Analytics For The CFO (Part 3): Rise Of The Machines

Rob Jenkins

In my previous blog, I discussed the role of finance quants in developing new insights and how finance owning enterprise master data provides a strong foundation for analytics. Today, I want to discuss how new technologies will fundamentally change finance process management and resource deployment.

In much the same way that industries like automobile manufacturing and agriculture have been disrupted by physical robots, artificial intelligence (AI) will have a dramatic impact on finance and accounting. The analytics engine and seamless workflow enabled by machine learning and robotic process automation will bring discontinuous change to transaction accounting. Shareholder-focused executives see opportunities for dramatic efficiencies, with some finance experts estimating that 40% of accounting jobs will be eliminated by 2020. A study by the Pew Research Center shows that most (72%) Americans are more likely to be worried than enthusiastic about automation. Thoughtfully redeploying task-oriented resources will be a source of competitive advantage.

The good news for analytical insight and productivity is the synergy in decision-making when AI is combined with humans. Medical professionals couple deep learning with doctors to magnify human capacity through the power of computer-aided diagnostics. Successful investment firms combine algorithms with fundamental analysis and human judgment in the search for alpha. Progressive CFOs are automating processes such as invoice matching, with one aerospace firm automating 95% of 3 million annual invoices.

Yet machines cannot demonstrate empathy, manage relationships, and tell stories. Nor do machines demonstrate cognitive biases that encumber our human decision-making. By pairing the rational analysis and speed of AI with the softer communication and social skills of financial professionals (at least for the foreseeable future), compelling analytics-based narratives will be part machine and part person.

Cloud changes everything

Millennials and “Gen-Z’ers” are taking over the boardroom. These digital natives have grown up with social media where engagement favors infographics that are more likely to be shared. The music is delivered via streaming connection to a cloud service. They look forward to application updates for new features and functions. They have expectations of real-time, live data that can be sliced and diced via browser and overlaid with spatial analysis for visual insight.

Enterprise software is rapidly migrating to the cloud. New apps are now born in the cloud, and the vast majority of new analytics projects will be cloud-based. Cloud eliminates the word “upgrade” from the lexicon. With the dramatic innovations in computing power, memory and database technology, data that score high on any or all of the 5 V’s (volume, variety, velocity, veracity, value) can be deployed and analyzed as never before.

Cloud is easy to try, buy, and use. Cloud is safe, scalable, and can be integrated with legacy on-premise systems. It is a global game-changer.

CFOs are embracing the power of advanced analytics to drive efficiency in finance operations, partner with the business in strategic analysis, and manage enterprise risk as corporate steward. By marrying art and science, equipping humans with machines, and modernizing technology platforms, CFOs will ensure that their models are as accurate as possible and most certainly useful.

Ready to start adopting technology? Read the research paper, Dynamic Planning: Live in the Moment to Succeed in the Future.

This article originally appeared on SAP Analytics.


Rob Jenkins

About Rob Jenkins

Rob Jenkins is a finance executive with over 20 years of experience in leading high-technology and professional services companies. He consults with CFOs on technology, analytics and performance management. Rob has served as Vice President, Corporate Finance and led finance transformation. His leadership experience also includes Corporate Development, M&A, Strategic Planning and Consulting. He has designed and implemented customer profitability, business planning, process improvement and performance measurement systems in multiple organizations. Rob began his career as an Auditor with a Big 4 CPA firm. He holds an M.S. in Accounting and is a CPA, CMA, and CFM.

Five Easy Ways To Streamline Your Higher Ed Invoice Process

Caitlin Strickling

For decades, higher education institutions have been utilizing an “it’s good enough” operating model. But that model is no longer sustainable.

Today’s educational institutions are experiencing several unique challenges. First, changing public perception has left students and parents alike questioning the necessity of traditional college degrees. Enrollment is declining, regulatory pressures are increasing, and for many public institutions, state funding is being cut.

