Intelligent Automation as a Key Enabler of Tomorrow's Agile Finance Function

Ameera Afzal Written by Ameera Afzal

It is estimated that Finance departments spend well over half (61%) of their resources on transaction processing and controls (44% and 21%, respectively), and only 17% on analysis and decision support (1,2). Today's companies want their CFO's to provide predictive analytics and strategic business consulting to boost financial performance, yet accounting and financial teams are drowning in the execution of low value tasks. Enter Intelligent Automation, the fastest growing enterprise software segment (and COVID is accelerating this trend): it gives Finance departments an opportunity to adopt a new operating model and to truly transform like never before given the current challenges most Finance teams face. 

But Isn't Finance Better Off With the Advent of the ERP?

Standard financial reports such as the P&L (Profit and Loss) contain thousands of underlying transactions that come from a myriad of systems. Despite the existence of robust ERP systems for a quarter of a century, most companies still have a large number of applications in use and an ever-growing number of accounting compliance requirements. In addition, the number of transactions is growing exponentially and their complexity is ever-increasing. Thus transactions are often manually fetched, validated and/or adjusted by accountants who generally work long hours and face high pressure deadlines. Manual effort means human error, and errors made early in downstream processes mean more manual effort is required to repair them (80% more effort than the original transaction (3). Due to this state of affairs, Finance teams still heavily rely on spreadsheets, which leaves little time for analysis and strategic planning. 

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finance-banner-mobile-0228A New Operating Model for Finance

Most shared services departments like Finance have already leveraged offshoring and outsourcing for repetitive, manual tasks. However, they still follow a traditional operating model in which Finance professionals are dedicated to a business unit, and, for the reasons above, their focus is on transactions, reporting and traditional budgeting cycles.

Robotic Process Automation (RPA) provides a fresh new opportunity to further reduce costs over offshoring and BPO (e.g., a robot costs 1/3 to 1/5 of an offshore employee). However, the use of significant automation requires a mandate, focus and organization which will be difficult to realize in a traditionally-focused finance organization.  A strategic solution is to consolidate tactical accounting and bookeeping activities under one core operational group that has a executive-backed hyperautomation. This leaves room to redeploy and organize Finance professionals into strategically focused groups (e.g., Cost Optimization, Working Capital Management and Liquidity, Risk Metrics, ROI, Taxation, Process Measurement, etc.), and finally provides an opportunity for true transformation.

 

transaction-1The Finance Transaction Execution Core

Tactical, transactional finance processes are executed across a broad number of groups. They should be done consistently across business groups and applications, which is another benefit of automation. A central, finance transaction execution group would consist of a operational unit of finance that focuses on core, tactical accounting and finance processes. Process and technology are the key skills that would be represented in this group so that finance professionals can be deployed to the businesses, and serve as subject matter experts (SME's) for process design and enhancement.

  • The most successful RPA programs leverage internal staff with finance process expertise to become citizen developers so as to keep costs down and maintain process knowledge and expertise in house. Dotted lines should exist between finance professionals in the Core group, and those aligned with business units, however, the goal is for the majority of finance professionals to be deployed in the field practicing their profession, and for the robots to do their traditional, manual tasks.
  • Citizen developers must be supported by more advanced architects and developers to write complex code, strategize on how bots should work together, economize on code, ensure performance/ROI. 
  • Ideally, the leader of this group should be half finance professional and half technologist, with experience in managing a digital workforce. Instead of being concerned with job descriptions, pay, benefits, performance management, time off, etc., the leader would strategize on the cost and efficiency of the digital operation. If not carefully managed, a digital workforce can, too, become complex and expensive. There is an art to managing a digital workforce that is more efficient, accurate and less costly than a human one.
 
Digital labour
What Tasks Should the Core Group Manage With Digital Labor?

We recently analyzed a sample of nearly 2,000 RPA use cases, of which 40% were Finance. Interestingly, automation of finance tasks evenly penetrated virtually all industries (e.g., banking, insurance, apparel, IT, food an beverage, transportation/logistics, automotive, consulting, government, healthcare, energy, utilities), with the highest usage in financial services (17%) and manufacturing (11%). The vast majority of these uses cases are for data entry, retrieval, validation and analysis; and claims processing and reporting. These processes fall under the following categories:

Infographic-3


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Conclusion

Process automation is here to stay, and the incredible rate of adoption across industries is a strong indicator that working alongside a digital workforce will rapidly become the norm. If you haven't considered automation in your finance department, here are some quick tips for identifying good use cases for your company:

  • Identify rule-based processes that do not involve decision making, judgment or human interaction
  • Make sure the process is repetitive, routine and well-defined
  • Look closely at "swivel chair" processes (i.e., they are run on several different hardware or software platforms and configurations); consider the input and output data involved in the process
  • Confirm that the process can be initiated by a digital trigger
  • Start with stable processes that run without error (note: consider an "automation first" mindset for new processes as your RPA program matures - see our blog, Can You Use Automation for Processes that Don't Exist?)
  • Identify processes with a high volume of transactions and large data sets
  • Identify high stakes processes that are prone to error

Click here for a FREE consult with a Finance Process Automation Expert

Be sure to review our other use-case focused blogs:

 

References
  1. BlumShapiro. "The Strategic Role of Finance," http://www.blumshapiro.com/media/uploads/files/The%20Strategic%20Role%20of%20Finance.pdf
  2. Workday. "How Can CFO's Take Control of Transaction Processing?", May 16, 2018, https://www.financialdirector.co.uk/2018/05/16/how-can-cfos-take-control-of-transaction-processing/ 
  3. Simon, Gary. "Why are 50% of CFO's Still Spending Too Much Time on Transaction Processing?" June 3, 2016, https://www.linkedin.com/pulse/why-50-cfos-still-spending-too-much-time-transaction-processing-gary/.
  4. Gartner. "Redesigning Finance Structure and Roles to Support Growth," 2019, https://emtemp.gcom.cloud/ngw/globalassets/en/finance/documents/insights/gartner-finance-redesigning-finance-webinar-exec-summary.pdf
  5. Gartner. "Gartner Survey Shows CFOs Double Down on People Cuts Due to Ongoing COVID-19 Disruption," May 11, 2020,https://www.gartner.com/en/newsroom/press-releases/2020-05-11-gartner-survey-shows-cfos-double-down-on-people-cuts-due-to-ongoing-covid-19-disruption0