cash and recover amounts owing. This is when a company becomes vulnerable in terms of its future survival and direction, as its creditors start to take matters into their own hands. Control in terms of survival will quickly switch from being with a company to its creditor(s). Therefore, as highlighted above, early engagement with an insolvency practitioner and an assessment of SCARP as a credible option is a must. Time-frame The end-to-end time-frame for a SCARP is much shorter than examinership (70 days versus 150 days), which means that much preparatory work will take place before the SCARP is formally kicked off by the directors via a resolution and the appointment of the process advisor. Getting difficult and challenging creditors onside is time-consuming. If certain creditors are unlikely to be supportive before the commencement of the SCARP, it is more likely that they will object to it. This will result in an automatic application to Court to seek approval for the SCARP, which impacts the certainty of the outcome for the company, its employees, and its consenting creditors. What should I do next? If one of your clients is struggling now or is highly likely to struggle in the future, or you own or lead an SME that is eligible for SCARP (see sidebar), you should consult now with an experienced insolvency practitioner. David Swinburne FCA is an insolvency practitioner and Advisory Partner at FitzGerald Legal & Advisory, Cork. SCARP eligibility An SME will be eligible for SCARP if it satisfies two of the following three criteria: Turnover of up to €12 million; A balance sheet of up to €6 million; and/or Up to 50 employees.

The need for structured, robust, and reliable business intelligence has mushroomed in recent years. As an increasing number of businesses grapple with the issue, Paul Cullen  explains the critical elements for implementation success. Data volumes within businesses have increased dramatically in recent years, primarily driven by cloud-based data solutions. Many companies struggle to harness this data in a way that enables them to focus on the key drivers of their success and to know if the strategies they have executed are having the desired results. Proper and well-planned implementation of a business intelligence (BI) solution can give management the real-time information they need to maximise commercial opportunities and ensure organisational coherence to deliver on agreed performance metrics. Why Excel just doesn’t cut it for BI Accountants have always loved Excel, and it still has a pivotal role as an analytics tool. However, when it comes to flexible reporting and giving end-users the ability to dive beyond the headline numbers to get to the ‘why’, Excel falls short in several key areas: Model maintenance headaches: in a 50-tab reporting workbook, any change to the layout can be very time-consuming (and often error-prone). I frequently encounter client reporting workbooks riddled with errors because one sheet has a misaligned row, which results in an incorrect aggregated summary. The dreaded invisible F2 edit: how many times have you spent hours pouring over an Excel workbook trying to figure out why the individual tabs don’t agree with the summary, only to eventually discover that someone has keyed in a manual F2 edit in a cell? Distributabilty: so you have built this all-singing, all-dancing Excel reporting pack, but it’s 70MB and cannot be shared via email. You also realise that some information needs to be segmented so that specific users can only see select slices of the data. These issues usually mean that multiple Excel models must be maintained, amplifying the risk of error and potentially compromising data integrity. Limits on row numbers: Excel’s sheet row limit has increased to one million in recent years. While this sounds more than adequate, you can easily exceed this limit if you include transactional data. Housing data in this way within Excel will usually result in slow, large file-size models. Usually dependant on one key user: there is typically only one key person who knows how to run and maintain a reporting model. Therefore, reporting quality, outputs, and cycle time rely to a worryingly large degree on one individual. The need for structured, robust, and reliable BI has mushroomed in recent years. As a result, dedicated BI platforms like PowerBI, Tableau, Qlik and ZapBI have evolved to address these shortcomings and provide analytics visualisations and end-user self-service reporting that goes far beyond Excel’s capabilities. Key obstacles to getting good BI Master data Many finance professionals underestimate just how unstructured their data is. I often hear clients say: “Yes, but we use NAV/Dynamics 365, so our data is really good”. They often fail to understand the inconsistencies across the company in how transactions are coded or recorded by staff. These inconsistencies make life difficult when you need to connect transactions across different platforms. For example, say you want to connect salary data for an employee from an HR system with data in a time-recording system. The employee ID is, say, PCULLEN250 on the HR system but CULLP on the time-recording system. This is just one example of the data-mapping tasks that must be undertaken for BI to succeed. I have seen this to varying degrees in every BI project I have delivered because, for many years, siloed teams have had their own ways of doing things. They simply didn’t realise that there would be a future requirement to bring all this data together at a transactionally-connected level. Historical processes or ways of working The ways in which your teams have historically coded transactions on source systems will almost certainly present challenges in initially setting up your new BI platform. I once worked with a ship management group with 1,000 ships under their control. Management wanted to get to ‘vessel profitability’, and we knew that cost allocation would be a challenge due to the complexity of the company’s operating structures. However, we were surprised to find that revenue for each vessel wasn’t available from the ledgers because the company issued just one monthly invoice to each carrier, even though some had more than 50 vessels under management. Furthermore, payroll costs for vessel crews were recorded by office location, not by vessel. Both of these historical processes gave rise to significant re-analysis work and new process design to enable the required analyses. Similarly, one