Predictive Isn’t Just for IT Anymore

Coffee-break with GameChangers

“No excuses, play like a champion.” How does this quote from the 2005 Vince Vaughn comedy Wedding Crashers relate to the financial world? Well, the key players in your Finance organization – your controller, accountant, treasurer, etc. – have no excuses left for ignoring modern technology. The reality is that understanding, employing, and advancing the innovative options in the industry is de rigueur if you want to meet and exceed your CFO’s performance goals while staying ahead of competitors.

During a recent SAP Game-Changers radiocast, panelists Anders Reinhardt, head of global business intelligence at VELUX; Nancy Jones, an accounting professor at San Diego State University; Robert Kugel, SVP and research director at Ventana Research; and Henner Schliebs, senior director in strategic product marketing at SAP analytics, weighed in on the role of predictive analytics in finance.

Seek data quality over quantity

According to Reinhardt, a solid analytical strategy must be in place before you can reap the benefits of predictive analytics or Big Data. Jones agrees, adding, “The problem is that people think that the more data they have, the more they can make good decisions, when in fact it’s not necessarily quantity. It’s more [about] quality.”

When you run predictive analytics on high-quality data, you can, for example:

  • Create more nuanced and accurate forecasts
  • Set realistic goals and measuring performance to such goals
  • Spot deviations from expected results

Kugel argues, “How well predictive analytics is going to work for any company is going to depend a great deal on the data quality and its availability.” Research shows that companies’ data issues are proportionate to their size. Larger corporations with more resources shoulder a bigger burden when dealing with data quality – and Big Data only aggravates the issue, as it requires new methods to make systems adaptable.

IT departments have to manage data stewardship before realizing the full value of predictive analytics. Reinhardt sees the fundamental challenge: “Big Data currently contains a lot of noise. And, do we have the analytical skills to see past that noise and get [to] the real gold in the data?”

Promote the marriage of IT and accounting

Business and IT must work in tandem in order for the Finance department to serve as a strategic partner to the rest of the business. Schliebs explains, “This is what the younger and more proactive CFOs are really requesting from their Finance departments: How do I apply analytics to a business problem that we’re having here – right now – that we are trying to solve?”

Problem solving must happen across the whole organization, not just in finance – and technology aids the process. The rising complexity of operations has frustrated many of the financial players. To encourage the adoption of predictive analytics, something needs to be simplified. Finding talent with both accounting and IT acumen is a promising start.

“You want to instill the notion of elegance as opposed to complexity. And elegance requires a high degree of sophistication to be made real,” adds Kugel. That sophistication can be gained by adopting cutting-edge innovations. The panelists hope that in the next five years, we’ll be talking about results instead of the technology that breeds them.

Have you already taken the leap to adopt predictive analytics? To find out how far you can go, listen to the full radiocast.

What’s Broken About Budgeting? – Part 1

By Gary Cokins, Founder of Analytics-Based Performance Management LLC

So tell me, how did your EPM system stack up against the vision I outlined in my last blog? Hopefully you’re in the “exceptional” category, but if not quite yet then maybe I’ve given you a few ideas to think over. I’m switching attention now to focus in on one area of EPM, but because it’s a big area I’m going to split this across two blogs. How many people in your organization love the annual budgeting process? Probably none. The mere mention of the name “budget” raises eyebrows and evokes cynicism. It should. That’s because the agonizing annual budget process may include:

  • Obsolete Budgeting – The budget data is obsolete within weeks after it is published because of ongoing changes in the environment. Customers and competitors usually change their behavior after the budget is published, and a prudent reaction to these changes often cannot be accommodated within it. In addition, today’s budget takes an extraordinarily long time to create, sometimes the process begins six months in advance and in the time taken to finish it the organization may often be reshuffled and resized.
  • Bean-Counter Budgeting – The budget is considered a fiscal exercise produced by the accountants and is disconnected from the strategy of the executive team – and from the mission-critical spending needed to implement the strategy.
  • Political Budgeting – Listening to the loudest voice, caving in to the strongest political muscle and using the prior year’s budget levels as a baseline are not be ideal ways to award resources for next year’s spending.
  • Over-Scrutinized Budgeting – Often the budget is revised midyear or, more frequently, with new forecast spending. Then an excess amount of attention is focused on analyzing the differences between the actual and projected expenses. These include budget-to-forecast, last-forecast-to-current-forecast, actual-to-budget, actual-to-forecast and so on. This reporting provides lifetime job security for the budget analysts in the accounting department.
  • Sandbagging Budgeting – The budget numbers that roll up from lower- and mid-level managers often mislead senior executives because of sandbagging (i.e., padding) by the veteran managers who know how to play the game.
  • Blow It All Budgeting – Reckless “use it or lose it” spending is standard practice for managers during the last fiscal quarter. Budgets can be an invitation to managers to spend needlessly.
  • Wasteful Budgeting – Budgets do nothing to help identify waste, unused capacity, or low productivity because they are not visible from the prior year’s spending. In fact, inefficiencies in the current business processes are often “baked into” next year’s budget. Nor to budgets do not support any form of continuous improvement.

