Archives For CFO

By Andrew Burgess, Director, Source

As a sourcing advisor, I’ve been telling anyone who will listen that the robotic automation of business processes is set to fundamentally change the nature of the BPO market. The stark truth is that, to date, most of the real-life success stories have been in industry verticals such as telecoms, so, if robotic automation is to really live up to its full potential, then it should be able to have a significant impact on those generic business processes that are carried out across all industries, in particular finance and accounting, specifically accounts payable (AP).

To date, the biggest improvements in AP processing have been down to three approaches:

  • Getting manual information into the system electronically e.g. scanning and optical character recognition
  • Automating the processing as much as possible through workflow
  • Standardising the data fields to improve interfaces e.g. electronic data interchange

Through our research at Source, we believe that robotic software automation presents significant further opportunities in a number of areas, including: cross-system manual processing, data gathering and reporting, reconciliation of matching errors, monthly account closure, bulk data updates and ERP IT processes. Some of the key ones are discussed below.

Cross-System Manual Processing

Typically, humans are used to providing a flexible interface between a number of different systems that are used in a process – this is colloquially referred to as ‘swivel chair processing’ – data is read by the human on one system or screen and keyed into another system, sometimes with additional steps inbetween.

Middleware can provide solutions to these interfaces but they are typically expensive and complex to implement. Software robots provide a much simpler implementation of the interface, carrying out exactly the same steps as the human but at a fraction of the price. This requires no or minimal system intrusion and provides 100% consistency with the process requirements.

For example: Barclays Bank work with robotic automation software has resulted in a £175 million p.a. reduction in bad debt provision in their Accounts Receivable function and over 120 FTE saved.

Reconciliation of Matching Errors

One of the most manually intensive processes in the finance function, and in AP particularly, is the reconciliation of errors due to incorrect matching of data between documents. Because this process requires inputs from different systems is inherently non-standard in each case and can require some judgement, it is usually carried out by humans.

By using inputs from other data sources, processing different matching options far faster, and applying semantic reasoning, robotic software automation can replace much of the reconciliation task, thus significantly reducing the number of people required.

For example, the excess queue procedure at the Co-operative Bank is carried out daily to accept, reject and return direct debits, cheques and standing orders. Overnight BACS (Bankers’ automated clearing services) processing results in a daily ‘queue’ of customers with payments due to leave their accounts and with insufficient funds to meet these payments. A nine-person team in the bank would have the daily responsibility of manually reviewing the 2,500 or so higher risk accounts. The automation of the entire procedure means that the bank now has a ‘virtual’ team of 20 people completing the workloads by 11am each day instead of a team of employees working to meet a 3pm daily processing deadline.

Monthly Account Closure

The monthly account closure is typically a complex process involving many data inputs, plenty of reconciliation and some elements of judgement. The number of people involved in the process is typically very high, and the time taken to close the accounts has a direct impact on the financial position of the company, but must be 100% accurate.

Previously, much of the reconciliation work has required human input across many data sources – robotic software automation combines a number of the approaches already mentioned into one critical process. By being able to access multiple data sources, make fast but relatively complex decisions (and to do that 24×7) software robots can significantly reduce the labour required, and the time taken, to close monthly accounts.

For example: a group of 250 NHS trusts have automated their month-end-close process. The process initially took 15 people 12 days; but it is now down to 2 people and half a day through automation.

With a software agent costing around one-third of a typical offshore Business Process Outsourcer FTE, and one-ninth of an onshore FTE, there are clearly some significant benefits to be gained from exploiting this new technology. Therefore, I would suggest a consumer of BPO services should be considering an ‘automation strategy’ as the best way forward. At the same time, I would urge the software vendors and BPO providers themselves to focus attention on this potentially huge opportunity. If you’d like to attend a free event on 27 November 2014 and hear from four speakers who have implemented RPA in their own organisations, then visit: http://www.source.co.uk/opinion/automation-blog/item/208-event-the-naked-truth-about-robotic-process-automation

Palma Michel

By Palma Michel, former CFO headhunter and founder of the Mindful Leadership program at BeYoCo 

As our modern worklife environment is dominated by information overload, 24/7 connectivity, multitasking and back-to-back meetings, the ability and space to focus has become a rare good for CFOs.

