CFOs and Digital Leadership – Automation for Transformative Change
The role of CFOs has evolved significantly over the past decade. In addition to traditional finance functions, today’s CFOs are also responsible for driving innovation, implementing digital solutions, and improving business performance. As the business world continues to become more digitally focused, CFOs are required to lead the charge in driving digital finance transformation. This article includes a number of ways CFOs can implement AI in their businesses to augment their transformation and value creation activities, including;
- Insights for your transition to digital finance
- Automation: a means to becoming faster, cheaper, more accurate and more reliable.
- Automating finance – what the future holds
- Capability building – a customer-centric exercise for finance.
Insights For Your Transition To Digital Finance
Here are some ideas how CFOs can make a successful transition toward digital finance transformation.
1. Embrace Automation and Artificial Intelligence (AI)
One of the critical aspects of digital finance transformation is the integration of automation and AI. CFOs can improve their efficiency by automating processes such as accounts payable and receivable, financial planning and analysis, and tax compliance. Additionally, AI-powered tools can provide valuable insights to help CFOs make informed decisions quickly.
Digital commerce has generated large amounts of data from customer-facing operations, which CFOs can analyse using AI-powered tools to make informed decisions quickly. By correlating price behaviour and receivables with transaction data such as product type, payment method, and customer demographics, CFOs can project optimal pricing for specific customer segments and predict inventory levels to save working capital.
2. Invest in software incorporated with AI
Invest in software that has AI capabilities built in so that you can experiment with the technology and use it to swiftly develop pilot applications for specialised business challenges. Building internal AI solutions for all financial operations results in significantly more effort and less time to investigate new pilots or use cases.
3. Build a Robust Data Analytics Strategy
To digitally transform finance, data analytics is crucial. However, firms often try to implement advanced analytics without first standardising their data, which can be siloed if they rely solely on manual spreadsheets. By using a cloud-based business analytics solution, firms can establish a single source of truth and enable predictive and prescriptive capabilities. This frees up finance personnel from mundane routine tasks to focus on higher priority items.
4. Implement Cybersecurity Measures
Cybersecurity threats continue to evolve, and data breaches are becoming increasingly expensive for companies. According to IBM research, the average cost of a single data breach has risen to a record high of $4.35 million. Additionally, small cybersecurity errors, such as sending an email to the wrong person, can also have significant consequences. According to a survey by Tessian, nearly one-third of companies reported losing customers due to email errors.
The CFO plays a critical role in ensuring the security of a company’s financial data. However, relying on siloed spreadsheets and basic security measures, such as password protection and cell locking, can leave a company vulnerable to cyberattacks. Moving to modern automation software that centralises and secures data is crucial for improving cybersecurity.
5. Foster a Culture of Innovation
To make the transition toward digital finance transformation successful, CFOs need to foster a culture of innovation within their organisation. This involves encouraging employees to experiment with new technologies and providing them with the necessary training to do so.
Make sure your foundation is solid by studying this, Innovation Can’t Thrive Without These Fundamentals in Place
Automation: A Means To Becoming Faster, Cheaper, More Accurate And More Reliable
Finance teams across all industries have seen significant change with the advent of automation. Organisations that are relying on manual and semi-manual processes in finance operations are being left behind. The technology around automation is rapidly revolutionising these processes by providing faster, cheaper, more accurate and reliable options.
Automation software products utilise a combination of rules engine, machine learning algorithms, and artificial intelligence to automate business operations. This can include data processing, multiple-source reconciliation, reporting, monitoring, auditing, and even compliance.
Automation products are transforming and improving finance operations in several ways. Here are some examples.
1. Efficiency Gains
Automation products can exponentially reduce the time taken to accomplish complex tasks especially involving large amounts of data. Due to ever-increasing payment infrastructure, finance teams are receiving reams of data from different sources like payment gateways, order management systems (OMSs), enterprise resource planning systems (ERPs), bank statements, etc. Crunching and analysing the data manually or semi-manually via spreadsheets invariably takes a lot of manhours. But automation products can seamlessly manage and analyse the data almost instantaneously.