The “traditional” annual budget is ingrained in an organization, yet the effort of producing it heavily outweighs the benefits it supposedly yields. How can budgeting be reformed? Or should the budget process be abandoned altogether because it can drive behavior counter to the organization’s need to rapidly respond to changing goals? How? Because managers will view end of fiscal year fixed targets as a “contract” they need to meet when instead they should be shifting their priorities in respond to changing business conditions. If the budget is to be abandoned, then what should replace its underlying purpose? 

The Evolutionary History of Budgets[1]

Why were budgets invented? Organizations seem to go through an irreversible life cycle that leads them toward specialization and eventually to turf protection. What do we mean by this? When organizations are originally created, managing spending is fairly straightforward. With the passing of time, the number and variety of products and service lines change as well as the needs of their customers. This consequently adds to more complexity and results in more indirect expenses and overhead to manage it.

Following an organization’s initial creation, all of the workers are reasonably focused on fulfilling the needs of whatever led to its creation in the first place. Despite early attempts to maintain flexibility, organizations slowly evolve into separate functions. As the functions create their own identities and staff, they seem to become fortresses. In many of them, the work becomes the jealously guarded property of the occupants. Inside each fortress, allegiances grow, and people speak their own languages – an effective way to spot intruders and confuse communications.

With the passing of more time, organizations become internally hierarchical. This structure remains even as value generating transactions and workflows flow through and across the internal and artificial organizational boundaries. These now-accepted management hierarchies are often referred to, within the organization itself as well as in management literature, as “silos,” “stovepipes” or “smokestacks.” They influence managers to act in a self-serving ways, placing their functional needs above those of the cross-functional processes to which each function contributes. In effect, the managers place their personal needs above the needs of their co-workers and customers.

At this stage in its life, the organization becomes less sensitive to the sources of demand placed on it from the outside and to changes in customer needs. In other words, the organization begins to lose sight of its raison d’être. The functional silos compete for resources and blame one another for any of the organization’s inexplicable and continuing failures to meet the needs of its customers. Arguments emerge about the source of the organization’s inefficiencies, but they are difficult to explain.

By this evolution point, there is poor end-to-end visibility about what exactly drives what inside the organization. Some organizations eventually evolve into intransigent bureaucracies. Some functions become so embedded inside the broader organization that their work level is insensitive to changes in the number and types of external requests. Fulfilling these requests were the origin of why their function was created in the first place. Yet, they become insulated from the outside world. This is not a pleasant story, but it is a pervasive one.

In part 2 I’ll discuss the evolving role of the CFO and ways in which budgets can be reformed.

[1] This section is drawn from Better Budgeting; Brian Plowman; 2004; http://www.develin.co.uk.

 

 

About the Author: Gary Cokins, CPIM
Gary_Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC www.garycokins.com . He began his career in industry with a Fortune 100 company in CFO and operations roles. Then 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013 Gary was a Principal Consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics and Predictive Business Analytics.

gcokins@garycokins.com; phone +919 720 2718

http://www.garycokins.com

Linkedin.com contact: http://www.linkedin.com/pub/gary-cokins/0/15a/949.

Hear Gary share some of his thoughts concerning EPM innovations and best practices at the SAP Conference for EPM in Chicago, October 13/14, 2014

Are Exceptional EPM Systems the Exception?

By Gary Cokins, Founder of Analytics-Based Performance Management LLC

Last time out I set a challenge for readers of this blog to question the performance management strategies and practices of their own organizations and executive teams. I hope you found this to be a useful and interesting exercise.

