Finance Transformation Frontier

CASE STUDY

Shaping Finance Transformation for a global professional services company

In a nutshell

David Cruise explores the finance transformation landscape, highlighting the continued dominance of ERP giants and the rise of AI and ML in reshaping finance functions. Offering practical advice for CFOs, he delves into the strategic adoption of AI, the potential of fintech, and the importance of cautious integration to drive efficiency and innovation in finance.

I’ve recently re-immersed myself in the finance function, a familiar territory I had swapped for the intricacies of HR programmes.

A client was embarking on a significant change in their finance function, and I welcomed the opportunity to join the Change Associates team leading the finance transformation.

It’s a bit like revisiting your old home town and noticing the new mixed with the familiar faces and buildings.

The ERP titans still reign

Oracle and SAP are still the dominant players, maintaining market leadership by offering customers full ERP solutions with finance functionality at their core. The complexity of integration and managing data flow with other systems is a barrier many potential customers consider insurmountable.

Workday, Salesforce, and Microsoft are all attempting to take a share of the cake, but their limited functionality means they are more viable for smaller businesses in specific sectors. Salesforce and Microsoft are also hampered by having a system integrator ecosystem that is not as well managed as Workday’s.

So, generally, CFOs will take the perceived lower-risk option of going with SAP and Oracle.

The rise of niche challengers

The finance transformation landscape has always included a wide range of vendors offering specialist solutions. The market continues to offer a range of planning, analytics, and reporting tools and specialist offerings. Annaplan and Tableau are two that stand out for me.

The Fintech revolution

Blockchain, data analytics, regulatory technology solutions, and fintech solutions for payments and lending have also transformed the market. CFOs have more options to drive efficiency in their functions and deliver customer-centric finance processes than ever before.

AI in Finance Transformation

Recently, the major vendors have been working hard to move customers from on-premise solutions to Cloud offerings, while the current hype is all about Artificial Intelligence and Machine Learning.

I call it ‘hype’ because while vendors celebrate their new AI offerings, I have yet to see any objective evidence of true AI solutions gaining significant traction in the core financial accounting and management accounting space.

But some of this hype is justified.

AI-based solutions for underwriting, credit checks, fraud detection and analytics are already widely available. It won’t be long before most finance processes will use Artificial Intelligence to improve accuracy and efficiency.

The first finance function to be genuinely transformed by AI will be decision support. Powerful AI offerings will provide complex predictive analytics and scenario planning using core data, natural language processing and cognitive computing tools.

AI and ML are ideally suited to this part of the CFO’s remit. And as it is arguably the most critical part of that role, I anticipate we will see finance functions in large corporates invest heavily in this area first.

An emerging threat to the old guard

I believe the biggest threat to SAP and Oracle will come when predictive analytics vendors expand into core finance processes – and that move is already happening. Even vendors such as Workday, who talk about having AI and ML built into their technologies, will be looking over their shoulders.

AI is already having a disruptive impact on many functions. Eightfold.ai seems to have something genuinely different to offer in the talent space, and I bet that we will see that business scale quickly. I am sure we will soon see the emergence of a finance solution of a similar type.

Here are five recommendations I want to offer CFOs considering AI to support their finance transformation.

1. Changing systems for change’s sake isn’t a good idea

The vast majority of organisations use much less of their software subscription than is available to them. Invest in getting the best of your current solutions before buying new ones with functionality you will never use.

2. Be a sceptical buyer

Don’t search for AI solutions to buy: ask your CIO and vendors to suggest solutions based on your business needs and challenges.

3. Prioritise

Agree design principles on where and how you might want to use emerging tech. For example, for the next two years, we will only use AI for decision support. This will prevent ‘bauble hunting’, where colleagues and vendors offer you shiny but ultimately irrelevant stuff.

4. Check under the bonnet

Ask a technical expert to examine any AI system vendors present and make sure they have something new and valuable to offer. Then, find out who their customers are and how they are using their system. Call some of them for a review.

5. Put aside AI FOMO

Resist internal and external peer pressure. Whatever your boss, your team, or your colleagues say, or whatever the competition does, stick to the principles above.

Image (c) Shutterstock | metamorworks and Pixabay | Gerd Altmann

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David Cruise

Group CEO David has led large scale business transformations both in-house and as a consultant. To contact David please email david.cruise@changeassociates.com

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