The challenges aren’t limited to these external impacts. Institutions are still operating with outdated, paper-based systems and department silos, restricting their ability to adapt to the changing environment and maintain a student-first strategy. Budgets are shrinking and, as a result, resources are becoming more strained. The bottom line: It’s time to change the “good enough” approach.

Where do you start?

Fortunately, adopting a new model isn’t as complicated as it may seem, especially when you begin by taking a look at your invoices. If your institution is like half of respondents in a recent Webinar for higher ed, your invoice process is paper-based and manual, and data is still hand-keyed, making it difficult to see and accurately control your spend. Even so, it may seem like your invoice process is a difficult first task to tackle. However, it’s actually easier than you may think.

  1. Work with the systems you are already using: Adopt a solution that integrates your invoice process with Banner and your ERP systems, and automatically match POs to invoices to validate purchases. To take further control of all your school-wide spend, pair your invoice process with your expense data so you have all the information you need in one place. The result? Your institution could see an average productivity increase of 11%, all by making your invoice process mobile.
  1. Empower users with their own devices: Your faculty and staff are already using their mobile devices daily, so why not adopt a mobile-friendly invoice process that uses tools your institution already has? Mobile devices could allow for approvals to be made on the go, so invoices won’t be in limbo while the approver is in meetings across campus.
  1. Consolidate the data you already have: Whether across departments or across systems, your spend data is already out there. But if your invoicing is paper-based, or even just partially automated, it is difficult to see all that spend in one place, let alone capture what is being initiated directly from your staff. By connecting your invoice spend to the rest of your user-initiated spending, you’ll get a more complete picture of your finances, so you can make strategic decisions for your institution, like negotiating better vendor rates and finding areas where you can cut costs.
  1. Bring out the best in existing staff: You already have valuable staff in your departments; leverage them for analyzing and identifying inefficiencies, not chasing down information and approvals. By automating and streamlining your invoice process, you can decrease staff time on invoice management by 34% so they can get back to helping your institution adapt to today’s challenges.
  1. Repurpose your budget: Research from Ardent Partners showed organizations can reduce their invoice processing costs by up to 70% through automation. By capitalizing on those cost savings, leveraging early-payment discounts, and negotiating better vendor rates, AP begins to look more strategic, and not just a back-office function. Cost savings here means money back to student-first initiatives and more smiles for your decision-makers.

A better way for managing university spend

Higher education has many new challenges to tackle. And likely, your institution’s current operating model isn’t cutting it.

Understanding the current status of your finances is important, but making adjustments today is necessary to ensure the financial success of your institution tomorrow. Establishing the areas in which your invoice process can easily improve is the first step to ensuring a successful spend management model. And, when you can showcase the value your departments gained from small changes, you can help shift your culture in ways that lead to lasting improvements in spend and beyond.

With an automated accounts payable process, your institution can eliminate manual invoice routing, approvals, and payments as well as the costly errors that go with them. Plus, you can get full visibility into your users’ AP spending so you can control it before it’s spent. What’s holding you back from making lasting changes in invoicing? After all, your faculty, staff, and students deserve better than “good enough.”

Learn how SAP Concur helps higher education institutions streamline spend management. 

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube


Caitlin Strickling

About Caitlin Strickling

Caitlin Strickling is an associate content marketing manager for the Enterprise Americas team at SAP Concur. Caitlin earned her degree in Communication from Santa Clara University and enjoys leveraging her experience in SMB, enterprise, and product marketing to create thought leadership content for organizations of all sizes. When she isn’t in the office, she’s out exploring Bay Area breweries or relaxing with a good book.

Automation, Simulation, And Talent Management For Finance

Tony Klimas

Part 4 in the 4-part “SAP Finance and EY Talk” series by Tony Klimas of EY and Joel Bernstein of SAP

When I graduated from business school, my first job was managing accounts payable at a U.S.-based shared services center for a large manufacturing company. This was an entry-level, management-track position — and it was a great experience. Not only did I learn the ropes at the most basic level, but I also made some good contacts and started thinking about where I wanted to go next. These positions are necessary for developing talent in finance, and this first job set me up for success later on in my career.