healthcare client wanted to understand their profitability by treatment type. They believed that everyone across the more than 100 clinics they owned used roughly the same few hundred treatment type codes. In fact, there were over 6,000 live treatment codes in use and in some instances, clinics could even create their own codes at will. So expect to change some of your ways of working as a result of embarking on a BI implementation. How far back to go? Once it becomes clear to key stakeholders just how much insight a good BI implementation will bring, there is typically a desire to have as much history loaded into the model as possible. This is often the case where the company is private equity-owned, or a sale is planned. My advice here is the old 80/20 rule. Yes, it might be nice to see this new level of insight going back five years. But if your company is one of those where a lot of re-analysis will be required, you have to ask: is it worth it? I instead recommend that older historicals should, where possible, only be incorporated in aggregate. You should then ensure that the new data processes are designed and implemented so that future analytics are both robust and reliable. How often is too often? When implementing a BI platform, the next consideration is how often the data and outputs should be refreshed. It’s tempting to think: “Great, I can see what the sales team are doing every morning and then follow-up to discuss what’s going on”. However, this approach can quickly create a situation where staff have to spend time each day figuring out what just happened. And this, of course, can lead to ‘paralysis by analysis’. Be judicious about how often BI data should form the basis of a trading or operations conversation, and otherwise use it to indicate the company’s direction of travel. Introducing a new performance management BI tool will initially strain your executives and managers as they sift through a deluge of new and revealing information. This takes me to the following consideration: the need for culture change if a BI solution is to work correctly. Warning! Culture change approaching Imagine you are a sales or production manager, and you wake up to a new, live, web-based BI portal that shows everyone in your organisation where things might not be going so well on your patch. Senior management must avoid using the BI solution to shame or berate colleagues. Instead, it should be seen as a tool to identify opportunities and enhance performance across the business. Tread carefully here and avoid the ‘big bang’ approach of rolling out BI. You want your teams to embrace this new way of working, not run away from it or, worse still, seek to discredit it. With all this new performance management data at your fingertips, you may wish to consider redesigning your legacy compensation and bonus systems to ensure that these insights drive the right behaviours across the organisation. Embedding a robust BI solution in your organisation can be the catalyst for undoing the traditional silo mentality that can arise when different functions perform to their own narrow targets. Factors affecting implementation speed The following four issues will affect the length of time it takes to build and roll out your new BI platform. Poor data mapping: it is critical to understand how different naming conventions are used across your systems. You should conduct a thorough data-mapping audit to ensure that independent systems can be bridged on common field names (by employee ID, customer ID, or product ID, for example). Doing this during the development of the BI solution is time-consuming, but products like Caragon Flex can make the process much more manageable. Organisational readiness: prepare your team for the effort required to clean up your data and, more importantly, how this information will be distributed and reviewed once it is live. Having a new suite of detailed analytics can be overwhelming for data consumers if it is not clearly understood what it will be used for. Also, inform your colleagues that they are not expected to understand every data point that surfaces in the reports. Absence of a project champion: projects that should take weeks often take months due to the lack of an internal project champion. It is vital to appoint one and empower them to ‘herd the cats’ to ensure the project is delivered on time. Unclear output requirements/moving targets: consider what you want to get out of the new BI platform and be ruthless in identifying the key reports and key performance indicators you will need at the outset. Solution providers will typically build a proof-of-concept model to illustrate the art of the possible. This is a good time to agree on the minimum requirements for Phase 1 – but don’t bite off more than you can chew. Some processes must change As the earlier examples show, digging deep on data to build robust processes across multiple systems will invariably highlight process weaknesses that, if not remedied, will compromise the integrity of any BI platform. Therefore, it is essential to understand at the outset that go-live and the ultimate success of the project will be contingent on staff being adequately trained in the new ways of working. This might, for example, mean retraining payroll staff on payroll coding so that the correct costs are tagged to the relevant activity. Similarly, invoicing processes may need to change to ensure that revenue can be appropriately tagged to achieve the desired level of reporting granularity. You should also introduce tighter controls on crucial data fields across your systems (customer codes, product codes or employee IDs, for example). In my experience, this is best achieved by having a data governance standing group, to which all data changes (or new data field creations) must go for approval and communication to other potentially affected users. In conclusion A BI implementation is an exciting journey for a company. To get the most from it, here are my top four tips: Appoint a data champion and BI steering committee to ensure the project both gains and sustains momentum, and the business is prepared for what’s coming. Take the time to fine-tune your data mapping processes. Phase your BI roll-out in bite-size chunks to avoid overwhelming the organisation. Create a sense of ‘new frontiers’ within the business as it embarks on its data-empowered journey. Paul Cullen FCA is CEO at 1Truth, a Belfast-based management information solutions provider.

