Don’t Fear Technology In Finance, Embrace It

Author

Jeff Thomson

December 13, 2016

Shutterstock

Shutterstock

Industry buzz has it that technology will change accounting as we know it. Though change is inevitable, management accounting teams shouldn’t fear it’ll leave them without a job. Instead, they should embrace it. According to Marty Borcharding, global BPO lead for Media and Entertainment at Capgemini, technology allows for less time spent on the financial close and more time spent being a strategic asset to the business. To shift this traditional accounting mindset and champion technology, Marty stresses the onus is on the CFO. We sat down this month to discuss how CFOs can harness technology within the finance team and why education at the college level and beyond, through professional certification, is crucial for building the right skills needed to do the job.

This interview has been edited and condensed.

Jeff Thomson: In your experience, you’ve found that CFOs and their teams spend 90% of their time on the financial close and 10% analyzing the numbers. How can CFO teams become more oriented toward insights and analytics?

Marty Borcharding: While the accounting teams are the ones spending 90% of their time on the close and 10% analyzing the numbers, the charge is on the CFO to flip this ratio. They can accomplish this through a mix of technological prowess and change management.

On the technology side, automation and robotics can free up time for accounting teams to focus on analysis. To effectively use this time, CFOs must attempt to change the deep-seated mentality that finishing the close is the end goal for the accounting team. Though timeliness and accuracy is critical, the close should be perceived as a non-event with increased focus on analyzing data which will bring additional insight and support the broader business goals and objectives.

Thomson: Technology is a pervasive force and is anticipated to automate much of the finance function in the near future. Rather than fearing the inevitable, how can CFOs leverage automation and robotics to allow more time for value-added activities?

Borcharding: CFOs should have this quote from Bill Gates on their desk at all times: “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”

Too many CFOs view technology as their saving grace; but, they won’t benefit from shifting priorities for their teams to analyze the close numbers unless they get their house in order first. This begins with determining what they can eliminate and optimize.

For example, CFOs should ask themselves what they can eliminate from the close process that doesn’t help them be better advisors to the business. I’ve seen businesses allocate small photocopy printing costs across hundreds of cost centers in the belief that it would improve the accuracy of financial reporting, only to realize this approach adds little or no value for the effort involved and detracts accounting teams from the end goal. Another example is the practice of reconciling every balance sheet account every month. CFOs should be strategic in looking at accounts to determine if some reconciliations can happen quarterly or even yearly. Similarly, activities should be optimized across business units to stamp out inefficiencies.

Only after going through a process of eliminating non-value add activities and optimizing processes can CFOs utilize the best capabilities of their ERP system to automate. Robotics should be considered last, and leveraged for processes that can’t be automated but would free up time for value-add activities.

 Thomson: How has the CFO’s approach to automating book close changed in the past five years? What changes do you foresee five years from now?

Borcharding: In the past five years, CFOs have increased their investment in software as a service (SaaS) models. This shift is important because it has helped them simplify the close process since this software is used out-of-the-box with little or no customization. Five years ago we saw more clients using on-premise systems, but the move to SaaS has, in a way, forced CFOs to take a more standardized and simplified approach to the close. Many of these cloud applications can interface with legacy systems and provide information into the data ledger that can then be automated. Companies that retain legacy on-premise systems are also waking up to the fact that having customized, non-standard systems and processes are costly and unstainable if they expect to remain competitive.

This shift to the cloud continues to accelerate and the CFO’s activities will be better integrated with the organization’s larger digital transformation strategy. You can’t have a digital strategy without a cloud strategy, and within the next five years leading organizations will have most, if not all, of their data, including all source data used to support the close, in a digital format.

Thomson: Shifting the roles and responsibilities of the finance team to focus on analyzing numbers and insight will require more strategic skill sets. How should CFOs approach this issue from a change management and talent management perspective?

Borcharding: In this scenario change management is difficult for CFOs because they’re basically telling their teams that process accounting transactions, a key reason for their existence within the company, is gone. Additionally, staff can feel threatened by the introduction of automation and robotics given concerns over job stability. In reality, technology helps accounting teams become more valuable because it allows for more time to focus on analysis that drives added business value.

From a talent management perspective, accountants will need new skills in order to be trusted advisors to the business. This starts at the college level through more classes in management accounting, entrepreneurship and analytics. Within organizations, CFOs have people with these skill sets but they typically sit within the financial planning and analysis department. CFOs must break down the walls between these departments to ensure that the accounting staff is just as qualified in analytics, for example. Why limit your analytics group to just some of your finance department when you can engage the entire team to help drive business insights and value?

Thomson: What anecdotes or data points can you share that support the benefit(s) of automation, robotics, machine learning and/or blockchain technology? Do you believe higher-order relationship management and insight skills will someday be replaced totally by machines?

Borcharding: From experience, we’ve seen benefits of automation when CFOs first focus on what they can eliminate and optimize. For example, we’ve achieved more than 25% journal elimination, up to 90% reduction in time spent on intercompany reconciliation, and 70% reduction in time spent on closing and reporting. With one of our clients, we crafted a vision of a continuous close to deliver reporting on the first working day of the month. We anticipate that this client will observe a nearly 50% month end close effort reduction in 2017 alone.

Finally, technology will not replace accountants; technology provides an opportunity to derive more valuable insights but the data must be questioned and analyzed.

This article was written by Jeff Thomson from Forbes and was legally licensed through the NewsCred publisher network.

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