Quite naturally, many organizations over-rate the quality of their enterprise and corporate performance management (EPM / CPM) practices and systems. In reality they lack in in terms of how comprehensive and how integrated they are. For example, when you ask executives how well they measure and report either costs or non-financial performance measures, most proudly boast that they are very good. Again, this is inconsistent and conflicts with surveys where anonymous replies from mid-level managers candidly score them as “needs much improvement.”

Every organization cannot be above average!

What makes exceptionally good EPM systems exceptional?

Let’s not attempt to be a sociologist or psychologist and explain the incongruities between executives boasting superiority while anonymously answered surveys reveal inferiority. Rather let’s simply describe the full vision of an effective EPM system that organizations should aspire to.

First, we need to clarify some terminology and related confusion. EPM is neither solely a system nor solely a process. It is instead the integration of multiple managerial methods – and most of them have been around for decades arguably even before there were computers. EPM is also not just a CFO initiative with a bunch of scorecard and dashboard dials. It is much broader. Its purpose is not about monitoring the dials but rather moving the dials.

What makes for exceptionally good EPM is when multiple managerial methods are not only individually effective but also are seamlessly integrated and enhanced through embedded analytics of all flavors. Examples for using analytics to enhance EPM are to perform data segmentation, clustering, regression, and correlation analysis.

Winds section in orchestra

EPM is like musical instruments in an orchestra

I like to think of the various EPM methods as an analogy of musical instruments in an orchestra. An orchestra’s conductor does not raise their baton to the strings, woodwinds, percussion, and brass and say, “Now everyone play loud.” They seek balance and guide the symphony composer’s fluctuations in harmony, rhythm and tone.

Here are my six main groupings of the EPM methods – its musical instrument sections:

  1. Strategic planning and execution – This is where a strategy map and its associated balanced scorecard fits in. Together they serve to translate the executive team’s strategy into navigation aids necessary for the organization to fulfill its vision and mission. The executives’ role is to set the strategic direction to answer the question “Where do we want to go?” Through use of correctly defined key performance indicators (KPIs) with targets, then the employees’ priorities, actions, projects, and processes are aligned with the executives’ formulated strategy.
  2. Cost visibility and driver behavior – For commercial companies this is where profitability analysis fits in for products, standard services, channels, and customers. For public sector government organizations this is where understanding how processes consume resource expense in the delivery of services and report the costs, including the per-unit cost, of their services. Activity-based costing (ABC) principles model cause-and-effect relationships based on business and cost drivers. This involves progressive, not traditional, managerial accounting, such as ABC rather than broadly averaged cost factors applied without consideration of any causal relationships.
  3. Customer Performance – This is where powerful marketing and sales methods are applied to retain, grow, win-back, and acquire profitable, not unprofitable, customers. The tools are often referenced as customer relationship management (CRM) software applications. But the CRM data is merely a foundation. Analytical tools supported by software, that leverage CRM data can further identify actions that will create more profit lift from customers. These actions simultaneously shift customers from not only being satisfied to being loyal supporters.
  4. Forecasting, planning, and predictive analytics – Data mining typically examines historical data “through the rear-view mirror.” Then using hindsight directs attention forward to look “through the windshield”. The benefit of more accurate forecasts is to reduce uncertainty. Forecasted sales volume and mix of products and service are core independent variables. Based on these forecasts, process costs can be calculated from the required resource usage. CFOs increasingly look to driver-based budgeting and rolling financial forecasts grounded in ABC principles to determine future requirements of other dependent variables such as headcount and related spending.
  5. Enterprise risk management (ERM) – This cannot be overlooked when discussing EPM. ERM serves as a brake to the potentially unbridled gas pedal that EPM methods are designed to step on. Risk mitigation projects and insurance requires spending, therefore somewhat reducing resources that could otherwise be directed towards revenue generating activities. Many executives are resistant to anything that impacts profits – and bonuses. So it takes discipline to ensure adequate attention is placed on appropriate risk management practices.
  6. Process improvement – This is where lean management and Six Sigma quality initiatives fit in. Their purpose is to remove waste and streamline processes to accelerate and reduce cycle-times. They create productivity and efficiency improvements.

EPM as integrated suite of improvement methods

CFOs often view financial planning and analysis (FP&A) as synonymous with EPM. It is better to view FP&A as a subset. And although better cost management and process improvements are noble goals, an organization cannot reduce its costs forever to achieve long term prosperity.

