The first official accounting records are tax records inscribed on clay tablets dating back to around 3,300 BCE. These artefacts have been discovered by Egyptian archaeologists and are thought to have been used by Egyptians to monitor the Pharaoh's finances and detect fraud.
Accounting systems remain largely unchanged today: They're essentially standalone records of inventory and transactions. But finance teams have swapped the clay tablet for technology and now must manage carefully selected platforms. Every CFO's technology stack consists of software designed to manage financial activities, from payments, payroll and accounting to expense management, financial planning and analysis.
As finance continues to take on more diverse and strategic roles within organizations and the amount of information collected grows, the technology stack is becoming an increasingly important weapon in the CFO’s arsenal.
In an ideal world, a technology stack would balance cost, functionality, reliability, and scalability, but this is rarely the case, says Martin Edstrom, CFO of business services provider Paragon. “The perfect financial technology stack doesn't exist. It's about optimizing what you have and finding what works,” he says.
One size does not fit all
Andrew Kennard is CFO of London-based VCL Vintners, an online marketplace for buying and selling rare whiskey casks. He believes there's no one-size-fits-all approach when it comes to building a tech stack. “Every finance department has slightly different technology requirements depending on the size of the company, its culture and its growth plans,” he says.
The perfect financial technology stack doesn't exist
Finance leaders have an “overwhelming” number of tools to choose from and limited budgets, Kennard says. In these situations, it can be tempting to opt for an all-in-one solution, but he warns against such an approach. “A technology stack quickly loses its relevance unless it addresses the unique needs of the business,” he adds.
For example, VCL Vintners uses blockchain technology to record every step of the whiskey production process, from maturation to energy use, meaning financial systems need to place special emphasis on data integration. By comparison, when he worked in the fashion industry, most recently as finance director for Kanye West Ltd, Kennard found it more appropriate to use dashboards and visualization tools to track sales. “Your technology stack should reflect the mission statement of your business,” he explains.
As CFO of a global company spanning five countries, Edstrom must consider the needs of local management when selecting the right financial platform, which meant he had to sacrifice efficiency for greater operational freedom when selecting an accounting software provider.
“If you move to a centralized platform, it makes your life a lot easier, but it takes away your ability to operate autonomously,” he explains. “As finance leaders, you have to think about how you operate, how you go to market, and how you get people to use the technology that you've invested in.”
Finance functions are often based on disparate systems and technologies, making it very difficult to integrate new tools into existing work streams. For this reason, Edstrom believes the focus should be on incremental improvements rather than “massive innovation.” “Change doesn't happen overnight,” he adds. “It's important to have the end goal in mind and work towards it slowly.”
The four levels of the financial technology stack
Evaluate your technology stack
Julien Lafouge, CFO of fintech company Spendesk, says that as a company grows, its tech stack needs to scale with it. Ensuring that technology is flexible enough to adapt to changing business needs is hard, and it's made even harder by the rapid rate at which technology evolves.
CFOs should strive to strike the right balance between innovation and stability, says Lafouge. “It's important to look beyond the hype of the latest feature or functionality,” he adds. “You don't want to be constantly switching between tools, which can be costly and disruptive to your team.”
Projecting what the business will look like in five years and asking providers for their product roadmap can help finance leaders determine which tools will be the best fit for the long term.
Equally important is being able to identify when your technology stack is falling short, says Vijay Padmanabhan, CFO of digital transformation company UST. This is something CFOs should always evaluate, he notes. Integration issues, slow performance and security concerns are the most common warning signs.
For Padmanabhan, ease of use is always a key consideration when deciding to upgrade your technology stack. When it comes to automated tools such as financial planning and analysis (FP&A) software, he emphasises the importance of checking the validity of the data and balancing it with human judgement and intuition.
“Finance leaders need to act quickly and retire technologies that are not performing as expected. Failure to act quickly could have negative consequences,” he added.
Barriers to adoption
Lafouge believes that despite the wide range of tools available to treasurers, they aren't using them to their full potential. Lack of training, inefficient processes, and inadequate automation systems prevent CFOs from getting the most out of their technology stacks, he says. “If treasurers were to use even 50% of the full capabilities of their tools, we'd see huge efficiency gains,” he adds.
Kennard points out that poor data management is also a common issue: “Companies tend to have data silos where they have redundant or duplicate information that they can't access. This means that companies are generating a lot of unused information.”
Previously, financial workflows like annual planning and quarterly reporting were managed in disconnected spreadsheets with no automation, resulting in a lot of time being wasted manually stitching together information from different sources and making sense of it in spreadsheets.
Purely financial training is no longer enough
Advances in technology will further complicate things and “fundamentally change” finance roles, according to Lafouge. “It's no longer enough to have pure finance training; candidates need to have some engineering knowledge, or at least a willingness to learn,” he says.
According to a study published by consulting firm Gartner, due to the rise of AI and automation, by 2026, 50% of employees hired into finance departments will come from backgrounds outside of finance or accounting.
Instead of wasting time and energy chasing the perfect tech stack, finance leaders need to take a closer look at their own internal processes, skills and capabilities.
