Finance function showing the way when it comes to automation

By Carole Murphy, Head of BPO Business Transformation Services, Capgemini

CFOs are typically regarded as prudent people by nature. Cautious. Not given to blazing new trails. But that caution is rooted in their need to protect the long-term integrity and well-being of the organisations they serve – and if innovative approaches appear that could significantly improve business prospects, those same CFOs can be surprisingly gung-ho. They see the possibilities, and they get excited.

That certainly seems to be the case as far as evolving technologies are concerned. Here at Capgemini, we recently commissioned a study of 500 senior finance executives in Europe and North America and found that robotic process automation (RPA) in finance is well under way, and that as part of this, some organisations are also exploring artificial intelligence (AI) and machine learning. Indeed, in many ways, the finance function is ahead of other key parts of the business in the development and implementation of these tools and practices.

They’re looking at procurement, client billing, order management, reporting, and more – all activities in which systems are in place – and they’re exploring digital transformation, and the extent to which it might usefully be applied.

There are three areas in which CFOs can envisage benefits from digital transformation:

  • Transactional performance – anything that improves standard finance functions saves time and money, and potentially enhances relationships with customers, or suppliers, or both
  • Functional performance – digital intelligence can transform the entire finance function, streamlining its operations and improving its cost-effectiveness
  • Enterprise-wide performance – digitally transforming finance can deliver insights that create and sustain value across the entire organisation. For instance, it can identify practices and behaviours which, if adapted, can significantly improve service delivery, product development, governance and more

It’s the third and broadest level that seems to engage CFOs most. Responses from senior finance executives to our study showed that 60% of them expect that in three years’ time, automation will be helping them to improve their customers’ experience; and 55% say it will be helping to unlock new insights that drive value for the business.

A company in Denmark provides an interesting case in point. Danfoss is a manufacturer of industrial and commercial heating, ventilation and air conditioning systems. A recent overhaul of finance functions included the implementation of appropriate automation and robotics for a variety of processes. This included the verification process, foreign exchange rate updates, and intercompany reconciliations.

Benefits that have been realized by Danfoss include significant improvement in customer collections; improved accuracy in all accounting processes; 56 standardized record-to-report (R2R) processes; and the creation of an intercompany hub, leading to faster closing of all transaction types globally and a reduction in closing period from seven working days to five working days. What’s more, all of this has resulted in reduced manual interventions and error rates.

In practice, we see the functions of digital transformation in general and of finance automation in particular as akin to five human senses. “Watching” refers to the ability to monitor and record key business data in order to create knowledge. “Talking and listening” correspond with the ability to interact with end-users of the artificially intelligent solution through listening, reading, talking, writing and responding. “Acting” is of course to act on knowledge and provide a service. “Thinking” relates to the ability to detect patterns, recognise trends and analyse information. Finally, “remembering” expresses the ability to store and find information and knowledge effectively using components such as databases and search engines.

In our experience, CFOs are as measured and thoughtful as they ever were. But like the tools and processes under discussion here, these senior executives have their own intelligence, and their own highly-tuned senses. They can see the future, they can see it will work – and they like the look of it very much indeed. It’s no surprise they’re so enthusiastic.