Aoife Donnelly and Thady Duggan explain how the role of the chief financial officer will evolve as digital change continues apace. As chief financial officers (CFOs) continue to take on more responsibility for strategy and execution, and for the sustainable future of the enterprise, they must build technology strength to unleash breakthrough speed. Doing so is the way to drive breakout value across the business. Accenture’s recently published report titled CFO Now: Breakthrough Speed for Breakout Value identified themes common to a select group of CFOs who deliver significant value to their organisations. We found that, aided by digital transformation, the pace of change is greater than ever before. This was further accelerated by the pandemic, with 79% of CFOs surveyed compelled to ramp up organisational transformation due to the effects of the past year. As chief executive officers (CEOs) embrace speed by accelerating their digital transformation, they turn to finance for guidance. The pace at which finance can support business leaders in real-time is critical and has resulted in the accelerated adoption of digital technologies in the finance function. CFOs said that 60% of their traditional finance tasks have been automated in our CFO Now research, up from 34% three years ago.  Some CFOs are delivering real value from their digital transformation. Our research identifies several key characteristics of these ‘winners’ – finance teams that can provide the business with insights to drive transformation with speed and agility. Economic guardians Compared to their predecessors, the breadth of responsibility and expectation faced by today’s CFO is increasing. To thrive with this increased responsibility, the finance function must transform itself to enable CFOs to support the rest of the business effectively. The pace of technological change in recent years has opened opportunities within finance. Huge strides have been made to optimise processes, maximise the capabilities within existing enterprise resource planning (ERP) systems, and implement other technology enablers. However, this is using today’s technology to fix yesterday’s problems. Timely, accurate, and complete reporting is important, but it should be considered a mere hygiene factor for a high-performing finance function. The business needs informed guidance to navigate the present and anticipate the future, not comfort for the past. That’s where the most significant shift is occurring in the role of CFOs as economic guardians. High-performing finance functions can and should provide predictive insights, but less than half (43%) of CFOs surveyed have used advanced financial modelling in the past two years to identify future risks and opportunities. How can CFOs be economic guardians if they don’t have a perspective on what tomorrow will bring? High-performing CFOs use internal and external data with advanced models to better understand leading indicators of demand well ahead of trends that might show up in the company’s profit and loss account. Others, however, are not sure how to maximise the benefits of digital transformation – only 21% of CFO Now respondents have used operational data to identify new sources of value, and only 20% have used macroeconomic data to support their forecasting. Cloud architectures offer a whole new world of possibilities to the CFO, allowing for much faster decision-making. Yet, only 23% of CFOs use the cloud to provide new insights and only 16% use it to identify new sources of value. Combined with this data and technology utilisation comes a renewed focus on aligning and nurturing talent within the finance function. According to Accenture’s latest CxO Pulse Survey, 75% of CFOs believe that their company is on a course to redesign how people work and reinvent their culture to support new behaviours and mindsets. CFOs understand that finance professionals can’t be left out of this talent revolution. Our CFO Now research shows that they are acting by re-prioritising the skills needed in their functions. Traditional finance and accounting skills are still important but, along with general management skills, are now among the lowest priorities. The top skills being actively introduced are data exploration and analysis (41%), followed by scenario planning and horizon scanning (38%), innovation (37%), and storytelling (34%). Architects of business value CFOs have always played an important role in the organisation, but they now increasingly influence and direct value creation across the enterprise. This enhanced role requires increased collaboration between the finance function and other parts of the organisation, with 86% of CFOs surveyed increasing the frequency and scope of collaboration across the C-suite. The current pandemic and the strains it has placed on business has changed mindsets at the C-suite level, turning what was once a competitive environment into a more collaborative one that enables the CFO to deliver on their expanded role. Leading CFOs understand the power of technology to support these efforts and take appropriate action to ensure that they play a significant role in any major technological decisions. Indeed, 72% of respondents said they have the final say on the technological direction of the enterprise. Catalysts of digital strategy The modern CFO needs to champion digital transformation across the enterprise to support the central theme