Digital transformation has emerged as one of the CFO’s top priorities, with new automations and technologies continually being developed that, in theory at least, offer opportunities to continually improve how business is done. It has been.
As managers of capital, finance executives not only play a key role in determining an organization’s technology spending, but are increasingly involved in implementing systems to help make choices.
“CFOs in all industries should focus on helping their teams automate as much as possible based on their resources and aptitude.” Shagun MalhotraNew York-based account reconciliation software provider, CEO of New York City sky stem“It’s definitely their duty to take the team and company to the next level.”
In the first installment of our CFO Automation/AI Close Up series, the evolution of automation and artificial intelligence (AI) and how finance executives can think about them to propel their companies’ digital transformation in the right direction. Find out what
Defining automation in the digital age
The word automation may conjure up sci-fi visions of robots silently operating sleek, chrome-plated machinery, but when it comes to financial functions, the reality is often quite different.
“Automation is simply replacing human input with repetitive, predictable and/or rules-focused processes,” Malhotra wrote in an emailed response to a question. I’m here.
Of course, the history of machines taking on tasks previously accomplished by human labor predates the age of computers. Early examples include physical systems for irrigation installed in the ancient world and, more recently, an assembly line implemented by businessman Henry Ford in the early 1900s, according to IBM’s 2018 report.
The term was infiltrated into the digital realm at the dawn of the information age, transforming in the early 1960s to describe online tools designed to assist data-driven corporate processes.
Amol Dhargalkar, managing partner and chairman of Chatham Financial, based in Kennett Square, Pennsylvania, said in an interview. “Automation can be achieved in many ways. The easiest way is to connect two different data sources.”
Many technologies fall into the category of automation, including robotic process automation (RPA), according to a 2017 Deloitte study. According to the research note, RPA can be defined as “programs that replace humans to perform repetitive, rule-based tasks,” not “walking and talking autobots.”
Overall, therefore, automation lends itself well to processes such as accounting, which are “full of rules, schedules, and predictable behavior,” writes Malhotra, a CPA according to her LinkedIn profile.
CFOs and finance executives are likely already familiar with applications such as straight-through processing, and finance departments and team members in finance can “click a button to turn one data set into another data set.” Manually by “converting”. “Automation is the ability to streamline that process.”
Reduce costs and increase efficiency
For CFOs, the main attraction of automation-based technology is its potential to reduce costs and improve the bottom line of the company. Investing in such technology can help financial leaders in the current economic environment, where experts are still predicting recession. Christina Ross, his CFO-turned-CEO of New York City at Cube, his provider of New York-based FP&A software, previously told CFO Dive.
Even automating simple, mundane financial processes, such as a company’s accounts payable (AP) and accounts receivable (AR) processes, can have tangible cost savings. In an October 2021 article by AP software provider AvidXchange.
Meanwhile, Deloitte’s 2017 RPA study found that companies that implemented RPA reported a return on investment within 12 months. Of those who implemented the technology, 86% said it met their expectations in terms of productivity gains, and 59% said the same in terms of cost savings.
Malhotra said the introduction of automation could bring “benefits” for businesses, but it also poses some challenges. For example, executives will struggle with automation if they can’t handle the company’s existing work processes well, and if their teams aren’t tech savvy and are “desperate” to keep things as they are. Malhotra wrote. “The good news is that these challenges can be easily met.”
AI Prediction Twist
One common problem that can trip up non-tech-obsessed executives is not understanding the difference between automation and artificial intelligence (AI).
Eric Emans, CFO of Nintex, a process intelligence and automation company based in Bellevue, Wash., said in an interview.
Although the terms may be used roughly interchangeably, they offer clear solutions, and AI systems are typically forward-looking and predictive, Emans said.
“I think we are desperate to get into AI, but there are currently very few solutions that I would say are truly AI-driven and drive predictability,” he said.
A good example of the difference between automation and AI is around things like payments, said Dimitri Dadiomov, CEO of San Francisco, Calif.-based ACH software company Modern Treasury.
“We are automatically coordinating things when we help companies build into their products, build their cash flow and initiate payments on their behalf,” he said. , team members know exactly what happens when they use it. Funds are reconciled and notifications are sent in real time. Employees do not need to be manually involved in the process.
AI could completely eliminate the human element and bring benefits in itself, but financial leaders may not be ready to rely entirely on machines and software for financial processes. .
“What we have found is that CFOs are much more comfortable with automation than with the idea of artificial intelligence because of the desire to make sure there are human checks on various processes, especially finance. because there is,” says Dhargalkar.
In any case, whether you choose automation or an AI solution, ugot itWhat companies are doing with technology is the key to making the right choices, ultimately freeing people and human brains to focus on more important, less mundane tasks. You can, says Emans.
“For me, the number one thing about automation is putting gray matter behind important things and not putting gray matter behind unimportant things. Let the technology do that,” says Emans.