The reality today is that many of these entry-level jobs in finance and other business functions are being automated. In financial services, such automation is not only a story about robotics, but also “machine learning” — and machine learning isn’t so much about machines as it is about pattern recognition and business process optimization.

Machine learning, a subset of artificial intelligence, is the process of using sophisticated algorithms to train systems to “learn” from massive volumes of data — rather than performing rote tasks programmatically. In finance, machine learning can be used across a wide range of areas. These include optimizing credit assessments, detecting and preventing fraud, improving compliance — the list goes on. The question is: what does this mean for traditional career paths in finance?

The uses of simulation

I believe one potential development is the new finance employees just out of school spending some of their first year working with business simulation tools to replace real-world experience that is no longer possible. New hires are often not fully prepared to take on more advanced positions in finance without first spending some time in the “trenches” — so one option might be simulation tools that teach them the business before they move into more hands-on roles?

Fortunately, young professionals in finance can learn a lot from simulation tools because they’re increasingly sophisticated and based on detailed competency models and career paths. At EY, we’ve worked hard to develop specific technology to help our clients meet their training and staffing goals by understanding the various competency models required, and the potential skill gaps that might exist in the current state of the organization. This helps our clients address immediate issues related to talent, but also allows them a more strategic view to prepare more effectively for what’s coming.

Getting out more

What’s coming, of course, is the need for greater agility to help keep pace with the demand for innovation. To help finance organizations prepare for this, simulation technology, competency models, and skills assessment can be helpful for people at every stage of their careers — and this doesn’t necessarily mean sitting behind the desk.

This point, certainly, is not lost on my colleague Joel Bernstein, CFO of Global Customer Operations at SAP. I recently spoke with Joel about his own internal efforts with digital transformation within the finance team at SAP.

“In many ways,” Joel said, “what we’re trying to do is drive a mind-shift where instead of doing a job or managing a process, our people are asking first and foremost: ‘What can I do to help the business succeed?’ This requires getting out, talking to people, figuring out what’s needed, creating data, running analyses, and impacting change.”

To help his team get there, Joel’s transformation efforts have included “simulation events” of sorts. These are workshops where people from across the global finance team gather to run simulations in a group context that highlight issues and help zero in on solutions. At the end of the training, teams actually present their solutions to business leaders.

The advantages of this program run at multiple levels. For SAP as a business, it helps to facilitate innovation. For employees, it exposes them to non-finance business colleagues and helps them to better understand how to serve and interact with the business. And for the finance team at SAP, it helps create a pipeline of valuable talent, while generating for the team a reputation as an agent of transformation.

So, for CFOs and other finance professionals who might be reading this: Think about the changes impacting your workforce and how you will be creative in making sure your people have what they need to help your businesses succeed in a digital economy that requires all of us to be at the top of our game.

To learn more about why CFOs need to facilitate innovation by building top-notch teams, take a look at this animated infographic and the Agile Finance 2.0 white paper.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube


Tony Klimas

About Tony Klimas

Tony Klimas, global finance practice leader with EY, LLP, is a member of EY’s Advisory Executive team with global responsibility for the Finance consulting practice. He is an experienced consultant with 20+ years of experience across a variety of industries. His areas of expertise include finance strategy and transformation, shared services/offshoring, and BPO advisory. Tony also has significant experience with finance and accounting systems and has traveled and worked extensively in Asia, Europe, and Latin America. He spent most of his consulting career in the Southeast U.S. before moving to the greater New York City area in 2009.

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!

About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.