While you are reading this, chances are high that your attention will be distracted by an incoming email, a text, a colleague, a thought about the budget meeting or a ringing phone. Research also shows that you will most likely follow the distraction and find yourself caught up in something else other than finishing reading this post.

In his latest book Focus, Daniel Goleman states that while the link between attention and leadership excellence remains hidden most of the time, it ripples through almost everything we seek to accomplish.

Scientific research also shows that deep thinking requires sustained attention; the more distracted we are, the more superficial and trivial our reflections are likely to be. The ability to control our impulses and focus our attention has even been found to be a better predictor of academic success than IQ.

The 2010 Science article “A wandering mind is an unhappy mind states that nowadays our attention is wandering involuntarily 46.9 percent of our waking hours. Neuroscience also shows that multitasking is a myth and actually makes us less productive, more susceptible to errors and increases stress. The results of this have shown to be decreased performance, wellbeing and productivity.

So what can we do to improve our ability to focus?

Janice Marturano, former General Counsel of General Mills and Founder of the Mindful Leadership Institute, states that improving focus starts when we begin to notice more and more that our ability to sustain attention even when we have time and even when we intend to be focused is becoming more and more limited.

Harvard Professor Ellen Langer advises to become a first class noticer by bringing a finely honed attention to every situation and a constant infectious sense of fascination with what is going on in the moment. According to Langer, first class noticers also question assumptions, previously relied-upon rules of thumbs and averages.

For neuroscientist Richard Davidson, contemplative practices such as mindfulness meditation can strengthen areas in the brain that are responsible for our ability to focus. The way he explains it, we all know that if we engage in certain kinds of exercise on a regular basis we can strengthen certain muscle groups in predictable ways; strengthening neural systems is not fundamentally different, it’s basically replacing certain habits of mind with other habits.

If you are still reading, well done, you managed to stay attentive.

Practical tips for improving your ability to focus:

  • Manage your technology instead of being managed by it: turn off instant email and text notifications.
  • The next time you receive an invite to a meeting, pause for a moment and reflect if you really need to be there and create space in your diary.
  • Cultivate a finely tuned attention to every situation by constantly applying a “fresh perspective” through questioning, inquiry and probing what´s going on in the moment.
  • Start training your muscle of attention through concentration exercises or contemplative practices such as mindfulness meditation.

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

To my eternal dismay I don’t really get much time on the iPad these days. I don’t have to look far, however to find where it is – invariably it’s in the clutches of either my seven year old daughter (worrying), or my three year old boy (worrying, but for different reasons). Their relationship with this sort of technology however seems very intuitive, dare I say almost hardwired. Technology will be even more coded into their future daily existence, probably beyond the realms we can imagine right now. It’s fascinating to watch, and it’s an extraordinary time to be alive.

Today’s rate of advancement in technology is exponential but I can’t help but think the technology we are becoming accustomed to in our private lives isn’t quite reflected in our business lives. There is no greater example of this than what’s been happening (or not happening) in corporate finance organisations over the last decade or so. If the finance organisation is serious about driving value and supporting the business in its strategic imperatives, one of the things it has to get serious about is the technology it has at its disposal. I don’t, however, subscribe to the view that technology is the panacea to all of finance’s problems, the one-stop solution to deliver the sorts of financial and operational insights the business is crying out for… but it would be naïve to underplay its growing importance, particularly with the digitisation agenda.

So what’s stopping finance technology delivering on its promise? The obvious one is investment costs and multiple legacy ERP systems not being fit for purpose; too much manual workaround, too much time trying to get to the number rather than understanding and explaining to the business the implication of the number. Where we have seen investment in finance technology, typically the investment is focused on streamlining and driving down cost, rather than investing in the sorts of capabilities that are predictive and insightful. But there are arguably other issues too. Has finance shown the necessary finance leadership in the technology agenda? Does it truly understand and can it explain the business case for finance technology investment? Does a typical finance function “culture” present challenges to really embrace the opportunities that technology provides? Is it because finance is too risk averse? Why isn’t it adopting the cloud much? Is the payback on technology that creates insight rather than headcount reduction just too hard to quantify? Is it a capability issue with finance playing “catch up” on the skills it needs to make technology truly deliver?

Lots of questions, not many answers. We explore all of these issues and more in ACCA’s latest CFO report Is finance function technology delivering on its promise? 