Automation products can complete tasks with much less effort and in a shorter amount of time. Once the user programs the products appropriately, the products can be left to complete the task without any further intervention or assistance. With more usage, the automation products tend to improve in quality and accuracy by covering corner cases.
2. Cost Reduction
One of the primary advantages of automation products is their ability to reduce cost. Not only mundane and repetitive tasks but even complex tasks also can be automated. Tasks such as the following can be managed through such products: data gathering and formatting, reconciling accounts receivables and receivables, payments, auditing, and record-keeping. According to a BCG report, automation products can optimise finance operations while reducing costs by up to 75%.
3. Workforce Enablement
A report by Bain & Co. highlights that the automation products not only enhance the quality of results but also prepare a reliable and efficient workforce. The personnel become equipped with better tools to carry out even the most challenging tasks. This whole process boosts the efficiency of the workforce and helps in retaining them while delivering better outcomes.
When automation products perform under the training and supervision of the user, we gain complete control over the process. Performing under the instructions given by the user ensures the desired results are obtained and enables users to perform more scenario-based analyses.
Automation is also turning into a business value creator as Glenn Hopper describes in this article. Improving Business Valuation with Finance Automation.
Automation Products: Complementary Tools
While automation products offer several benefits, some may wonder whether it will take over the common workforce. We believe that is unlikely – For innovation and step function improvements to be made certain psychological perspective only possessed by humans is required. Automation and AI are the enablers, not the initiators, to these business improvements.. Automation products can and should be used to help finance teams become swifter and more efficient. These products should be seen as a way to lessen the burden of the working personnel, freeing up their time for decision-making and sorting choices.
Automation products are transforming finance operations by providing faster, cheaper, and more efficient processes. They reduce the need for extensive paperwork, increases efficiency and productivity, and boosts employee confidence. It should be used as a tool to make working in the finance easier and more effective, with humans playing a critical role in the decision-making process.
Automating Finance – What the Future Holds
As artificial intelligence (AI) and automation have grown in popularity, the finance profession has seen considerable upheaval. Increased efficiency, precision, and cost savings are just a few of the significant advancements noted about and brought about by automation. Let’s take a deeper dive into what the future of automation and finance holds.
The Role of Emerging Technologies in Finance and Operations
Future finance operations will be greatly impacted by automation and AI. “The core” and “the strategic” are two interconnected components of the finance operating model. While the core operations consist of the main accounting procedures, payables and receivables, reporting, and governance; the strategic operations offer the information and analysis required to measure, analyse, and formulate strategies for a variety of potential future outcomes.
CFOs can improve operations while managing an effective and compliant controllership function by leveraging digital technologies like automation and AI by optimizing core processes. The efforts on core processes frees up finance resources to focus on strategic initiatives.
What can be automated?
McKinsey Global Institute’s research on automation reveals that currently available technology can fully automate 42% of financial processes, and another 19% can be mostly automated.
However, advanced cognitive automation technologies, like machine learning algorithms and natural language tools, are required to automate the remaining portion. Finance leaders should not wait for these technologies to fully develop, as new opportunities are being unlocked daily with the growth in structured data and the declining cost of computing power driven by ERP systems. See the section above, Automation: A Means To Becoming Faster, Cheaper, More Accurate And More Reliable, for specific finance areas to be automated.
The Potential of Automation in Fraud Detection and Prevention
Anomalies and trends that can be indicative of fraudulent conduct can be found using AI-powered algorithms. Also, finance professionals can analyse massive volumes of data fast and effectively using AI and automation, spotting trends, patterns, and insights that would be difficult to pick up on manually.
