Technology plays an increasingly larger role in our daily lives as we benefit from the advances of the Fourth Industrial Revolution, a technological revolution that builds on the developments in automation that were made in the Third Industrial Revolution. But the breakthroughs in this revolution are unlike any we have seen before – they are coming exponentially faster than in any previous industrial revolution.
The role of digital transformation in construction
Technologies such as artificial intelligence (AI), and machine learning (ML) are merging with our physical lives – think of technologies such as facial recognition software and voice activated assistants that many use on their smart phones each day. These emerging technologies are also altering the way we do business.
Given these technological advances we are currently preparing for jobs that may not even exist yet. Think back on your own career. What was the latest equipment and technology your construction firm was using when you entered the industry? How have roles changed and what roles have been added?
The construction industry has traditionally been slower to adopt new technologies so it’s beneficial to look at trends across other industries and how this will impact your construction firm. Finance is one area that has greatly benefited from new technologies. A recent CFO 3.0 study of more than 500 top finance executives in the United States examined how the role of CFO has changed amid technological advances. The study’s findings can be applied to the evolving role of the construction financial manager (CFM).
While most would agree that a CFM’s primary role is to keep track of a company’s finances – accounting for all expenses and revenue, the digitalization of the finance function is fundamentally changing the role of the construction financial manager. Gone are the days when it was enough for a CFM to serve as company bookkeeper. Today’s CFMs have greater visibility across their businesses and are taking a more strategic approach to finance as a result.
The evolution of the CFM
Traditionally, the job was all about reporting on what happened yesterday (or last week, or the previous month). CFMs relied mostly on manual processes, Excel spreadsheets, and monthly financial reports. We’ll refer to this state of the role as CFM 1.0. Sure, financial history is important, but a CFM’s role was limited in this capacity. While they could refer to the latest reports to show previous performance, they didn’t have a clear picture of the present state of the business.
Today, most CFMs have moved beyond this state and are able to analyze data in the present. CFM 2.0 has an array of tools at their disposal such as automated finance processes, financial management technology, and sophisticated data sets. Having access to real time data allows a CFM to be more agile and adjust their financial strategy as necessary instead of waiting until they’ve analyzed the most recent monthly financials. There is no doubt that today’s CFM has greater insight into the business, allowing them to make more informed decisions faster. But what if you could see into the future?
Enter CFM 3.0, a new breed of trailblazing construction financial leaders who use data and emerging technology to create a vision for the future. They incorporate Robotic Process Automation (RPA), AI, and ML into their firm’s day-to-day operations. They embrace new techniques, such as predictive analytics, to drive digital transformation to new frontiers of its capabilities.
This is the future of the industry. This is how to excite Millennials and Generation Z, who enjoy working and interacting with the latest technology. Amid a global pandemic and a qualified worker shortage, this is more important than ever, as firms need to find ways to attract and retain the best talent, including the newest generation. Top construction firms will increasingly turn to technology to help them restructure their daily routines, from working remotely to reimagining the jobsite.
How is the role of the CFM changing?
Innovators are already using AI and ML in the construction accounting space and some software vendors are incorporating elements of these technologies into their solutions. For example, some technology solutions can flag general ledger outliers, combing through data and scoring transactions in their likelihood of them being an error or issue. Being alerted to any potential issues immediately and correcting as they come up helps ensure that financials are always up-to-date and helps put CFMs closer to the goal of continuous accounting. Always having a clear financial picture and freeing up more time to focus on business strategy can also go a long way in helping firms increase their bonding capacity.
We are only just beginning to see the possibilities that emerging technologies bring so there is little doubt that the CFM role will continue to evolve. With change comes uncertainty but mastering new skills such as data analysis, AI and ML will future proof CFMs and put their skills in high demand.
CFMs who embrace the role of CFM 3.0 are in a unique position to lead their firms to the forefront of the digitalization of construction. In an industry where competition is fierce and margins are slim, being an early adopter of new technologies can provide a real competitive advantage.