Part 8 in the “Intelligent FP&A” series
“The science of today is the technology of tomorrow.” – Edward Teller
“Never before in history has innovation offered promise of so much to so many in so short a time.” – Bill Gates
Those famous quotes popped into my mind when I started to think about technology and intelligent financial planning and analysis (iFP&A). We are moving so fast on the technological front that the speed can be somewhat unnerving. The way technology continues to have a greater impact on our daily lives, often in subtle ways, is fundamentally changing the way we work, play, and interact with others.
The tech terms thrown about today can cause the typical finance professional to question whether they have chosen the proper career to pursue or if they took the right courses at university. Terms like advanced analytics, robotic process automation (RPA), the cloud, software as a service (SaaS), artificial intelligence (AI), and blockchain are bandied about as if their meaning and impact are obvious to all.
This blog and the next will address some of these technologies relative to their value to iFP&A teams and the current state of utilization for organizations evolving toward intelligent finance.
Advanced analytics can improve the ability of the iFP&A team to better predict outcomes and manage risk by running scenario analyses and what-if forecasting models, which could never be done before due to constraints of time, money, and resources. We have reached a point where the amount of data is so great (currently measured in yottabytes, 10^24, and rapidly heading towards brontobytes, 10^27) that throwing more humans at the problem is no longer feasible nor cost-efficient.
By leveraging advanced analytics, we can gain a better understanding of the financial impact of key strategic and operational decisions. Advanced analytics can improve our ability to provide better and faster insights and information to key stakeholders through storytelling techniques. And we can use advanced analytics to improve the performance measurements of the organization by merging financial and non-financial information.
Currently, I would describe the use of advanced analytics worldwide as “active.” Many organizations have made significant investments and are exploring and expanding their use of advanced analytics across the entire decision-making process.
Robotic process automation
RPA is a term that scares finance professionals. I experience this every time I speak on the issue, no matter where I am.
We have been witnessing the automation of labor since the earliest days of the Industrial Revolution. For me, an exaggerated example of this concern is the Luddites smashing machines in early 19th-century England. To date, RPA hasn’t touched finance in a significant manner, but that is all changing.
Yet, for 30-plus years, those of us in FP&A have been complaining that we spend an inordinate amount of time – estimated at 70% to 80% – on the acquisition, reconciliation, and verification of data (and other low-ROI activities). Now with RPA, we may be finally able to flip that paradigm on its head and spend 70% to 80% of our time focused on what the numbers mean rather than on what the numbers are.
RPA can dramatically reduce costs by automating time-consuming processes and greatly improve consistency, control, and traceability. The work produced is of higher quality due to the reduction of errors. A tremendous benefit of RPA is its ability to overcome system fragmentation by consolidating data from disparate systems.
Currently, I consider the use of RPA globally as “developing.” Many organizations are growing their understanding of the technology and its benefits. Based on studies, the take-up of RPA seems poised for significant growth.
We’ll take a look at cloud and SaaS, artificial intelligence, and blockchain in the next blog.
We will be hosting a number of events internationally, where we will be discussing and diving deeper into these critical issues and topics.
In addition to our Global FP&A Roundtable series, we hope to see you at Financials2018 EMEA in Prague, October 16–18.