How should controllers look at the new technologies in their organization? Keenly but cautiously. Many new products will simplify workflows, empower people, and facilitate even more investment in technology, but it pays to ensure that companies aren’t sacrificing controls, margins, or growth for marginal gains.
Our last post on Gartner’s Future of Finance Report looked at some of the challenges that corporate finance departments will face and opportunities to evolve. From the fourth era of ERP to the expectation that companies leverage centralized, sufficient, and on-demand data for decision making, we would today like to look at five more trends on the horizon.
Today, we’re exploring five more trends including the AI revolution, the risks of RPA, the rise of supplier collaboration, the use of shared services, and the need for efficient growth.
6) AI Adoption Ramping Up—The Revolution is upon Us
In a recent article, we explored the mainstreaming of AI, noting,
“According to the recently published third edition of Deloitte’s State of AI in the Enterprise report, respondents are starting to look or even move into the buying phase, with about half of respondents having launched multiple AI systems and more than a quarter demonstrating maturity.”
Gartner shares this notion, noting that everything will change. “In the coming decade, AI will optimize or transform nearly every activity in finance.”
Much like our esteemed panelists in the Accounting Robots webcast, Clement Christensen, Senior Principal, Advisory at Gartner adds that while AI won’t replace you, it will change your life. Christensen adds, “Will AI take your job or your team’s job tomorrow? Probably not. Will it fundamentally change how you work in five years? That’s up to you.”
7) Plan for the Internal Controls Challenges of RPA
“The good thing about computers is that they do what you tell them to do. The bad news is that they do what you tell them to do.” –Ted Nelson
Though not technically artificial intelligence, robotic process automation is nonetheless a key driver of business value for finance professionals. According to Gartner, 88% of corporate controllers will soon be using RPA within their function.
But one of the biggest benefits of RPA is also its risk. If the input or algorithm is bad, RPA will simply do the wrong things more efficiently than you can. This… is not great for internal controls. It’s even worse if you don’t incorporate a coherent strategy for segregation of duties.
Therefore, it’s critical for companies to focus on RPA governance. Joey Mixon, Director, Advisory at Gartner adds, “It’s essential to define internal control and governance for RPA programs. To fully utilize bots and cost savings, clearly delineate the responsibilities of bot development, bot operations and bot outputs.”
8) Supplier Collaboration and the Ability to Unlock Value
2020 has changed the way supply chains work—but it’s not the only trend. It pays to ask if, when, and where you’re leaving value on the table. Without rigorous contract management, up to 75% of the value achieved during strategic sourcing can erode within 18 months of signing a contract.
Therefore, the move from purchasing to supplier collaboration is the way to grow. Gartner recommends that finance leaders look for new ways to benefit: “As your organization becomes increasingly reliant on suppliers for key capabilities, create more value from existing supplier relationships.”
9) The Importance of Aligning Shared Services
Shared services has moved far beyond finance transaction processing, now including value-added services in finance and beyond. This presents an opportunity for finance leaders.
Much like the evolution of supplier collaboration, companies can benefit by focusing on value creation. Gartner notes,
“The focus of mature shared services organizations will shift from cost reduction to value delivery. Process experts become digital experts, who not only understand process strategy and problems and current solution options but are also expert in “digital sensing,” which incorporates both problem sensing and solution sensing.”
10) Efficient Growth Requires a Move from Scope to Scale
Are companies focusing too much on cost scope instead of value and scale? Probably. Too often, a company will look for growth in the wrong places. It might feel right to enter a new market, launch a new product, or look for other diversification strategies—but not many are benefiting from the decision. Rather than finding a cost effective way to grow, they are sinking money into something first without looking at its impact on margins.
According to Gartner, in the last decade, only 5% of companies have outpaced peers in top-line growth and short-term margin expansion while also maintaining industry-leading cost structures (what they call efficient growth).
By building scale into the cost structure, finance leaders can get more from their business. Gartner sees this strategy as a way to combine revenue growth and profit growth. Efficient growth companies compete in almost 20% fewer industries than peers, provide a simple product and service offering, and go all in on building a dense footprint.
Bracing for the Future of Finance: Discuss Your Initiatives in the Controllers Council Community
With so much changing in the accounting world, controllers need to stay ahead of the changes. The Controllers Council is here to help. As a leading community for controllers, we are excited to provide benchmarking and discussions on how to run your department, and invite you to join us. Get to know more about the benefits of joining the Controllers Council and join today
