Part 1 of a 2-part series about how finance teams can apply new technologies to improve enterprise performance
Automation is not new… so what’s with all the hype and excitement? What differentiates the automation of today from the automation of yesterday? How can smart automation affect the finance function? And most important – is it worth it?
First: what does smart automation mean?
The Hackett Group defines smart automation as “the optimization of structured work, knowledge work, and interaction work through the adoption of emerging robotic process automation (RPA), smart data capture, conversational interfaces, cognitive automation, and agile orchestration technologies.” This framework is the core of digital operations. For finance, it means applying new technologies to improve effectiveness, efficiency, and user/customer experience, while providing operational insights (see image below for more detail).
The difference between new and old-style automation
Finance has been automating for decades. In fact, saying “today’s technology” is a misnomer. Technology has always been digital. However, unlike traditional software, smart automation is:
- Agile – Flexible and adaptable to changes in business demand and function-agnostic, i.e., can be applied to different business problems
- Economical – Faster and cheaper to develop, implement, and maintain
- Scalable – Begins with simple, small, and focused implementation, with an eye on additional automation opportunities
- Business-led – Built with close coordination with IT and internal audit, but owned by the function
The finance potential
Smart automation solutions are – and should be – an important part of the finance function’s future. Digital transformation is intensifying competition. Innovation is disrupting the way business is conducted and products and services are delivered. Plus, finance executives are under pressure from key stakeholders to do more with less, improve quality, support more robust decision-making, and be agile enough to respond on a dime… or preferably, anticipate what’s needed, by whom and when.
The Hackett Group research found that the typical finance organization can reduce process costs by 41% by optimizing its technology landscape and deploying new technologies like RPA and cognitive computing, eliminating a decade-old performance gap versus world-class finance functions. Even finance organizations that are already at world-class levels can reap big benefits: They can further lower cost by 20%. That gives them a significant advantage by offering them the choice to grab the savings or pass and redeploy resources to higher-value activities. According to our research, over 30% of business services functions have already introduced new positions such as data scientists, digital transformation program managers, and cybersecurity specialists.
Meeting these expectations is impossible without change: Changing how we operate, how we deliver, how we partner, how we organize, how we manage, and how we execute. And that’s where smart automation comes into play. New technologies can help, but they are not without their challenges. They raise critical questions; for example: What are the best opportunities for automation? Who is the right provider? Where should we start? Should we start with RPA? What is the impact/value? What are the main risks, and how do we avoid them? Why do we need a center of excellence? And, how will these digital tools integrate with other systems?
Making the right choices
You and your team might be asking yourselves these very questions; indeed, the challenges that surround smart automation might sound similar for those who are confronted with other technology initiatives and transformation programs. The reality is that this new breed of software solutions comes with its own set of assumptions and dynamics.
In Part 2 of this series, we’ll explore how you can align the right automation tools with the right processes.
The Hackett Group is an SAP platinum partner.