In an era of constant disruption, Finance professionals need to rethink their own roles as financial guides for the business direction as well as how reported data is sourced, configured and, ultimately, used. It is critical for business leaders to seek ways to improve the efficiency of their finance operations by both embracing emerging technologies and adopting an agile approach in the way daily operations are carried out.
An agile approach is an industry concept that speaks to a way of doing things: quick meetings where requirements are prioritised weekly, the building of multi-disciplinary teams, continuous testing, failing fast, moving to prototyping fast and so forth. When coupled with a deliberate shift to standardising systems and migrating core processes to cloud-based software, this can have a huge multiplier effect of value for the entire business.
Invest in new technology and cloud
Modern finance operations require a significant investment in software and hardware, combined with the skills to deal with these exponentially larger volumes. Finance is, however, not immune to pervasive organisational cost pressures and, therefore, do not have blank cheque books for elaborate finance transformation programs. To address the need for scalable and flexible processing power, while keeping cost under control, many finance functions are looking towards cloud computing as a potential solution. Cloud computing involves making Software-as-a-Service (SaaS) and Infrastructure-as-a-Service (IaaS) available to lessees. Provided the business case is deemed feasible, cloud solutions potentially have a number of benefits.
Processing power is easily scalable as and when required. Typically, an in-house system must be able to cater for peak month-end demands and often has spare capacity during certain periods of the month. When predictive AI is used during planning periods, higher levels of performance will also be required. These peaks and troughs can be managed in a cloud solution through which the organisation only pays for actual usage.
Allow for the use of very large data sets, which can be curated once and used many times within and outside of the Finance department. Once a trusted, reconciled data set becomes available other functions such as product development, marketing and risk can also access the same data set, knowing it is fully reconciled. This paves the way for hyper personalisation in terms of product offering and pricing down to a unit of one.
Cloud providers typically have many AI tools available that can assist with the production of insights, predictive forecasting and scenario analyses. Leveraging these available tools can significantly reduce development time and cost of ownership.
Logical access control and data security is a major issue, and cloud providers are active in the field of IT security. Control environments also benefit from advanced analytical software and increased processing power, as it is now possible to review all control accounts daily for exceptions, rather than on a sample or threshold basis.
Even though the benefits are alluring, there is a very strong caveat relating to the quality and completeness of the data. Poor quality and incomplete data moved to a cloud application will render most insight and predictive tools ineffective. Therefore, it is vital that a thorough quality review process be conducted before data is moved to cloud applications. Many companies are currently spending a significant portion of their time and change-budgets on data remediation to become cloud ready.
Adopt an agile approach
It must be noted that embracing an agile approach is hard. The risk is always that agile will be implemented as a “tick-box” exercise, which will defeat its objectives which are rooted in a way of thinking and a discipline of doing. Although organisations with agile cultures introduce new products and services faster and are quicker at identifying and making cost reductions, many managers loath ceding control. To get them to embrace agile, its value must be demonstrated to them.
A study by Accenture suggests that companies using agile technologies such as AI can realise benefits such as a boost in productivity by 36%, standardised finance processes to 80% in the cloud, and cut the time to process invoices from 15 days down to one. Agile also allows for wider skills development where leaders can cross-train team members, so they gain additional skills, which ultimately increases productivity. For example, banks can train business analysts to perform quality function tasks (such as working on test specifications in addition to product specifications), and developers pick up testing skills, and vice versa. Lastly, agile embraces ‘fast failures’, where flaws in a product or service idea are discovered and fixed early. This means lessons are learned early, saving time and money later as compared to traditional approaches.
Why implement both?
The data sets being used by finance has grown exponentially in recent years, putting pressure on technology infrastructure. Historically, finance had an objective of working only with aggregated data, but the demand for more accurate financial data and insights has become ever more important as a business imperative, beyond the traditional bean counting. The systems capable of producing these valuable business insights for commercial application tend to be data hungry, prompting a shift to using more granular, transactional level, and non-financial data and thus the adoption of AI and predictive analytics.
Needless to say, the adoption of these emerging technologies needs to be efficient to reap maximum benefits – thus part of an agile approach. Some in the organisation are still likely to resist the effort to move to agile but demonstrating quick results from the effort will help win over colleagues who are sceptical. The company’s competitiveness depends on it. Leaders know that innovative organisations are working hard to take the agile approach into their business for a reason. Agile approaches are critical to making established financial services firms grow faster, become more competitive, and serve customers better, especially online.
ABOUT CEDRIC MILLER
Cedric Miller is an accomplished financial executive with extensive commercial experience at the C-Suite of blue-chip companies. He has outstanding people skills and a recognised business success record, achieved a variety of top executive management positions with a strong bias towards corporate vision, financial leadership and organisational regeneration and a qualified chartered accountant. Cedric has excellent commercially orientated finance and accounting skills combined with strong abilities to build networks within and outside the organisation, extending beyond his professional qualifications as a chartered accountant. He is currently the Group Chief Financial Officer (CFO) of Altron, where he enjoys being part of and leading cross-functional high-performance teams with a focus on digital transformation and the modernisation of corporate finance functions. Previously he was inter alia the Head of Finance for Global Retail Operations of one of the largest banking groups headquartered in Africa.