The important message here is that EPM is not just about the CFO’s organization; but it is also the integration of all the often silo-ed functions like marketing, operations, sales, and strategy. Look again at the six main EPM groups I listed above. Imagine if the information produced and analyzed in each of them were to be seamlessly integrated. Imagine if they are each embedded with analytics – especially predictive analytics. Then powerful decision support is provided for insight, foresight, and actions. That is the full vision of EPM to which we should aim to aspire in order to achieve the best possible performance.

Today exceptional EPM systems are an exception despite what many executives proclaim. If we all work hard and are smart enough, in the future they will be standard practices. Then what would be next? Automated decision management systems relying on business rules and algorithms? But that is an article I will write about some other day.

In my next blog I shall change focus slightly, to look a little more deeply at the budgeting process, the challenges many organizations face in producing budgets and the possibilities for taking different approaches.

 

About the Author: Gary Cokins, CPIM

Gary_Cokins

Gary Cokins (Cornell University BS IE/OR, 1971; Northwestern University Kellogg MBA 1974) is an internationally recognized expert, speaker, and author in enterprise and corporate performance management (EPM/CPM) systems. He is the founder of Analytics-Based Performance Management LLC www.garycokins.com . He began his career in industry with a Fortune 100 company in CFO and operations roles. Then 15 years in consulting with Deloitte, KPMG, and EDS (now part of HP). From 1997 until 2013 Gary was a Principal Consultant with SAS, a business analytics software vendor. His most recent books are Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics and Predictive Business Analytics.

gcokins@garycokins.com; phone +919 720 2718

http://www.garycokins.com

Linkedin.com contact: http://www.linkedin.com/pub/gary-cokins/0/15a/949.

Hear Gary share some of his thoughts concerning EPM innovations and best practices at the SAP Conference for EPM in Chicago, October 13/14, 2014

The New Revenue Recognition Standard is here, now what?

By Pete Graham, Director, Finance Solutions and Mobility, SAP

In May 2014, the International Accounting Standards Board (IASB) and Financial Accounting Standards Board (FASB) issued the new International Financial Reporting Standard (IFRS 15 / ASU 2014-09, ASC 606) which specifies the accounting guidance for revenue recognition. This standard is truly a joint standard of the IASB and of the FASB.   The new standard becomes effective January 1, 2017 in countries adhering to US GAAP and to IFRS.  So, this new standard will impact many companies in every industry and many countries around the world (announcement).

SAP has been actively preparing for this change for several years.  In order to support our customers to be compliant with this new standard, we have now completed a multi-year development effort providing a new standard SAP solution: SAP Revenue Accounting and Reporting 1.0. It specifically addresses requirements derived from this new accounting standard but also generic requirements related to revenue recognition across various accounting principles.  This new solution is now in Ramp-Up.  SAP is rolling out the new solution internally and some scenarios are already being handled in a production environment.  SAP ERP Financials customers with current maintenance agreements will have access to the solution at no charge.

SAP Revenue Accounting and Reporting 1.0 was built from the ground up to handle the new revenue recognition regulation. A cross-functional team comprised of product development and corporate accounting met frequently while the standard was being written to analyze the standard and assess how best to design a new solution to cover the new requirements.  SAP also ran a co-innovation project with over 30 customers to gather input and requirements on the new regulation from our customers’ perspective.  The end result is a solution that automates the revenue recognition and accounting process and simplifies the tasks of revenue accountants in following the new accounting guidelines which are structured in the five following steps:

  1. Identify the revenue contract(s) (combine contracts)
  2. Identify the performance obligations in the contract
  3. Determine the transaction price
  4. Allocate the transaction price to the performance obligations of the contract
  5. Recognize the revenue when / as the performance obligations are satisfied.

SAP Revenue Accounting and Reporting manages revenue recognition from a Finance point of view. It decouples operational transactions from accounting. Thus, various operational transactions can be accounted together no matter where the operational data is processed. It literally translates operational transactions into accounting. The main requirement tackled by the new solution is the management and processing of so-called Multiple Element Arrangements. It is now possible to automatically determine these Multiple Element Arrangements from an accounting perspective based on a flexible rules framework. Additionally, accountants have the ability to change the way of how revenues are allocated and recognized manually based on given customer arrangements. SAP Revenue Accounting and Reporting is able to deal with multiple accounting principles and their specifics in revenue recognition and presentation. It also provides analytics for revenue accounting to address legal disclosures and management reporting.

