Utilizing new technologies in the Finance domain
In our first blog we indicated that in 2018 the finance function must start preparing for the digital transformation of the organization. A number of new activities are expected from Finance organizations, such as predicting the future and supporting decision making at the highest level with predictive analyses. To achieve this, we proposed an integrated approach that looked at improving the organization, automating processes and optimizing technology usage. In the second blog we went deeper into identifying those indicators that can be used to ensure that the transition takes place smoothly and explaining how these could be measured. We have discussed the following 3 KPIs that cover the basis:
1. Process Automation percentage - The percentage of processes within the department that are automated.
2. Personnel performance - The tasks that the department members spend most of their time and what the added value of these tasks is for the organization as a whole.
3. Incurrence time - The amount of time your team takes to resolve incidents related to controlling and accounting.
Now we want to look at the underlying technologies that support these metrics and at the same time drive the changes in the Finance domain. The most important questions we want to answer are; how we monitor these goals, how do we demonstrate that our strategy is successful, and how it delivers the desired result using these new technologies at our disposal. 5 keys areas of development will be discussed below.
Big Data – Master data Management
The use of full available data sets in our analysis allows us to create more predictive models. It also allows for a more detailed monitoring of existing operations. This can then be used to seek out optimization scenarios.
As we already depicted in our first blog, working with Big Data must be accompanied by a jump in the adoption of master data management (MDM) technologies. Without agreement on common data definitions, how data is stored, and how it can be changed, there can be no data integrity. Without data integrity, the outcome of any analytics solution cannot be trusted, no matter how sophisticated.
When fully utilizing Master Data Management you can expect to be able to create more layered and detailed analytics models. You will be able to adjust variables which in the past needed to be approximated or even completely fabricated. Historical models can be created to track expansion of business and growth of product lines. Because Master Data Management expects adherence to standard across all streams interaction between, Financial, Logistics, Sales and even production data streams can yield new insights which previously where unattainable.
Software Robotics will allow us to automate manual tasks, which still involve user interaction even when there are no longer any intelligent decisions needed. Most companies now outsource these manual tasks to offshore locations to reduce cost. However, Robotics offers us a different approach to further reduce costs while utilizing the understanding of staff with years of experience.
To implement Robotics into your organization you have to keep the following in mind:
- Implementing Finance Robotics is not an IT project. A software robot works alongside and with existing IT systems. For the development of the application it is not necessary to have in-depth IT knowledge. In particular, operational knowledge is key to success.
- Detailed work instructions and supplier-specific training materials are a requirement for quick results.
- In addition to cost reduction, quality improvement is seen as the most important advantage of Finance Robotics implementations. By robotizing the (financial) processes, employees understand the processes better and see possibilities for optimization.
- Support functions such as IT, HR, Legal and Tax must be involved in the implementation process to prevent blockades of the various stakeholders.
- Change management cannot be underestimated. The management of employees, and the cooperation between employees and the new software robot is essential.
Areas where Software Robotics will have most impact are; where manual actions are required to transfer information between systems without changes, and where repetitive actions are carried out which do not require intelligent decision-making. Of course, it would be even better if you were even able to facilitate the minor decision making sometimes required. Which stem from the human experience base.
For this, A.I. presents us with new opportunities for automation of simple decisions. You can use machine learning to cater for the last 5-10% of your processes, which could not be automated due to human decisions being involved in the process. If we can teach the system to think as our most competent employees do when making simple decisions, We can strive for 100% process automation and move employees to positions where they truly can add value.
While A.I. and Robotics are similar, we feel that Robotics only requires knowledge of the task where A.I. requires the system to have knowledge of the environment and context as well.
A.I. can be best utilized to make deductions in areas such as allocations of postings and scenarios-based analytics. Currently these deductions (such as text interpretation, adjustments-based changes in contractors or other services providers and so forth) would be made by a person. However, if you could teach the system to do these small adjustments itself? By learning from how incidents and errors were resolved. If you could free your staff from this kind of time-consuming decisions, what would be the first improvement project that you had them work on?
In memory Computing
With the advent of In Memory computing, we no longer require overnight jobs to do meaningful analysis. Finance is one of the prime recipients of this new capability as data previously needed to be collected from other areas. This allows for greater breadth of reporting on an intraday basis.
Being able to do real-time analysis and reporting makes sure that the finance team can answer questions more quickly and add more value to their output. If we look at where this technology might be of benefit, imagine having a real-time P&L at any moment during the month. It will also be possible to do Margin reporting and getting insight into your position on every day of the week. Next Analytics on your assets and simulating depreciation will become a possibility. All of these reporting types used to require long calculation runs because they took up too much processing power because of the scope of the data set. Having this dataset readily available reduces processing time exponentially putting them within reach on a continuous basis.
More and more software providers are delivering their product as a cloud based system. These cloud ERPs require you to strongly standardize your process but have the added benefit of requiring no in-house updates to local legal legislations, localized solutions that address language, currency, and tax laws, capabilities that enable you to quickly explore new business scenarios and being scalable immediately when needed.
We see the trend of requiring greater returns on expenditures becoming more and more prominent. Doing less with more is the key in all areas of business. Cloud ERPs allow the Finance domain to move along with this. Support cycles, system mergers, and carve outs and all other complicated landscape changes are reduced in throughput time. And by reducing internal IT involvement with local finance requirements, the Finance domain can be more in control of its own functioning (Self Service). And can spend the time not spent on facilitating changes on learning more about their own system and how it operates.
Technology becomes integral to Finance operations
We have shared this insight because we feel that finance is shifting towards the point where technology is no longer a supporting function but necessary to remain competitive and grow as an organisation. We believe that the technologies mentioned above are the cornerstones of future operations within Finance and businesses as a whole. They will each play their own role in ensuring that companies are able to meet the demands of the fast paced and more competitive nature of business in this new age.