Part 2 of the 4-part “Transformation Ahead” series
I am seeing several key trends that are poised to make a major impact on the future of the finance organization. As I wrote in the first blog in this series, CFOs must be prepared to adapt to these changes, beginning with Trend #1: the evolving role of finance in supporting and executing business strategy.
Following are three additional trends that CFOs should consider, along with examples of leading finance organizations that have embraced change in these areas.
Trend 2. Finance organizations will implement finance platforms, not ERP software.
The introduction of in-memory database technology allows businesses to gain insight from massive volumes of data while using systems for both transactional and analytical purposes. Thanks to these developments, financial ledgers are becoming data platforms for both transactional and analytical processing.
Platforms are being delivered with additional intellectual property as add-on capabilities. For example, professional service firms such as PwC, Deloitte, Ernst & Young, and Accenture are including their IP into applications built on SAP Cloud Platform. By extending the original capabilities of the platform around tax optimization or profitability analysis, this IP will broaden the choice of solutions and increase the speed and depth of functionality for finance organization.
When choosing financial solutions, executives must consider the openness of the platform and the availability of these advanced capabilities. CFOs should look beyond the immediate product features and functions and choose a financial solution based on the strength of a vendor’s platform and ecosystem.
Trend 3. Critical financial processes will be highly automated.
“Lights-out finance” will be part of every CFO’s future. Accounting that runs 24/7, using technologies such as artificial intelligence, will allow nearly full automation in traditional processes such as record-to-report, procure-to-pay, and order-to-cash. The need for shared service centers will shrink dramatically, allowing companies to redeploy scarce human capital to support high-value-added activities. Business networks will also digitize the information flow between companies and suppliers without breaks.
At SAP, revamping our finance processes helped us steer business model innovation beyond ERP. We have implemented several automated technologies that reduced the percentage of expenses dedicated to back-office, transactional costs from 65% to 40%. Automation also helped us lower the cost of finance as a percentage of revenue.
Trend 4. Finance will own true enterprise risk management.
Considering the incredibly high stakes of failure, it’s not surprising that finance would become the owner of enterprise risk management. Fortunately for CFOs, technology is increasingly enabling enhanced insight into the organization, removing silos and creating a true enterprise-wide view of the business that supports risk mitigation.
As this technology matures, proactive risk management strategies will become common, and they will be driven by requirements at the supervisory board level. This will not be limited to an enterprise view. As business networks become increasingly prominent, the view of enterprise risk management will extend throughout a company’s ecosystem, further enhancing capabilities in this critical area.
In my next blog, I’ll look at analytics, continuous processes, and automation – major developments that will disrupt finance. You can read more about finance solutions at www.sap.com/cfo.