There is still a lot of work to be done to benefit from digitalization

How would you like to see the future? Do you sometimes wish there'd be complete and accurate visibility on your cash flows, automated accounts payable processes with no errors and peace of mind in terms of security? 

In many other fields, full digitalization is the current reality, not so in finance. CFOs are in fact looking at a major opportunity to reach a competitive advantage in the market - or risk to fall behind. Many other functions are more advanced - sales, marketing, HR (cloud), the B2C world (real-time purchasing, paying) - whereas in finance, comparatively, the processes are still largely paper based and highly manual. 

What’s holding Finance back?

So why hasn’t digitalization touched finance? I think there simply hasn't been a player that has managed to disrupt the market with a solution that is simple and easy and yet meets all the needs that we in Finance have.

For example SAP did disrupted the market in the 90s with a new generation of ERPs (following the AS400 of IBM). Everybody wanted their hands on an SAP system. But the fact is that the time of large custom-integrated ERPs is over. These ERPs require a lot of human power but the future is in SaaS and ‘machine power’. Outside of technology, automating processes requires a lot of internal work which makes it a heavy endeavour. And of course, we are all human, which, admittedly, also means that we are not always fond of change.

Now comes the good news: CFOs have a lot to look forward to when it comes to having something to gain from digitalization. 

What lies ahead for CFOs in practice? 

First: From real-time to future-looking

Real-time information and transparency are the known buzzwords. We’re now moving into the second wave of digitalization, where we not only use rules to automate processes but also take advantage of algorithms capable of learning on their own. This development is facilitated by system integrations, data visualization and of course also Machine Learning. In practice CFOs along with their teams will be able to move from reporting on what has happened to reporting on what’s ABOUT TO happen - a whole new level of actionable insight.

The obvious benefit in this is that it gives executives the needed reaction time to potentially course correct well in time. It’s like finally getting a good enough cleaning liquid to clean your windshield and getting clear visibility on the road ahead. It’s not hard to argue why this would be interesting: every company wants predictive analysis for easier decision-making. We expect the result to drive improved bottom line performance and improve soft values like customer satisfaction and earnings predictability.

We are not far from having a system that produces a forecasts automatically for more than just one or two functions. Today, forecasting is typically based on extrapolation but the future of forecasting will bundle in external data sources to actually predict the near future - rather than simply extend the past.

Second: Reaping the value of real automation of processes - finally!

Many roles in finance are done by people having highly manual workloads. Of course one of the concerns is the obvious questions weather we all will be replaced by robots soon. It's a valid concern don't get me wrong but I think we can look at it in another way too. Elements of AP, AR, cash management, collection, etc. these are all processes which can be labour intensive with huge amounts of repetition. This clearly opens the door for automation.

Rule-based automation has been the thing for a long time already, but will machine learning finally be the answer for true automation. With increases of e-invoicing adoption and the gradual digitalization of everything from small businesses to large governmental agencies, automation tools (AI/ML) will have more and more clean data to play with - increasing automation across the board.

But what about the people doing the work? In some shape of form all our jobs from specialist to high level executives feel at times threatened by a super powerful AI. But are they really? According to Accenture, the future of the workforce won't come down to a binary choice between humans and robots; it will instead be an empowering mix of the two.

The point is that automation is about freeing up manual workloads, empowering people to focus on value creating, non-routine tasks that require things such as social intelligence, creative problem solving and complex critical thinking instead. So instead of moving data from one source to another they can now spend time analyzing the data and drawing actionable conclusions. And of course it's our task as business leaders to enable our employees to transition to new jobs that don't yet exists but will inadvertently be brought about by new technologies.