As a company, you have to be smarter than your competition in order to win. Depending on your company goals, winning could mean: gaining market share, improving margins or to increase revenue.
For centuries chess was a human-only game. Garry Kasparov became the youngest ever World Chess Champion in 1985 at age 22. For years he held the world title. In May 1997 he became the first world champion to lose a match to a computer.
Given the rate of technological change even the best humans can be defeated. No industry is exempt: all industries can expect a game-changing experience. Things that seemed really far out there just a couple of years or even a month ago, will have a massive impact on how we re-assess every part of our business. Research of McKinsey shows that current technology can fully automate 42% of finance activities and almost entirely automate an additional 19 percent!
Make your move
When technology can do a specific task better & faster, you shouldn’t teach people to run that task. Instead, empower people and think ahead to meet shareholder expectations, such as “How can you address strategic goals like improve margins, decision making, and reducing risk?”
Many organisations are still spending the majority of their resources just keeping the lights on. A classic example is ‘we run the business this way for many years, so we do not have to change’. This is understandable as a move to a newer version of a financial system is not easy when you run a legacy system. However, with the speed of innovation, the gap between businesses that embrace innovation and those who do not is widening every single day.
It is not about the move itself, only about the timing as the move to a new system will in due time be unavoidable. In general, you have 2 flavours today:
- Applications that come with full service (SaaS), so you always gain from the latest developments.
- A legacy application that you can run yourself or via a hosted service.
Isn’t it quite obvious to go for number 1 as you don’t want to face a widening innovation gap again?
How RPA, AI, and ML impact your business
A few of the latest developments are robot process automation (RPA), artificial intelligence (AI) and machine learning (ML). Operational processes like capturing and processing all the transactions can run without human interventions. So you are able to free up time for value added tasks while technology ensures the reduction of human error as it autonomously unveils insights by creating reports and dashboards based on real-time data.
Implementing modern technology goes beyond refreshing systems as it is a strategic building block. It is similar to chess: think a few steps ahead to outperform your competitors. By being more operationally efficient, the finance team could drive and realize new implicit business models. Even driving the strategic agenda with unbiased intelligence! And this applies to not only the finance team, but also across the whole business. By fostering better interactions through technology, companies can connect segments up to now in isolation.
Innovations, like RPA, AI/ML, were not common years ago, but are available today. Personally, I think technology minded CFO’s will benefit the most from the digital age. They just get it!
How finance and IT can cooperate
The CFO cannot drive digital enablement on her/his own. Buy-in from the CIO is required. However, as I just mentioned the majority of IT resources is still on the maintenance side. An important mindshift on the side of the IT department has to take place: Less focus at infrastructure and more focus to support business innovation by embracing the latest technologies.
In a changing world, technology is driving change in the way we do business faster than ever before. Companies that focus on old technologies or stick with the status quo will fall behind. As the value of autonomous systems increase, the C-suite has to take ownership: Use technology as an enabler and prepare your workforce as modern technology will definitely impact the required skills of your workforce.