SAP Revenue Accounting and Reporting can also handle multiple accounting standards offering additional flexibility to customers.  And because SAP’s corporate accounting group provided direct feedback to the product development team, the solution was built holistically considering the requirements of revenue accountants even going into the details of transitioning to the new standard.

So what is your call to action?   Brush up on the new standard.  Schedule a meeting with your auditor to discuss the new regulation. Develop a plan to assess your revenue contracts with customers.  Put a project team together. Start evaluating transition options. Listen to the Game Changers Radio show call on September 23, 2014 at 12 PM Noon EST to learn more about the revenue recognition topic. And if you want more information in the future then please check out this link.

 
Pete Graham Bio

 

The 2014 SAP Conference for EPM: Strategy AND Execution

In EPM (or enterprise performance management if you prefer full names), we talk a lot about the Strategy to Execution cycle, believing that enhanced performance is possible by linking and continually re-aligning operational plans with business strategy and objectives.

While EPM as a solution area is focused primarily on the area of Finance within organizations, the principle of linking strategy with execution spreads far wider than this, and having an eye on your goals despite all that goes on around you can prove to be a success factor in many parts of business, if not personal lives also.

I’m presently involved in planning for the 2nd annual SAP conference for EPM, which is a collaborative venture between TA Cook Conferences and SAP. Being mindful of the strategy to execution link has been a big part of our planning cycle, and as we now approach the event (with just 5 weeks to go), I am pleased that we took the decision to set out our objectives early, defined a plan to work to, have held regular alignment calls with central and dispersed teams so that we can adjust plans and correct our course in light of new information or changes – with the result that we are now well on track towards holding a terrific event that has an excellent speaker line-up, fabulous sponsors and so far is seeming to attract interest and registrations from many Finance executives and managers.

stage

Customer stories are key

Given my involvement in the event planning team I thought it might be remiss of me if I didn’t share some details of it with you in the coming weeks. After all, many readers of this blog channel are Finance professionals, and so it’s something that I hope will be of interest. At the last event we took feedback from many customers who attended, and by-and-large they told us that the thing they wanted to hear most at the conference were stories from other customers about their EPM solution experiences. With that in mind we set out our stall this year to focus squarely upon giving our customers’ the stage – with the result that we have eleven SAP EPM customers joining the event next month to talk about their experiences in implementing and using EPM solutions. With speakers from a range of industries using varying EPM solutions, there will surely be “something for everyone” interested in EPM. Our speaker line-up this year includes:

  • Blue Cross Blue Shield of Michigan
  • Citrix
  • City of Henderson
  • Dolby
  • HealthNet
  • John B. Sanfilippo and Sons
  • Lexmark
  • Mars
  • Owens Corning
  • Pacific Gas & Electric
  • T-Mobile

As well as this impressive customer line-up, we also have some special guests joining the conference including Joel Bernstein, SAPs CFO Global Customer Operations and Paul Hamerman, Principal Analyst at Forrester Research who are both due to take part in a discussion panel on day-1, and Gary Cokins of Analytics-Based Performance Management who will present the day-2 keynote. More details are available in the event brochure

Collaboration leads to better results

Our ability to secure this excellent speaker line-up has in many ways been a result of great collaboration with our sponsoring business partners. I’ll mention them more in my next blog as partners have been a key factor for us in creating a well-rounded agenda. Suffice to say as a result of that collaboration, we can expect to hear some terrific EPM stories from the customer speakers who have decided to join us at the event.

There’s no particular secret to setting up and hosting events. Obviously you need the right subject matter, but that alone doesn’t create the event. What you do need is a clear strategy, a workable plan and then you have to execute on it. This needs careful thought, planning, collaboration and continual re-alignment towards the overall goal despite the many challenges that occur along the way. And that’s really no different to many processes in business…albeit just a bit more “glitzy” perhaps in the end result!

Is It Time for Two CFOs?

Coffee-break with GameChangers

Laurel and Hardy. Lucy and Ethel. Fred and Ginger. Dynamic duos can have quite the impact – far more than one person alone. Is it time for the office of the CFO to adopt this mentality? Finance insiders would say so, especially as they try to force the tipping point for moving operations to the cloud.

During a recent SAP Game-Changers radiocast, panelists Joshua Greenbaum, principal and founder at Enterprise Applications Consulting; David Dixon, partner and principal at TruQua Enterprises; and Neil Krefsky, senior director of product marketing for SAP Cloud at SAP, weighed the advantages of splitting the CFO job into two parts – one for compliance and one for innovation.