of our research – breakthrough speed for driving breakout business value. Outside their own function, there are three key areas where the impact of digital strategy are most striking. Business models: our research shows that 41% of CFOs are driving new business models within their organisations. That’s a great start, but it still falls short of the 72% of CFOs who thought their business would need to completely re-think processes and operations to be more resilient in the face of impending disruption. Throughout the past year, organisations had to reconsider their business model and its resilience for the future. Irish companies have used this crisis as an opportunity to reassess their ambitions, using the shift to digital to re-evaluate their global ambition and identify business lines, markets, and other opportunities that were not considered possible before. Security: the most cited barrier preventing CFOs from realising their full potential as drivers of strategic change was concern about cybersecurity. Yet only 28% of finance professionals are engaged in managing risk through data security to a meaningful degree. In many organisations, chief technology officers and chief risk officers report to the CFO. Given this responsibility, it is incumbent upon the CFO to better understand and become more actively engaged in data security. Environmental, social and governance criteria: one striking finding from our CFO Now research was the extent to which CFOs are seen as responsible for their company’s environmental, social and governance (ESG) policies. In fact, 68% of respondents said that CFOs take ultimate responsibility for ESG performance within their enterprise. Driven by the growing concern about the global climate crisis, Irish CFOs are also trying to understand their role in any future ESG reporting requirements. The impact on the finance function The role of finance within the organisation is evolving and expanding. The enterprise expects more, and at greater speed, from the finance function. To deliver this, the function must change. One enabler of this change is the accelerating adoption of digital technologies. This impacts the speed and type of finance activities being performed. Leveraging technology to perform more of the mundane tasks allows the CFO and the finance function to spend more time planning, analysing, and advising on the growth agenda, thereby better serving the enterprise’s changing needs and expectations (see Figure 1). Given this shift, a significant change in the skills being introduced to the finance function makes sense. CFOs know that their teams must gain insights from data and then, crucially, communicate these insights to the business. In conjunction with the shift in the type of work performed by finance teams, the composition of the workforce is also changing with fewer people using more technology to deliver better insights (see Figure 2).  The combination of enhanced capabilities within finance, improvements in technology enablers, and the explosion in data offers an amazing opportunity. To maximise the benefits from this digital transformation, the finance operating model must evolve (see Figure 3). Corporate: group-level functions, the scope of which differs from entity to entity but may include activities such as finance governance, tax strategy, treasury strategy, investor relations, internal audit, and others of a similar nature. Intelligent finance operations: the engine room where both transactional and non-transactional finance activities such as purchase to pay (P2P), order to cash (OTC), record to report (RTR) and significant components of management reporting take place at scale to maximise technology enablers. Business unit finance: direct support to the business, often in the form of finance business partnering, operational planning, and forecasting. Working closely with other teams within the finance function and the business to provide actionable insights to the business unit. Centre for value optimisation: instead of having static groups working on the same thing for months at a time, we see teams with multidisciplinary skills assembling for several weeks to take on short-term projects with defined goals and outcomes. Once work is completed, these teams then disband and new teams with different members tackle the next initiative. These teams are not finance-specific and will typically include non-finance partners. The work they do is supported by the data and analytics hub, where they work with experts to develop recommendations for business leadership. Data and analytics hub: the hub has the dual responsibility of ensuring the veracity of finance data and augmenting the teams in the centre for value optimisation with data scientists, who run multiple models to prove or disprove hypotheses. If the value optimisation squads are the ‘brains’ of the function, the data and analytics hub is the ‘heart’, pumping much-needed blood in the form of data to provide the brain with the fuel required to do its magic. Many of our Irish clients have established the first three components of this operating model. However, they are only starting to fully investigate the potential benefits of multidisciplinary teams that use a single source of truth to identify opportunities and drive insights. What does this mean for Chartered Accountants? The remit of the finance function will continue to expand, and its influence will grow in the coming years. 