Part 2 of a 2-part series about opportunities and challenges as finance experiences a massive shift towards automation to support the intelligent enterprise. Read Part 1.
Jørgen Bo Johansen knows finance. Part of the SAP family for over 20 years, he currently holds the title of sales director, overseeing sales of Finance and Risk & Compliance products following a 17-year stint as CFO for Nordic & Baltic states and a large part of Europe. His mission? Helping CFOs and finance support intelligent enterprises so their companies can become “disrupters instead of being disrupted.”
How can the predictive capacities of machine learning and artificial intelligence be used in finance?
You cannot have an intelligent enterprise without an intelligent finance department. There is a huge need for more automation across all aspects of business. Using machine learning for compliance and fraud detection would be an example, but there are many others. A normal system reconciles the payments that come in with the invoices that have been sent out. Yet there could be a number of reasons why the customer has paid a different amount, so these amounts don’t reconcile: maybe they have a certain volume discount or maybe they’re using a different currency. Machine learning can evaluate and take these aspects into account. It offers a whole new level of complexity by looking at the payment pattern from the past month within the context of the last two years to identify certain patterns.
What would you cite as the two main two challenges for CFOs of global enterprises today?
It depends on the maturity of the company. For a CFO in a big international company, I would say it’s a question of standardization and automation within the finance department. The CFO is and always will be responsible for protecting and improving margins.
This responsibility implies two big challenges for the next few years. The first is a new focus on finance operations and running them at the lowest possible cost for the highest quality. And the best and perhaps the only way to do this at scale is by using automation and avoiding error-prone manual work. I think we will see a lot of things that were outsourced to service centers will come back to be insourced, and a lot of the manual repetitive work will come back in-house to be taken over by machines and robotics using the latest technology.
I think the second thing CFOs are struggling with is simply keeping up with the market pace and embodying this new role as a supporter of strategy and business for the management team, as well as looking into new business models and thinking about new ways to make money.
Within this new context, it seems like finance can inform business way beyond its scope.
All this data can be made available to everybody in the organization depending on individual needs, without waiting for accounting to come up with the requested numbers. For example, one of the regional presidents here at SAP is one of the most frequent users of SAP S/4HANA. He told me that in the past, he would direct a question to the controller. He would get an answer a day later, but by then he had forgotten the question. Today, if he needs information, he just drills down and gets his answer on his own within seconds.
What do you imagine will be some of the main themes for finance over the next few years?
Having the right processes and technology has become a competitive advantage, and it’s really necessary to stay in the game. Igniting the finance department and data sourcing is crucial. I think data will be the new gold. If you don’t have the right data at the right moment, you won’t be able to make the right decisions.
I think technology will move extremely quickly toward machines taking over normal manual transactions in the next couple of years. And simultaneously, I think we will also see more rigorous regulation established as concern increases about the regulatory side of technology. We will see more legislation around using technology, and it will be, in part, up to the CFO to keep pace. We’re seeing new accounting standards emerge, and I think this trend is set to continue. Then, with all of the data flowing and all the new things you can do with technology, I think compliance, cybersecurity, and things like that will also come up this year for us again.