The modern day CFO is being asked to harness the power of “digital business disruptors” to define the future of finance and act as an influential business partner. We at KPMG describe this changing CFO agenda as “extreme automation,” with the below key elements…
Cloud-Enabled Digital Transformation
To enable the shift toward digital disruptors, Cloud technologies are providing CFOs with the ability to select best-in-class application solutions that provide real-time data insights and enable greater access to Artificial Intelligence (AI) and Machine Learning solutions. Cloud-based infrastructure provides a cost-efficient, scalable way to optimize the business by changing the consumption model and by supporting the standardization of processes, seamless integration, and enhanced data governance.
Insights and Analysis in the Digital Age
The ability to unlock strategic business insights using analytics is a prerequisite to business success. Availability of data and accessibility of analytical tools are keys to reimagining the role of finance as a contributor to growth.
Yet, according to a recent survey conducted by the Association for Finance Professionals, 55% of FP&A practitioners primarily use spreadsheets to deliver analysis. This trend remains, even as proof accumulates that greater investment in technology liberates FP&A staff from non-value added activities and allows them to conduct robust analysis and forecasting to better inform their company’s strategic decisions.
A recent KPMG case study details the story of a Global Consumer Products company with high volume of manually produced reports, limited standardization and fragmented systems across business units. The company was able to reduce reporting volumes by 50% while enhancing reporting capabilities by standardizing reports via automated management reporting catalog and front-end data visualization tools.
Robotics Process Automation (RPA), Artificial Intelligence, and Machine Learning
CFOs have started to implement Robotic Process Automation (RPA) to optimize manual and repetitive processes and free up finance capacity. RPA is the first step in automation journey, as more complex processes require more sophisticated tools. When RPA is further enabled using AI programming approaches, the benefits are exponential. Estimates suggest that a software robot represents approximately one-third the cost of an offshore FTE.
With the benefit of high-quality data architecture (e.g., through the implementation of Cloud ERP systems), businesses can build upon their RPA foundations and leverage AI and Machine Learning to analyze risk, streamline accounting, increase speed of insight, and improve forecasting accuracy. The need for timely access to data and insight has prompted a surge in Artificial Intelligence (AI) and Machine Learning. KPMG’s 2017 Global CEO Outlook concludes that, “[CEOs] are just beginning to realize how [AI], Machine Learning, and cognitive capabilities could bring a surge in productivity as well as help to create new products and new demand that would not be possible without these capabilities.”
AI can be used to enhance contract management and compliance, by analyzing sets of documentation to extract needed elements to determine compliance. For example, KPMG’s Cognitive Contract Management (CCM) Solution was used to support a leading telecom provider in automating the extraction of contracts and conducting customized analytics to extract and upload the required metadata back into source systems. CCM helped converge towards a “single source of truth”, allowed for quick and efficient review of entire contract portfolio, facilitated full oversight of all extension and termination of contracts and helped to increase speed and effectiveness of Data Cleanup process. Spend reduction of 5-10% can be achieved by better data capture and reduction of manual efforts in procurement contracts management. AI-enabled contract management solutions can also accelerate compliance to the New Revenue Recognition and Lease Standards.
KPMG also recently supported a global online payment processing company suffering from a lack of transaction-level standardization between payment processors and vendors, which led to numerous anomalous events and a general degradation of trust in organization-wide data. AI-enabled advanced analytics, in the form of a data-quality monitoring tool, were employed to detect anomalies in key business metrics. The solution leveraged time-series modeling, machine learning, and deep learning to identify patterns of each individual data feed and forecast expected daily behavior. The model incorporated yearly, monthly, and weekly seasonality, and accounted for nonlinear behaviors. Real-time reports and metrics were also published in a web-based interface.
CFOs have begun to consider the finance applications and disruptive capabilities of shared ledger technology, increased efficiency, reduced capital consumption, revenue enhancement, and loss reduction. Blockchain’s qualitative value includes increased compliance through a clear audit trail, transparency of transaction history, immutability, and an inherent efficiency with automation.
Blockchain technology has applications across all industries, even in diamond mining and trading, where companies are exploring blockchain ledger for tracing stones from the point they are mined right up to when they are sold to consumers thus ensuring only those overseeing the mining, wholesale and retail of diamonds can enter data on the blockchain database. This gives the strongest reassurance to the consumers to the value and authenticity of the precious stones.
CFO’s are uniquely positioned to harness the power of “extreme automation” and influence the strategic direction of their companies. CFO’s who adopt cloud technologies and successfully combine them with digital disruptors, such as real-time data insights and analysis, AI/Machine Learning and blockchain, will be able to drive enterprise-wide transformation and ultimately unlock tangible benefits for the organization.
Ron Walker, Principal KPMG
Anuj Mathur, Director KPMG
Mark Pele, Manager KPMG
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