Why? “So we can ignore the former and stop driving financial innovation based on what a regulator thinks is innovative,” quips Greenbaum. He asserts that the office of the CFO is one of the most conservative places in the business. Until the CFO can get on board with and drive innovation, finance will continue to lag behind in cloud adoption.

Monitoring cloud turnover

Krefsky sees cloud adoption in finance happening in a sort of domino effect. He explains, “I think it’s going to be an evolution…as they [finance organizations] see adoption uptake, that will encourage them to uptake, but [who] is going to dip their feet into the water?” The water might be more enticing once finance organizations realize there is no tradeoff between staying compliant and moving to the cloud.

Companies of all sizes are now moving to the cloud, for reasons that include:

  • Greater accessibility
  • Lower cost
  • Innovative technology

The general success of SMEs bodes well for global corporations that might be reluctant to move to the cloud. Adds Dixon, “It’s just a tipping point…and, as more people adopt it, [there] will be more [of a] trust level. But really, I think it’s IT that needs convincing, because I think finance will just turn to [the] IT organization and ask, ‘Is it trustworthy? Is it safe? Is it secure?’”

Simplicity vs. complexity

Part of cloud adoption is walking a tightrope between simplicity and complexity – balancing the need for user-friendly solutions that facilitate self-service with the complexity of integrating your existing systems across a variety of different applications.

Managing this dichotomy would, theoretically, be easier with two CFOs in place. Greenbaum agrees, remarking that, “For innovation, I would want someone from the technology side – someone with a minimum of grey hair and a lot of crazy ideas. I think they need to be counterbalanced by the adult supervision from the compliance side, but I think we need a little bit of fresh blood in there.”

Do you think there is room for co-CFOs in the finance world? Listen to the full radiocast to learn more.

Three Steps to Transform into a “New” Finance Organization

Coffee-break with GameChangers

If you’re not innovating, you’re falling behind. This is true for any industry, but especially finance. The question is how to successfully manage change. It’s easy to get lost in many moving parts and lose sight of the original goal. What steps can you take to adopt innovative practices and remain as efficient as possible? Panelists Rob Kugel, research director at Ventana; Renee Ford, a managing director in Accenture’s SAP practice; and Birgit Starmanns, a senior director in marketing for finance solutions at SAP discuss the prospects of financial innovation – and how to get there – in a recent SAP Game Changers radiocast.

Step 1: Ditch spreadsheets where appropriate

Kugel dives into travel and expense reporting as a prime example of an area made unbearably tedious by Excel spreadsheets. The task is time-consuming for the traveler and just as laborious for the business. He says now is the time to find solutions.

“Software has the ability to be our personal assistant to speed and improve the effectiveness of enterprise processes.” Kugel’s research shows that companies relying heavily on spreadsheets take two days longer on average to close books than companies that use them infrequently. Why?

  • Lack of flexibility means spreadsheets don’t lend themselves to data visualization
  • Time-consuming and error-prone processes lead to mistakes that can affect decades of data
  • On-demand reporting now exists to quickly and accurately pull necessary information

Starmanns agrees, pointing out that by spending so much time consolidating Excel sheets, you’re missing the solid technology foundation that enables advanced analysis.

Step 2: Automate – for better or worse

Ford presents the automation conundrum with a quote from Bill Gates: “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second rule is that automation applied to an inefficient operation will magnify the inefficiency.”

She advocates adopting automation with an open mind as “organizations can use technology to highlight bottlenecks and in some cases where they are really conscious of it, it can propel them forward.” In her opinion, automation should advance finance to a point where the finance function is contributing to the overall organization.

Step 3: Consider your people above all else

Starmanns asserts that “A huge part of implementing any new technology is really that change management piece, and it’s all about communicate, communicate, communicate. Some folks will be more comfortable and can hit the ground running and others… they are almost afraid.”

Ford echoes this sentiment, cautioning that technology is just one piece of the puzzle – it means nothing without capable minds to operate it. It’s important to make sure your workers are ready for the change that’s happening – and prepared to take on the change. You should decide where they need to be with technology proficiency and then get them up to speed.

As tech-savvy millennials start taking on more prominent roles in finance, the panelists think software adoption should become more rapid and intuitive, paving the way for prolific innovation.

Is your finance organization equipped to take these steps? Listen to the full radiocast to learn more.