Why Blockchain Is Crucial For FP&A: Part 1

Brian Kalish

Part 17 in the Dynamic Planning Series

In these times of almost continuous technological change, there is a natural tendency to be suspect of whatever is being heralded as the “flavor of the month” or the “next best bet.” In early 2017, I was graciously given the opportunity to speak on what I believed to be the technologies that were transforming finance and specifically, the FP&A function. The talk I ended up giving covered five areas:

  • Advanced analytics and forecasting
  • Robotic process automation
  • Cloud and Software-as-a-Service
  • Artificial intelligence
  • Blockchain

While all these topics deserve further investigation, for this article, I want to focus on blockchain. Part of the reason for diving deeper into blockchain is the lack of understanding of what it actually is and the great amount of time people in the finance function are currently spending talking about it. This has greatly changed in the past nine months.

Last March, while hosting an FP&A Roundtable in Boston, I ask a group of 25 senior FP&A professionals how familiar they were with the concept of blockchain. Out of this august group, there was only one participant who felt truly comfortable with the concept. I still get asked on a regular basis, all over the world, “Blockchain. What is it?”

Blockchain: What is it?

By allowing digital information to be distributed but not copied, blockchain technology has created the spine of a new type of Internet. Picture a spreadsheet that is duplicated thousands of times across a network of computers. Now imagine that this network is designed to regularly update this spreadsheet, and you have a basic understanding of blockchain.

Information held on a blockchain exists as a shared and continually reconciled database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly transparent and easily verifiable. No centralized version of this information exists for someone to corrupt. Hosted by many computers simultaneously, its data is accessible to any authorized user.

Blockchain technology is like the Internet in that it has a built-in robustness. By storing blocks of information that are identical across its network, the blockchain 1) cannot be controlled by any single entity and 2) has no single point of failure. The Internet itself has proven to be durable for almost 30 years. It’s a track record that bodes well for blockchain technology as it continues to be developed.

A self-auditing ecosystem

The blockchain network lives in a state of consensus, one that automatically checks in with itself on a regular basis. A kind of self-auditing ecosystem of a digital value, the network reconciles every transaction that happens at regular intervals. Each group of these transactions is referred to as a “block.” Two important properties result from this:

Transparency. Data is embedded within the network as a whole, and by definition, is available to all authorized users.

Incorruptibility. Altering any unit of information on the blockchain would mean using a huge amount of computing power to override the entire network. In theory, it is possible; however, in practice, it’s unlikely to happen.

A decentralized technology

By design, the blockchain is a decentralized technology, so anything that happens on it is a function of the network as a whole. Some important implications stem from this. By creating a new way to verify transactions, aspects of traditional commerce may become unnecessary.

Today’s Internet has security problems that are familiar to everyone. However, by storing data across its network, the blockchain eliminates the risks that come with data held centrally. There are no centralized points of vulnerability that can be exploited. In addition, while we all currently rely on the “username/password” system to protect our identity and assets online, blockchain security methods use encryption technology.

I hope this little tutorial helps describe what blockchain is. In my next article, I’ll discuss the value of blockchain to the FP&A profession.

For more on this topic, read the two-part “Blockchain and the CFO” series and “When Blockchain Fulfills CFOs’ Paperless Vision.”

2018 will be a busy year with FP&A Roundtables in St. Louis, Charlotte, Atlanta, San Diego, Las Vegas, London, Boston, Minneapolis, DFW, San Francisco, Hong Kong, Jeddah, and many other locations around the world to support the global FP&A community.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube


Brian Kalish

About Brian Kalish

Brian Kalish is founder and principal at Kalish Consulting. As a public speaker and writer addressing many of the most topical issues facing treasury and FP&A professionals today, he is passionately committed to building and connecting the global FP&A community. He hosts FP&A Roundtable meetings in North America, Europe, Asia, and South America. Brian is former executive director of the global FP&A Practice at AFP. He has over 20 years experience in finance, FP&A, treasury, and investor relations. Before joining AFP, he held a number of treasury and finance positions with the FHLB, Washington Mutual/JP Morgan, NRUCFC, Fifth Third Bank, and Fannie Mae. Brian attended Georgia Tech in Atlanta, GA for his undergraduate studies and the Pamplin College of Business at Virginia Tech for his graduate work. In 2014, Brian was awarded the Global Certified Corporate FP&A Professional designation.