VideoWhile Gandalf and Dumbledore give moviegoers a spectacular dose of year-end wizardry and soothsaying, the editors of CFO.com thought finance executives might want their own glimpse of the future. To that end, CFO.com Senior Editor Marie Leone spoke with futurist and social scientist James Canton about emerging technologies — and how those systems will change corporate finance in the not-so-distant future.
For example, much of what the CIO knew last year, the CFO must know this year, opines Canton, who is the founder and CEO of the Institute for Global Futures, a San Francisco-based think tank and consultancy. Going forward, says Canton, CFOs will reinvent themselves and their career for the long run, and their success will be determined by what new things — outside of financial management — the finance chief is willing to learn.
Over the next few years, the CFO's technology purview will grow to include management of real-time reporting; cross-border transactions without boundaries; fast bandwidth; nanotechnologies; software agents that clone CFO decision making; and location-based marketing tied to GPS satellites.
Perhaps more interesting, executives will begin to see some of these technologies creep into their daily routine before King Aragon returns to Middle Earth or Harry Potter meets Sirus Black next holiday season.
CFO.com: Would you give a quick assessment of the current business technology environment?
James Canton: We are in the Middle Ages when it comes to the mature deployment of technology. This is just the beginning of the transformation of business led by innovation. The real productivity and competitive advantages are just emerging now.
CFO.com: Haven't we at least made it to the Age of Enlightenment?
Canton: We are on our way. However, think of it this way: 75 percent of the world's population has not made its first phone call; the Internet only reaches 500 million; less than 1 percent of all supply chains have been connected; and we don't have the wireless Web. What's more, half of all the products that will be sold in the next five years haven't been invented yet.
CFO.com: What will the ante be to stay in the game?
Canton: Over the next 3 to 5 years, senior executives will have to invest in smart information technology to establish a clear competitive advantage. Creating the real-time enterprise with a 360 degree view of all financial information, on-demand, is coming. My chief concern: whether companies will develop a capacity to anticipate future opportunities and risks.
CFO.com: Which transformational technology will CFOs test-drive first?
Canton: CFOs will gain the most from building financial systems that have complete financial knowledge transparency. In practical terms, financial managers will close the books, get an accurate cash picture, and identify and locate assets all in real-time. In addition, CFOs will use artificial intelligence (AI) for decision-support once the technology is embedded in back-end software. AI agents will retrieve internal and external data on a daily basis, to send, for example, automatic messages to notify the CFO if a particular budget is incomplete, or if too much cash is being is moved from a particular account.
CFO.com Will these back-end systems be smart enough to sniff out accounting fraud?
Canton: If we program them that way. The software robots — fraud agents — will identify irregular accounting patterns. Whether the irregularity turns is intentional or just a mistake, is another matter. As more financial systems become connected in data warehouses, the use of agents will increase.
CFO: Won't companies need access to more bandwidth to serve these corporate technology needs?
Canton: Fast bandwidth will be mission-critical for running the enterprise. As more functions move to the Internet, fast bandwidth will be essential. Workers will need broadband access for everything from Web-based collaboration on projects to checking their 401(k) account. If fast reliable communication links via the Internet are not available, ROI will suffer.
CFO.com: Would you give an example of how technology might affect specific corporate finance functions?
Canton: They'll be some changes to treasury operations over the next few years. For instance, CFOs and treasurers will migrate to systems and gateways that capture, report and manipulate real-time data. This will give them more control over investments, asset allocations, human and capital resources, arbitrage techniques, and more. Also, much of the decision-making complexity — such as when to move cash or assets or when to execute a payment of Euros into British pounds — will be handled by an automated agent programmed with rules that mirror the company's risk tolerance and success parameters. Humans won't disappear. They'll do more, faster and effectively.
CFO.com: When will AI-based decision support systems hit the mainstream?
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