Talent Management in the Future of Finance: Upskilling and Training Programmes
Up to 40% of transactional accounting roles are anticipated to be automated out of existence in the upcoming years, according to a Deloitte analysis on the future of automation in finance. Automation will, however, also give finance experts new jobs and career options. Finance professionals will need to learn new skills in disciplines like data analytics and process optimization to compete in this new environment. Watching out for your you people during your transformation requires the right mindset. A mindset like the one highlighted in this article by Julie Winkle Giulioni, Instilling A “Just Skill Me” Mindset at Your Company
Automation implementation in the finance function
To successfully implement automation in the finance function, there are four key priorities to consider.
- Prioritise employee satisfaction: Start small and let employees guide the transformation.
- Clear expectations: Ascertain that the leadership is focused on the long term and aligned with opportunities. If you don’t have a clear tech strategy, no amount of automation can transform your finance operation.
- Provide access to everyone: Ensure that everyone may engage in automation and get the necessary skills.
- Fill in the little gaps: Even if you have millions of employees, everyone’s experiences and jobs are distinct. Try your best to fill in any gaps, no matter how tiny.
Automation and AI are set to transform finance, bringing benefits such as increased efficiency, accuracy, and cost savings. AI and automation can also play a crucial role in fraud detection and prevention while creating new opportunities for finance professionals to upskill and develop new skills. Overall, finance organisations that embrace automation and AI will be better positioned to succeed in the rapidly evolving digital landscape of the future. Enjoy this thoughtful and related piece by Ashok Manthena, Is Self Service Reporting the First Step To the AI Transformation In Finance?
Capability Building – A Customer-Centric Exercise For Finance.
Customer-centricity has become an essential element for any organization to be successful. Finance is no exception, and a customer-centric approach can help financial organizations improve customer engagement, increase customer satisfaction, and drive business growth.
In a recent survey by the University of Amsterdam, Workday, and Finance on a Mission, financial professionals were asked about the finance department’s most crucial client. The study found that 72% of respondents considered the end customer to be the most important. To be truly customer-centric, the finance department should prioritize both its internal and external customers.
In the past, the CFO’s role was primarily focused on financial budgeting, analysis and reporting. But now they must also be involved in customer experience and understanding. CFOs can drive customer empathy by closely monitoring customer feedback in real time using data analytics, they can gain insights into customer needs and preferences. This requires a shift in mindset from a purely financial perspective to a more customer-centric approach. CFOs are also required to collaborate with other departments to align their strategies and ensure that the company is meeting customer needs. This CFO Talk with Paul Barnhurst describes a customer-centric area, pricing, where CFOs and finance departments are having a bigger impact, CFO TALK – The Role of Finance in Pricing.
The biggest store in the world, Walmart, is aware of how important real time insights are. It has set out to create the largest private data cloud in the world. The cloud will be able to take 2.5 petabytes of data every hour.
Edwin Ang, senior financial controller APAC at Foodpanda, reports Foodpanda relies on a real-time dashboard to drive data-informed decisions. The dashboard helps them measure user incentives, manage rider supply and demand, reach new customers, identify fraud, monitor competition, predict orders, adjust pricing, and measure brand profitability.
Customer-centricity is key for financial organizations looking to improve customer engagement, satisfaction, and business growth. The finance departments and CFOs have to play and, indeed have started playing, a vital role in driving customer empathy and innovation. By adopting digital transformation and leveraging technology investments, finance organizations can transform their operations and deliver real results for their customers.
References:
· https://10xds.com/blog/ai-for-the-modern-cfo/
· https://www.ey.com/en_gl/ai/six-ways-the-cfo-can-use-artificial-intelligence-today
· https://www.bcg.com/publications/2019/simpler-faster-efficient-operations-financial-services
· https://www.bcg.com/publications/2021/becoming-digital-finance-function-benefits-challenges
· https://www.accenture.com/in-en/insights/operations/future-ready-finance https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/bots-algorithms-and-the-future-of-the-finance-function
· https://www2.deloitte.com/us/en/pages/advisory/articles/future-of-automation-in-finance.html
· https://www.bcg.com/publications/2022/first-steps-toward-the-future-of-finance
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