I’ll leave with you a final thought – I think the corporate insight agenda offers CFOs and the finance organisation a great opportunity for internal influence and moving the dial on the corporate reputation of the finance department. I also think embracing and making the case for technology and tools is essential to achieving this. My observation is this: if finance doesn’t take this opportunity to lead the insight agenda, perhaps someone else will…

This blogpost first featured in CFO World, February 2014

Helen Brand video-8656

By Helen Brand OBE, Chief Executive, ACCA

The second ACCA and IMA CFO Month starts today, and this year we are focussing on all things digital.

Today we live in an era of ‘digital Darwinism’, a time where technology and society are evolving faster than many organisations can adapt to the changes. This is one of the many underlying factors that led to the demise of stores such as Blockbuster and Borders. Yet technological advances continue to drive economic growth.

As trusted advisers to business, accountants and finance professionals around the world are expected to lead, not follow. The profession has historically been quick to identify and then exploit the huge potential of emerging technologies – from the earliest known records of commerce, to the earliest commercial computer systems.

Accountants’ enthusiastic use of the first programmable computers and widespread adoption of the spreadsheet helped to turn accountancy into the profession it is today; embracing of emerging technologies will turn it into the profession it aspires to be tomorrow.

Many new technologies have the capacity to influence the future of business and the accountancy profession, over the next decade and beyond.

ACCA and IMA’s latest report Digital Darwinism: thriving in the face of technology change, focuses on 10 technology trends with the potential to reshape the profession and business landscape significantly. These are developments that will change the way people live and work, and responses to them will determine the future success of individuals, organisations, and even countries.

The 10 technology trends that will have the potential to significantly reshape the business and accountancy landscape are:

  1. mobile;
  2. big data;
  3. artificial intelligence and robotics;
  4. cyber security;
  5. educational;
  6. the cloud;
  7. payment systems;
  8. virtual and augmented reality;
  9. digital service delivery;
  10. social.

Over the coming weeks during CFO Month 2014 we will be looking at some of these trends in a little more detail. In the meantime, to find out more about the technology trends impacting on the accountancy profession, please read the full report.

Jamie Lyon

By Jamie Lyon, head of corporate sector, ACCA

There’s a new kid on the block for business service delivery and it could be a threat or a major opportunity for finance chiefs. We’re all pretty familiar now with the advent of finance shared services and outsourcing, but Global Business Services goes one step further, leveraging sourcing methodologies, organisation structures and operating locations to create a cross-functional business support operation across HR, IT, Finance, Procurement, delivered under one governance framework. In theory it should mean greater business efficiencies, better visibility on end-to-end processes across the organisation, better insight into organisational data, and greater organisation flexibility and scale. There are, however, few examples where all support functions are wrapped around this new delivery framework – it’s an aspiration rather than a reality for most right now, with some but not all of the “GBS” boxes ticked, and it could be that GBS is more of a marketing term to signify a major business transformation, when it reality what we’re talking about is still finance transformation for many….

So what’s the implication for CFOs of GBS aspirations?  There’s plenty of evidence that those organisations which have GBS aspirations are typically putting CFOs in charge. With functional silos broken down, and processes managed end to end, the real prize for the finance organisation is that they should have access to a scale and scope of corporate data being brought together that they have previously unknown. This enhanced data visibility across the organisation, combined with new technologies and business partnering capabilities could help finance chiefs deliver the sorts of insights that truly make a difference to the strategic direction of the organisation, or which impact directly on bottom line performance.

But do many CFOs care about GBS or indeed want ownership? Are some likely to see it as a major political headache, riddled with enormous organisational complexity and logistical challenges. Could GBS be seen as a significant diversion from all their other responsibilities? CFO’s don’t have to “own” GBS to get the potential benefits, and it can be someone else’s problem. Maybe it should not sit within the CFO domain at all, perhaps the CIO or indeed the COO is better placed to ensure it has an appropriate seat at the corporate table.

One final note – if GBS aspirations are realised, moving finance operations and finance “service delivery” into a cross-functional structure and reporting model is likely to impact on the skills needed; it will almost certainly impact the career paths that finance professionals have access to.  These are some of the issues we have been raising in ACCA’s latest report. Co-authored with Deborah Kops of Sourcing Change: Global Business Services – a game changer for finance? we explore some of the questions which aren’t necessarily being asked. GBS has enormous potential for many businesses, but there remain a lot of unanswered questions.

This blogpost was first featured on CFO World website, November 2013