CFOs are betting big on returns from new tech
Businesses are increasingly looking towards new technologies to become more efficient, agile and, perhaps most importantly, profitable.
It’s a movement that we know only too well under the abstract label of ‘digital transformation’, but a new survey by accounting firm Grant Thornton and CFO Research applies some hard figures to this change in mindset, and its impact in the finance department.
Based on a survey by 378 senior finance executives from companies with revenue between US$100 million and more than US$20 billion, CFOs are increasing their bets on a range of new technologies— including artificial intelligence (AI), robotic process automation (RPA), analytics and blockchain— as they look to automate much of their operations for maximum profitability.
According to the report, nearly half (48 percent) of CFOs expect to experience changes in workforce composition and organizational structure as a result of this increased spending, while 47 percent reporting that evolving technology is driving real change in business processes, not just speeding up existing ones.
With 87 percent of finance executives agreeing or strongly agreeing that technology is impacting the way the finance function operates, they expect to increase their use of technology more specifically for key strategic functions such as financial planning and analysis (30 percent), financial reporting and control (28 percent) and treasury/working capital management (29 percent), within the next year.
In order to achieve that, finance executives are prioritizing advanced analytics (38 percent), machine learning (29 percent), optical character recognition (27 percent) and artificial intelligence (24 percent).
Market forecasters project intelligent automation type initiatives will experience 62% growth in 2019 and beyond, with a focus on efficiency gains, personalized insights and automated processes. In fact, it’s estimated that 40% of finance activities can be fully automated.
In fact, the survey found that the vast majority (95 percent) of finance leaders agree or strongly agree that the finance function should be an active participant in allocating resources for innovation across the enterprise.
“The speed of technology change will demand increased frequency of touchpoints between the CFO and CIO to review budget forecasts and planning […] as technologies evolve, the CFO and CIO will serve as two quarterbacks, but it will require the entire C-suite working together to make a digital transformation successful,” said Chris Stephenson, Principal of Business Consulting at Grant Thornton.
For finance heads or business executives looking to embark on their own journey towards a digital transformation or automation overhaul, the researchers laid out several guidelines:
# 1 | Identify business use cases
Work with the CEO, board and other C-suite peers to systematically identify processes within the finance function and the enterprise that would most benefit from automation and digitization. Determine which opportunities will offer the most incremental value to the organization in the short term. Engage business unit peers to identify pain points in various financial processes including slow reporting or incomplete data.
# 2 | Adopt a machine-first mindset
Determine where you can shift manual, low-level work to computers and move finance team members into higher-value strategic roles. Realign resources as needed and provide additional training to allow team members to obtain new needed skill sets such as data analytics and forecasting.
3 # | Experiment
Begin to pilot use cases and use them as a foundation to define capabilities and new ways of working. Share success stories broadly throughout the enterprise as well as lessons learned from project failures.
# 4 | Improve communication processes
Evaluate the way in which the finance function interacts with and aligns with other business functions including IT, marketing, sales and strategy. Identify new processes for more frequent touchpoints to ensure the finance function has a deep understanding of business unit needs and challenges.
# 5 | Align digital investments with business objectives
Identify core key performance indicators to measure the effectiveness of all digital transformation initiatives and deliver healthy ROI. Prioritize metrics that link technology investments and innovation to business objectives, ROI and growth.
# 6 | Invest in building a culture of innovation
Focus on creating a culture of innovation within the finance function to empower employees and cultivate a more digitally capable workforce. Emphasize the human side of digital change rather than technology-first approaches.