Your finance function is ready for change. Are you?
Top-performing finance functions are keeping automation high on their agendas, but it’s just the start of a bigger push for performance.
Process
Why it matters
It typically doesn’t pay to be strictly focused on radical changes to processes through automation, centralization or offshoring, without looking at trade-offs such as its impact on people as well as implications for tax and regulatory structures. The potential needs to be balanced against overlapping goals for people and performance. How do you aim for process excellence?
What’s working
In leading companies, rather than addressing the demands of specific segments, finance is systematically making connections—and choices—that create value for the whole business. That was the goal of finance transformation at the Dutch telecom provider KPN. Previously, vital information was getting lost in massive reports. Today finance is using interactive dashboards and KPIs in real time, and engaging in more productive discussions with business. For example, First Time Right (FTR) is linked to Net Promoter Scores, and ultimately to customer churn. Internal stakeholders are more satisfied now, while the cost of finance has declined by a double-digit percentage.
Every company is not that data-driven, but here are two things that’ll help drive focus:
1. A technology roadmap that weighs the finance function’s culture, goals and appetite for change: A case for change will surface any number of opportunities to automate, reduce costs and increase efficiency of transactional and compliance-related processes. Our analysis of activity data shows that 30-40% of the processing time for several key finance processes could be eliminated with automation and behavior change. A quick look points to high automation potential for management reporting (40% of time spent on these activities could be automated), tax accounting (27%), credit management (23%), general accounting (23%) and billing (23%). Still, don’t consider automation without a good look at the organization’s culture, goals and appetite for change.
Tackling redundant systems and services is where most companies start. When Dixons Carphone merged to form Europe’s largest electrical and telecommunications retailer, it knew it had to clean up redundant systems and services—particularly its back-end finance systems. With a roadmap that defined achievable, momentum-building chunks, Dixons Carphone implemented a single, cost-effective ERP system in 18 months—ready for layering in additional technologies.
With a roadmap that defined achievable, momentum-building chunks, Dixons Carphone implemented a single, cost-effective ERP system in 18 months—ready for layering in additional technologies
2. Roles fit for the work: Process redesign often requires new levels of coordination and collaboration across the enterprise. Yet 59% of companies in our benchmark sample aren’t set up for global oversight of processes that drive transactional efficiency (e.g., procure-to-pay, order-to-cash and record-to-report processes). Instead, multiple process owners drive what the business needs.
Slowly, new roles are forming based on automation’s potential. For example, we’re seeing an increased interest in single end-to-end process owners who are responsible for standardization of processes for transactional efficiency, while still allowing for some level of localization of the work. These global process owners are always scanning the landscape, taking a strategic view of their core function, making sure they are achieving cost savings and efficiencies and applying the right technologies to the core tasks.
Ask PwC
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Samir Bishara
Q: How do process automation and AI work with ERPs?
Look at your end-to-end processes: The parts that can’t be taken care of by your redesigned efficient processes and cloud-based ERPs should be taken care of by RPA, then kick in artificial intelligence, enabling decision support and insight.
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Michael Engel
Q: Should we be looking at headcount reduction with our automation efforts?
Automation creates capacity, but the first question is not about reduction. Instead ask, how can we take advantage of new capacity to ensure that there is a financial return for the investment? And how can we help people do their jobs differently? This gets you more value.
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Sultan Mahmood
Q: You use the term digital workers for RPA and AI, why?
When you think this way, you frame what type of work AI and RPA can support. Digital workers, just like human workers have various skills and are well suited to undertaking high volume or repetitive activities with minimal or zero error. This allows finance functions to deliver at speed and remove friction out of the process when dealing with their customers.
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Jim Barres
Q: Is automation more cost-effective than outsourcing?
Automation and outsourcing are not mutually exclusive, so a cost analysis should be based on the processes you are trying to impact and an understanding of both automation and outsourcing benefits. Without a true understanding of that, you’re just going to be spinning in circles.
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Reagan Strey
Q: Should we be aiming for quick results with RPA?
RPA solutions are great sources to drive value. In order to improve the realization of those benefits, it’s important to be thoughtful up front about how you will identify, prioritize, govern, support and scale these solutions. Just because you can automate something doesn’t mean you should. Finance functions should think holistically about transforming processes to determine where to strategically apply RPA.
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Bill Gilet
Q: How is automation changing decisions about shared services and outsourcing?
Whether to centralize or outsource is less about automating transactional activities and more about weighing opportunity. For example, letting staff automate processes rather than moving the work may give them growth opportunities they want. But automation applied to more standardized processes will result in larger efficiencies, and having processes consolidated (captive or outsourced) will help achieve that in a timely way.
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Rob McCargow
Q: What’s the level of AI adoption in finance organizations?
Forward-thinking organizations are running several AI proofs of concept and projects consecutively, and in the majority of cases developing the technology themselves on Open Source.
Takeaways
- Stage improvements carefully to increase finance’s contributions to the business. Move forward in line with the capabilities most needed for the business and stage different technology solutions and role changes carefully. Elsevier, a global information analytics business, conducts periodic benchmarking analyses to identify the process redesigns that would yield the greatest returns and moves forward sequentially.
- Match finance roles to outcomes. Transformation efforts are less likely to succeed when there isn’t a clear understanding of the target operating model and specific business outcomes. Change roles to get the right role-to-outcome match. Today’s global process owner role, for example, helps standardize end-to-end processes for automation.
- Check taxes and compliance before you commit. Process simplification and automation can have trade offs. Thinking of automating shared-service processes and moving them offshore? Remember that changing where work gets done may subject you to different regulatory considerations or it may alter your total tax costs or legal entity structure.
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