Part 1 of a 2-part series about opportunities and challenges as finance experiences a massive shift towards automation to support the intelligent enterprise. Read Part 2.
Jørgen Bo Johansen has been at SAP for over 20 years, and he knows finance. While his current title may be sales director and his responsibilities focused on overseeing sales of Finance and Risk & Compliance products in EMEA North, he brings real insider insight to the job following an extended position as CFO for Nordic & Baltic States, France, UKI, Netherlands, and BeneLux. Over the past few years, he’s been witness to and responsible for driving a massive shift towards automation in finance to support a global move towards more intelligent business. We took some time to chat about the opportunities and challenges in finance today… and what to expect tomorrow.
During your tenure, you must have seen some huge changes in the needs of finance departments.
For about 17 of my 20 years at SAP, I was CFO for Nordic regions. A couple of years ago I moved into sales to sell the very solutions that we had implemented for ourselves to support CFO procedures. At a basic level, we sell all the solutions that are relevant to a company’s CFO.
Change to the finance department has come in different waves: responses to increasing pressure on efficiency and leadership in line with the evolving global business landscape. Around 10 or 15 years ago, it started with companies trying to standardize their processes and move to shared services, but without really having the technological advances.
And then the last wave swept in about three to five years ago with a massive technological advance most apparent in the development and creation of the new intelligent ERP available in the cloud. Suddenly it was possible to have one universal version of the truth. It gave financial departments real-time data and reporting capacity and empowered them to drill down to the most detailed level of information. Taken together, these advances equaled a complete change for financial portfolios.
Why is having one version of the truth and this drill-down capacity so important?
Having one universal truth from one set of data is massively significant. And having this available in real-time is extraordinarily powerful because it supports faster decision-making on a much more detailed level. That allows companies to be faster and more agile; necessary conditions for today’s new economy.
The world is becoming increasingly agile. The new technology being continuously introduced to the market today is evidence of this constant forward progress. Markets are being disrupted; over the last 50 years, the average lifespan of a company has gone from 75 years to 15 years, and 50% of the companies that existed 20 years ago are now gone.
This new landscape requires more flexible finance. But agility and disruption are not the only issues; new legislation is constantly being introduced within the scope of technology. Other forces include significantly more volatile markets in terms of currency, mergers and acquisitions, and so forth. All this puts huge pressure on the CFO and finance department to engage in business development.
How has the role of the CFO changed in relation to this context? What are the new expectations?
CFO has become a more strategic role than it used to be. You know, 20 years ago, the CFO was what they call a bean-counter, doing the numbers, making sure that the company met requirements, creating annual accounts, filing tax declarations, and so forth.
But today the role is more similar to a business partner. Along with CEOs, CFOs now take part in strategy and in mergers and acquisitions and play an important role in looking into new business models.
Ultimately, the goal is to be a disruptor instead of being disrupted.
New business models, new product categories, new brands, new market sectors: How important is having one version of the truth when the scope has become so much more complex?
The systems used by many companies today have many inconsistencies. They hold a diversity of data from different systems compiled in the general ledger, which might range from management accounting to statutory accounting. Reconciling all of that takes a lot of work and a huge amount of time for things that could be automated, and that inefficiency is why one source of truth is so important.
I think we are moving into an era where companies are looking for digitalization, automation, standardized processes, robotic postings, and machine learning. There are so many new and potential applications for machine learning that will remove the need for manual work that doesn’t add value.
Stay tuned for Part 2 of this interview next week, where Jørgen shares his views on everything from predictive technology to future themes for finance.