Over the past decade, the finance technology landscape has changed at a dizzying pace, with all indicators pointing to a faster pace of innovation.
Cloud computing has lowered the bar to deploying new apps. Finance automation enables accounting and finance teams to accelerate the financial close and budgeting cycles.
Robotic Process Automation (RPA) promises to eliminate repetitive, high-volume tasks like reconciliations. New technology like AI and blockchain are coming into view.
It’s a wave of technology that can seem overwhelming.
Plotting a Path to Value
Research by KPMG found that 70 percent of CEOs see technology as key to the future role of the CFO. The challenge for finance leaders is to learn about the different technologies available to them in the finance stack, understand where they can create value, gain perspective on their maturity and risk, and create a value and risk-adjusted roadmap for change.
Understand today’s finance solutions will help you effectively navigate these challenges and advance your finance transformation initiatives.
Cloud Computing
Solutions that are built specifically for the cloud offer a cohesive web-based UX, and enable business users to customize them. Further, they often have strong Application Programming Interfaces (APIs) that enable them to be easily integrated with other cloud and on-premise apps in the finance technology landscape, like legacy ERPs or 3rd-party supplier, invoicing, banking and credit card systems.
With cybersecurity and continuity being top of mind for CFOs around cloud services, look for ISO 27001 certification as well as SOC 1/2/3 compliance to ensure that the provider is dedicating the utmost security and highest level of controls around managing your application and securing your data.
Finance is following a hybrid model in how they deploy cloud apps. Simply, a hybrid approach blends new cloud technology with existing legacy on-premise apps. It enables the addition of new cloud apps, such as reconciliations automation or improved financial reporting, without having to rip and replace old infrastructure by integrating new with old.
For success, look for cloud solutions that deliver rich, pre-built connectivity to ERPs, strong SOAP and REST APIs, and the ability to reach across firewalls to connect to on-premise systems.
Cloud Financial Corporate Performance Management (FCPM)
Cloud FCPM technology, now in the broad stages of adoption with large and mid-size accounting organizations, is focused on streamlining and reducing risk in the financial close process.
FCPM technology comprises multiple capabilities, including reconciliations, financial close task management, financial reporting, intercompany processing, and variance analysis, as well as financial consolidation and pre-consolidation.
Typical users of FCPM technology include all levels of accounting and audit, as well as downstream teams that are consumers of financial data, such as FP&A.
FCPM technology augments existing on-premise or cloud ERP deployments, often connecting with outside systems of record such as banking, credit card, and supplier systems.
Recently defined by Gartner as a strategic “Magic Quadrant” category, FCPM marks a shift away from monolithic, on-premise CPM “mega-suites” that are often hard to deploy and expensive to maintain, and toward best-of-breed apps designed specifically for accounting, audit, and CFOs.
Robotic Process Automation (RPA)
RPA can be considered a subset of FCPM. RPA is a rules-based technology approach designed to replicate high-volume repetitive tasks, and can be applied to areas such as transaction matching or intercompany eliminations.
With increased advancements in cognitive computing and machine learning, the complexity of tasks that are subject to automation by RPA engines is continuing to advance.
Value drivers for RPA include efficiency as well as consistency in the application of business rules.
Data Analytics
Reporting and analyzing data is typically top of mind for finance teams. Business Intelligence (BI) and Data Discovery and Visualization tools all enable better analysis of revenue and expense data, trends, thresholds, and variances in dashboards or reports.
Cloud data warehouses further enable finance teams to integrate finance and operational data as they step deeper into a business partnering role, supporting cross-functional teams.
However, the first step in any data analytics initiative is ensuring access to data, and it’s typically often hard to extract from ERPs and other systems without extensive “data wrangling” or massaging in spreadsheets.
A multi-ERP environment often presents an even larger challenge, requiring the combination of data across multiple systems to get a consolidated view for analysis, creating further delays.
Manually integrating data analytics tools with multiple accounting systems is not only time-intensive. It can often create serious issues around data quality and the risk of erroneous analysis downstream.
FCPM technology is frequently used as a data access layer across ERPs and other financial sources, ensuring strong data integrity, establishing a single trusted point of access for financial data for analysis, and enabling real-time access to the latest financial data at any stage during the accounting period.
Artificial Intelligence (AI)
Artificial intelligence, machine learning (ML), and more recently, deep learning, have all gained substantial attention in the media. In many cases, vendor claims around offering this class of technology are overblown.
In a nutshell, AI and ML algorithms/rules can be trained based on identifying patterns in large volumes of numerical or text-based data. They can then apply what they’ve learned to uncover insights such as helping accounting teams and auditors find anomalies and exceptions in data, and provide an early warning for accounting fraud.
In almost all cases, the claimed benefits of current state-of-the-art AI in finance are already being realized by current FCPM and RPA-based solutions. These products already provide advanced rules-based systems that can both automate and highlight exceptions and variances, and are specifically designed for the needs of accounting.
Finance in the Driver’s Seat
As we move forward into the new finance landscape, digital savviness is key. According to EY, 74 percent of CFOs see understanding of digital, smart technologies and analytics as a required skill, and McKinsey reports that only 3 percent say they’re prepared for the digitization of business in the next 5 years.
Now is the time for finance leaders to take the lead on technology decisions, and ensure their organization is equipped to thrive in our digital world.