76% of respondents claim that the pandemic highlighted the valuable role finance teams played in feeding early warning insights to the CFO. Finance will become even more critical to future success as it delivers data-driven insights and guidance at speed. However, to do this, CFOs need to consider all the capabilities within the finance team and any potential future capabilities that may be required. Here are three things to consider. Become more technology-savvy and data-savvy. Become technology-savvy to enable finance leaders to make informed decisions on the organisation’s technology strategy; to understand the tools that can optimise the processes in the function and allow leaders to manage teams in which these tools perform a significant portion of the activity. And become data-savvy to understand the opportunities presented by data to make informed decisions that can drive profitable growth; to understand the fundamentals of analytics to challenge the insights generated by analytics teams, if not actually being part of those teams. Get better at communicating financial insights to non-finance leaders. As the role expands and continues to become less about reporting prior financial performance and more about identifying future opportunities for the business, finance leaders need to convert analysis into a compelling story that business leaders can understand and act upon. Consider how to train and upskill the whole team. The shift to a technology-enabled, data-driven finance function is becoming even more pronounced. Trainee and newly qualified Chartered Accountants must gain enough exposure to ‘traditional’ finance activities to understand the fundamentals of finance management while working in a function where these traditional finance activities are increasingly being automated. This is a challenge that must be solved in the years ahead. Aoife Donnelly FCA leads Accenture’s Finance Strategy & Consulting practice in Ireland. Thady Duggan FCA is a Senior Manager in Accenture’s Finance Strategy & Consulting practice in Ireland.

Barrie O’Connell considers how Ireland can achieve continued success in international financial services after three decades of momentous growth. As a semi-senior auditing investments and subscriptions in the offices of Chemical Bank on Lower Abbey Street in the late 1990s, I knew little of the influence international financial services (IFS) would have on my career as a Chartered Accountant. Ireland has built a thriving IFS industry over the last three decades. This success can be measured using several metrics, some of which are outlined in Table 1. So, what are the factors behind this success? In my view, Ireland’s strategic approach and talent have been the two key enablers. Chartered Accountants have played – and will continue to play – a key role when it comes to talent. The ‘Ireland for Finance’ strategy In 2019, the Government of Ireland launched the Ireland for Finance 2025 strategy. The strategy was developed by the Department of Finance, with input from a range of stakeholders, and is part of the current Programme for Government. It contains four pillars: Operating environment; Technology and innovation; Talent; and Communications and promotion. The Ireland for Finance 2025 strategy is aligned with other key Government strategies, including the National Development Plan and the National Digital Strategy. A refresh of the strategy will likely be undertaken after the COVID-19 pandemic to account for the permanent impact on the future of work, the changing operating environment, and the intense competition from other IFS investment locations. Each year, the Department of Finance also publishes an action plan and an update on actions. This allows each action to be measured and provides accountability, as each action has an owner. The IFS team within the Department of Finance plays a significant role in supporting the strategy’s implementation. There is also a dedicated Minister of State for IFS at the Department of Finance, which ensures continuing focus on the sector. Coincidentally, the current Minister, Sean Fleming TD, is a Chartered Accountant. Operating environment Ireland has enjoyed great success as an IFS location for a long time. With new entrants relocating here due to Brexit, there is the prospect of more to come. This will remain the case while there is uncertainty around UK firms’ ability to achieve financial services equivalence and, thus, access to EU markets post-Brexit. However, the environment for IFS is increasingly competitive. Industry participants continually face pressure to optimise their business by delivering new and innovative products and exploiting process and location efficiencies. They must deliver on these issues while serving their customers’ needs and ensuring the global financial system’s continued stability. The industry is more technology-intensive than ever, and artificial intelligence (AI) and automation present both opportunities and challenges for Ireland. We must continue to position ourselves as a location that is open to providing an innovative, supportive, and dynamic environment for companies that seek to leverage our expertise and history in technology and financial services. After COVID-19, other countries will redouble their efforts to attract investment. As IFS is a mobile sector, Ireland must be agile and adapt quickly to the new