5 trends driving the transformation of finance
INSIGHT ARTICLE |
In 2018, we are hearing both bad news and good news for the chief financial officer (CFO). While CFO.com says the majority of financial executives describe their technology as inefficient, constrained by silos and not linked to decision-making, the upside is that there are a number of technology-based remedies for the problem. Some of the leading trends transforming finance are actually hidden opportunities for financial decision-makers.
Using cloud-based software for customer relationship management (CRM) has been a mainstay for organizations for decades. In 2018, however, software as a service (SaaS) became a default option (even for small- to medium-sized companies) for finance as well. While sometimes organizations use a “mixed” model—an on-premise legacy application integrated with multiple SaaS point solutions—the comfort level with SaaS has increased. That means there are now more users, configuration options and support resources, which will eventually drive costs down.
While it has taken enterprise resource planning (ERP) vendors some time to adjust to the increasingly mobile business environment, leaders in the industry have finally succeeded in making their platforms available via mobile devices. It’s now possible for CFOs and company managers to obtain real-time snapshots of key metrics or enter transactions from a phone or tablet. So whether it’s viewing sales, expenses, inventory and receivables, or placing purchase orders, approving transactions or managing the warehouse, users now have those capabilities on any device, from anywhere, at any time. This ability will have a huge impact on the CFO’s ability to manage operations, make key decisions and be proactive about leveraging opportunities.
Software to prioritize tasks and operate more efficiently has also existed for a number of years. As with adoption of any kind, it hasn’t happened overnight. In 2018, there is a marked increase in the use of workflow automation software applications that minimize the number of emails, eliminate unnecessary steps in the workflow and optimize processes. For organizations that already use ERP systems, workflow automation capabilities are usually included at no extra charge. A more streamlined operation can function with fewer people. It also allows a business to run efficiently, which means freed-up resources can be used elsewhere in the company.
For most companies in 2018, waiting until the end of the month to close the books and deliver financial statements is a thing of the past. There are tools available that can automate reconciliations and close on a daily basis. Plus, now they are more affordable for small- to medium-sized firms. It requires integration across existing systems and the capabilities of cloud software, but the energy and resources used on a burdensome closing process can now be shifted from transaction processing to financial analysis and strategic action.
As software evolves, it naturally becomes more efficient at its core functions. Developers are constantly thinking of ways for their products to do what they do well even better. The introduction of artificial intelligence as a technology that can supercharge existing capabilities as well as enable new ones is an entirely new reality in 2018. For example, machine learning can take existing financial data and forecast demand to help drive the procurement process. It can look at customer behavioral data and identify the customers in which it should invest more resources. It can also analyze social media and unstructured data to help focus the sales team.
While there are more software capabilities on the horizon,—Think, “Alexa, please run my monthly financial statements.”—the platforms and applications, rates of adoption and integration of existing and up-and-coming cloud-based systems are simplifying the job of the CFO. It’s also creating new opportunities for developing new lines of business and ways to compete. What will be required today and in the future is for CFOs to discard the transactional mindset of the past and adopt the analytical and strategic mindset of the present. RSM can help.
For more information on transformation in finance, watch Michele Juliana's interview on CEO Chat.