CFOs have a lot on their plates, but some tasks matter more than others. This year, it seems, the enterprise is relying on finance to deliver some critical objectives. And first among the objectives is supporting the enterprise’s need for information and analytics, according to to The Hackett Group’s Key Issues Study, released last week. That priority is even ahead of “maintaining a competitive cost structure.”
The two digital technologies that finance departments will adopt most broadly the next three years, according to finance leaders, will help meet that objective: master data management (MDM) and advanced analytics.
About 40% of finance executives in Hackett’s recently released survey of global companies with more than $1 billion in revenue say they have already adopted tools for advanced analytics and 46% for MDM. In two to three years, about 80% plan to be using both of those technologies.
“One is useless without the other,” explains the survey report written by The Hackett Group’s Nilly Essaides, Tom Willman, and Jim O’Connor.
“Absent a strong foundation of consistent data definitions and processes for how data is stored or changed [a key capability of MDM], there is no guarantee of data integrity. And without data integrity, finance cannot trust the outcomes of analytics solutions, no matter how sophisticated.”
How will finance teams have the time to spend analyzing all the data spit out by business units and provide options and guidance to management based on it?
Ideally, time and resources will free up because of the other digital tools being adopted: cloud-based applications, robotic process automation, and cognitive computing/artificial intelligence.
About 45% of finance leaders say they are already using cloud-based or software-as-a-service applications, and 82% plan to do so in the next two to three years.
“It’s already gaining momentum in applications such as enterprise performance management, expense reporting, and account reconciliation,” say the report’s authors. “We are even starting to see signs of a shift to ERP in the cloud, but that movement is still in its very early phases.”
Lower cost of ownership, ability to quickly adopt best practices, and faster implementation are the particularly attractive beneficts of the cloud for finance teams, and all are pieces of the drive to become more efficient.
Among emerging technologies, robotic process automation (RPA) should see the highest take-up rate. It is also the technology that the greatest number of finance teams are currently piloting. With software robots replacing people in tasks such as “reinputting data from one system to another,” RPA adoption should bring finance organizations some relatively quick wins compared with, say, implementing an ERP system.
About 21% of finance leaders say they have already adopted RPA, with that number expected to increase to 78% two to three years from now. And 58% of finance organizations are currently piloting RPA solutions. (See chart, above.)
“The business case [for RPA] is relatively easy to make,” say the Hackett authors, with the closing process and general ledger accounting being the areas where RPA is being most quickly applied.
In contrast to RPA, the cases for other emerging technologies are underdeveloped. Only about 17% of financial leaders say their organizations are piloting blockchain solutions, for example, and 26% Internet of Things applications. Virtual assistants/chatbots are being tested by 26% of the survey respondents’ organizations.
“Finance is only beginning to explore how [those tools] may be applied to improve efficiency and effectiveness,” according to the authors.
Irrespective of what kinds of technologies they are piloting, CFOs have high expectations for their technology investments in 2018. In early January, CFO‘s own IT survey found that 38% of finance chiefs expect those investments to have the largest positive impact in the area of process efficiency. That was followed by cost reduction (35%), reporting accuracy (34%), data/analytics availability (34%), and staff efficiency (33%).
Those expectations suggest that as much as CFOs are concentrating on delivering for the entire enterprise, they are also not done wringing costs out of the processes and procedures they oversee.