environment. The IFS sector has been remarkably resilient over the last year, and I am impressed by how the sector adapted to remote working and continued to deliver for customers. This resilience is a key differentiator, and the collective ability to solve issues gives Ireland credibility and trust in a global marketplace – something that is noted internationally. Track record The IDA and Enterprise Ireland have both contributed to the development of the country’s IFS industry. I am continually impressed by the IDA’s work with overseas companies and Enterprise Ireland’s work to create opportunities for indigenous companies to operate successfully from Ireland. Indeed, these organisations are the envy of many other countries globally. Irish Funds is another excellent example. It works relentlessly at an international level to promote Ireland as a funds location, and the quality of the content at its events is compelling and demonstrates some of the best qualities of ‘Team Ireland’. Meanwhile, the European Financial Forum, usually hosted in Dublin Castle, was hosted virtually this year. It is another superb showcase of what Ireland offers in IFS to companies operating globally and is supported by an effective regulatory environment with a fully independent Financial Services Regulator. The development of the “IFS Ireland” brand has been a crucial first step in building an integrated offering across different sectors. We must now market Ireland with consistency and in new and innovative ways.  The secret sauce Ireland’s key asset is its people and talent. Ireland has a well-educated, highly-skilled, flexible, internationally diverse and multilingual workforce. Our demographics are favourable, with 33% of the population less than 25 years old and over 50% of those between 30-34 holding a third-level qualification. Chartered Accountants’ skills and attributes are a good fit for this sector, and I am aware of so many Chartered Accountants Ireland members who have cultivated successful careers in IFS – not just in Dublin, but throughout Ireland. The executive and senior management teams in IFS in Ireland, many of them Chartered Accountants, are a vital ingredient in our competitive advantage. They advocate with head office, look to develop and grow the offering based in Ireland, and are prepared to manage global operations from Ireland – and often exceed expectations when they do. Many have very senior global roles in large IFS organisations, and we don’t always acknowledge them and their relentless focus on expanding their organisation’s footprint in Ireland enough. For example, the recently announced acquisition of GECAS by AerCap, headquartered in Dublin, is a fantastic transaction that demonstrates Ireland’s position as a world leader in aviation finance. Caution needed Now is the time for Ireland to redouble its efforts. Some commentators suggest that the future of work will alter the relationship between talent and location, but I am inclined to challenge this hypothesis. In my view, where the executive and senior management teams are based will continue to be a key consideration for an organisation’s location. With accelerating disruption and digital transformation impacting the IFS sector, Ireland must be aware and adapt accordingly. In the coming years, protecting existing jobs may well be as important as growing the number of those employed in the sector. Ireland must therefore invest in education and training to ensure that workers stay relevant and productive and harness the strengths of Ireland’s technology sector to position Ireland as a leader in technology-based financial services and platform development. Chartered Accountants Ireland’s FAE elective in Financial Services is a welcome development in this regard. Action Plan 2021 The IFS Action Plan 2021, which is available to download at www.gov.ie, outlines several priorities in this regard, including sustainable finance and fintech. These areas have huge growth potential and present an opportunity for Ireland to take a leadership position globally. Sustainable finance and environmental, social and governance (ESG) criteria are strategically important to all companies. It is fitting that the Minister highlighted both as critical areas of focus for 2021 and beyond. Ireland’s recently enacted Investment Limited Partnership (ILP) legislation was an objective in the action plan for several years and has the potential to deliver significant growth in the private equity area. The Central Bank of Ireland also issued a stakeholder engagement consultation in recent weeks, and this will be a key focus for the 2021 action plan. Cause for optimism IFS is a vital element of Ireland’s overall economic strategy. Like all strategies, the strategy for IFS must be continually reviewed and adapted as the world evolves. Given our talent, flexibility, and drive, there is much cause for optimism while resisting complacency. It is incredible to see what started in the IFSC now present in every corner of Ireland, from Killorglin to Letterkenny. Yes, IFS in Ireland will need to change, adapt and continue to improve. But for newly qualified and experienced Chartered Accountants alike, the opportunities in IFS are almost limitless. Go and explore them for yourself. Barrie O’Connell is Partner in KPMG and Chartered Accountants Ireland’s representative on the Ireland for Finance Strategy 2025 Industry Advisory Group.