Another challenge is shifting from a just-in-time mindset to making forward-looking predictions.
A new report from Genpact found that finance leaders are finding it hard to adopt the non-traditional roles required to make digital transformation a success.
The report "Finance and accounting: Unleashing transformation" identified three significant barriers among CFOs and finance and accounting teams. Leaders are not eager to:
- Expand the rollout of transformational tech
- Become the corporate data guardian
- Connect internal departments around data projects
Research firm Longitude surveyed more than 500 finance leaders on behalf of Genpact to understand how artificial intelligence and advanced analytics are changing strategy and tactics in finance and accounting teams.
Expanding transformational tech
A key to success with AI is connecting it to other technologies like Internet of Things sensors and machine learning analysis. Many leaders struggle with this and finance executives are no exception.
The report found that 81% of functions are implementing automation, analytics, and AI (AAA) to enhance only a few business processes and only 13% are using them to transform many business processes.
None of the respondents are using the technology to reimagine their functions with AAA.
Finance is known for providing analysis on past performance, but a key advantage of artificial intelligence is the ability to look ahead. Finance leaders are finding this to be another difficult shift as most functions only provide predictive insights when asked.
Only 24% respondents say their functions have a structured approach to providing predictive insight and none have a structured way that supports the needs of individual business units.
Finance and accounting leaders in the retail sector are leading the pack on this capability with 47% providing a structured approach to providing predictive insights.
Very few finance departments in insurance (20%), banking (18%), or consumer packaged goods (15%) companies have a structured approach to generating insights.
AI also has the potential to reduce fraud but the survey found that F&A leaders are not using this capability either.
Fewer than 10% of participants have improved risk assessments and mitigation, and fraud identification and prevention with predictive insights, despite respondents saying that the risk and compliance is very advanced in AAA adoption. Also, only 9% currently use predictive insights to identify new revenue opportunities.
Becoming the corporate data guardian
Traditionally, finance teams gather data and provide just-in-time compliance and reporting. According to the report, these tasks should be replaced with more forward-looking work, such as identifying high-margin customer segments and directing sales teams to focus there.
Performance insight is the pivot and what finance really should be doing, according to Katie Murray, the CFO at RBS.
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"Finance must use its ability to bring data to life and its power to drive economic and strategic value creation," Murray said in the report.
The Genpact survey data shows that only 49% of finance respondents think they should be the enterprise data guardians.
Finance leaders should embrace this responsibility, given finance's established data capabilities and understanding of the wider business, according to Hari Avula, senior vice president and CFO of retail pharmacy USA at the Walgreens Boots Alliance.
"The finance function has the skills to manage, organize and analyze data, which enable sit to generate a holistic set of insights based on analytics across multiple metrics, shareholders, consumers, and employees," he said in the report.
Connecting across departments
Just as finance leaders are skeptical about being a data guardian, they are also hesitant to take the lead in connecting business processes across internal departments.
Only 32% of finance functions have integrated technologies across functions to ensure the process is managed end-to-end. Only 10% have a global process owner or visibility of performance results across functions.
Other key finance processes, such as procure to pay, order to cash, and record to report, also lack initiatives that would help connect them across the organization, the report found. Finance teams could improve service delivery, transparency, and efficiency by connecting these processes.
Finance leaders may need to reshape hiring plans and start reskilling current employees to meet this challenge to start making these strategic shifts. Sanjay Srivastava, chief digital officer at Genpact, said that the key is to find "bilinguals," individuals with both technology expertise and traditional F&A skills.
"The world doesn't need any more computer scientists, nor accountants for that matter," Srivastava said in the report. "It needs people that can do enough of both to understand the right questions to ask, and then implement the right technologies to get them answered."
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