CIMA E1 Syllabus D. Shape And Structure Of The Finance Function - Shape Of The Finance Function - Notes ^{7 / 9}

The shape of the finance function has evolved as a result of advances in technology, changing roles of the finance function and the changing capabilities of the finance function.

Automation of entry-level tasks has reduced the need for a large workforce in these positions. This shift poses challenges for succession planning, as employees typically start at lower levels and work their way up. And if fewer staff are taken on at lower levels, there will be fewer staff to promote to more senior roles over time

Then traditional shape of the financial function was a hierarchical triangle, it then migrated to a segregated triangle and finally, the bottom corners of the triangle are knocked off by technological automation leaving it to be a diamond shape.

Migration

The shape is migrating from the hierarchical triangle (traditional shape) to the segregated triangle (last 20 years) and finally now to the contemporary diamond shape (today's digital age).

The hierarchical triangle

The hierarchical triangle contains a broad base of the finance workers reporting upwards to series of ever narrower management levels.

The segregated triangle

The segregated triangle has seen much of the routine processing of the finance function being carried out by shared service centres. 

The bottom section of the segregated triangle represents the finance function activity carried out by shared service centres.

The contemporary diamond shape

The contemporary diamond shape has been caused mainly by process automation. 

The flat top of the diamond shape shows a move to a more collaborative finance leadership approach.

The correct order from bottom to top is

• Smart finance factories (bottom)

• Digital centres of excellence

• Strategic business partnering

• Senior finance team (top)