Changing technology is one of the main external reporting challenges that face the finance function. This is because with masses of data now at CFOs’ disposal there is pressure to deliver capabilities that include global and centralized systems, more transparent and regular reporting and deeper business insights. Yet, this also poses an opportunity – new technologies have the power to solve some of the finance industry’s most pressing challenges and uncover hitherto unseen opportunities.
Technological innovation already enhances what finance teams can deliver. Teams can tap into the power of intelligent machines, draw on developments in data analytics and implement robotic process automation (RPA) and artificial intelligence (AI) to magnify existing capabilities. These tools help enable data processing and analysis so they can reach their finance and business goals faster and more efficiently than ever.
RPA – taking the robot out of the human
Consider RPA, which is having an unprecedented impact on routine audit tasks as organizations strive to gather and digest ever-increasing amounts of data. EY has invested in building a Hadoop platform to help auditors manage these volumes of data. The platform frees up auditors’ time to focus on the higher-value work of interrogating the data to provide unparalleled, actionable insights to clients, rather than trawling through mountains of information to compile Excel spreadsheets. In other words, this new technology is helping auditors uncover new value.
Advances like RPA and other technologies can help CFOs, in particular. For instance, we found that 66% of respondents to our survey on corporate reporting said the increasing pace and volume of data significantly impacts the effectiveness of reporting. A lack of automation across systems is one of the biggest technology challenges CFOs face in reporting, our survey found.
So how does the finance function get the most benefits from the latest technologies? What is needed is a coordinated push for harmonization across the whole finance ecosystem. Without commitment across the function – from business goal, to business process, to IT that supports the function’s tools – the true potential of the technology won’t be achieved. The simple reason being that implementing technologies in siloes rarely produces long-term gains.
The value of combining intelligent technologies can be seen in lease accounting, with new global regulations such as IFRS 16 and ASC842. In this area, EY has developed a tool that uses a mix of RPA and AI technologies such as deep learning, text pattern commonalities and statistical modeling of text. As a result, this tool extracts substantial amounts of the information required for lease accounting. The technology also allows teams to start grouping contracts together, which can then be analyzed collectively. This allows us to automatically extract 80% of the information required for lease accounting, which significantly reduces the time a finance professional needs to work through contracts, particularly for large multinational corporations where they can typically manage 100,000 to 200,000 lease contracts of significant length.
Man and machine working side by side
But technology integration is just part of the story. Seamless workflows between technology and people must also be developed, based on an understanding of where each person provides the most value. That means developing new processes, roles and skills, and adapting to new dynamics between different areas of the business. With new technologies in place, finance teams will see their role begin to overlap and connect more with their commercial and IT colleagues, with deeper business insights that give people the capacity to become more forward-looking and predictive. Others will be called on to work more closely with computing professionals to develop and implement complex technology systems. The more people that have access to insights uncovered by advanced technologies, the easier it will be to implement those insights across organizations.
It’s time to recognize that just implementing AI or trying out data analytics is no longer enough without the integration and the wholesale change to back up the initiatives such as creating centralized systems. The only way the finance organization will realize the full-range and long-term benefits of these technologies is by rethinking finance processes and how the entire ecosystem works together. From our experience at EY, and working with our clients on their own innovation, I truly believe that the finance, IT and commercial teams can and should all learn from one another.
A version of this article first appeared in Accounting Today.