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CFOs: Get Your Heads Out of the Sand—Or Get Buried

Aug 23, 2017

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By: Jim Kaitz, President and Chief Executive Officer, AFP

As we gear up for the next MindShift Summit October 14 in San Diego, it’s time to start looking at the future of finance, particularly through a technology lens that seeks to disrupt the status quo. Finance organizations need to ask themselves what technology such as big data, the cloud, artificial intelligence (AI), machine learning, automation and blockchain could mean for them, their organizations and the future of work.  

Technology is becoming so pervasive that some predict the government will start collecting taxes using blockchain by 2021. And by 2023, these same prognosticators say, AI will account for 30% of all corporate audits.

Every industry is facing the technology revolution, and many are responding accordingly. Flashing a clear signal that the lines between finance and tech are blurring, rail line Norfolk Southern Corp. recently announced that it promoted its CIO to CFO.

The benefits of technology for the FP&A and treasury functions are clear, including increased productivity, reduced costs and improved decision making. However, the challenges are just as clear: lack of control over technology, cybersecurity, company-wide consistency and maintaining employee skills, for starters.

Even more concerning, while this is an unprecedented time to stay out ahead of the ever-evolving tech curve, research indicates that we are notoriously slow to adopt technology or even recognize how technology could disrupt work. And we’re even more behind the curve on seizing the full potential technology offers.

So, what does the future hold for treasury and finance? For example, how will automation and AI shift roles, perhaps even eliminating the need for some traditional functions?

According to a McKinsey study, we have the potential to automate 78% of the tasks that nearly a fifth of the U.S. workers perform daily—working in what McKinsey calls a “predictable environment: workers carry out specific actions in well-known settings where changes are relatively easy to anticipate.”

But other observers see a much more gradual role for technology performing jobs without human control. “I keep hearing the tsunami is coming, but there’s an equilibrium—the execution gap,” says Terry Bradley, chief technology officer with PLEX Solutions. “The tech is there to do it but the things don’t work 100 percent of the time. The tsunami isn’t going to kill everyone because there’s an execution gap.”

There are others who believe that the technology boom will have zero impact on jobs, and in fact may even create more positions. Harvard University professor Barbara Grosz recently told MIT Technology Review that AI systems will be designed to “complement rather than replace people,” because the technology is still very limited. “AI systems, like all computers, need to be developed for the people who are going to use them,” she says.

Survival skills

To survive—and thrive—in this booming tech culture, treasury and finance will have to help sow an environment of innovation. Ultimately, AI, automation, blockchain and the like should help the finance profession and the organizations they serve become more efficient and profitable. Ideally, technology should play a critical role in helping treasury and finance transform from a specialist role to a strategic partner.

But technology can only be as effective as the people who use it.

Smart finance and treasury organizations are asking difficult questions, and they’re using tech to find the answers on an increasingly shrinking horizon. Where a three to five year forecast used to be acceptable, today companies need to look 12, 24 or 36 months out to see which technologies will have the biggest impact on the growth of their organizations.

Companies that stay ahead of the curve and invest wisely in emerging technology will endure the oncoming wave, while those that don’t risk becoming marginalized.

The best way to invest is to scope out emerging technologies now to determine which tools offer the most value at the lowest costs and risk. Moreover, which solutions are going to increase profitability and improve operating efficiency to drive organizational growth?

Assessing how your company will adapt to short-term challenges and opportunities requires assessing how tech can help. At the same time, companies have to consider the risks and hurdles, looking at:

  • The most pressing challenges to adoption.
  • The technologies that offer the most value.
  • How company culture can influence innovation.
  • Staff skill level to seize the most advantageous technology.

The ever-encroaching wave of technology is not going to stop or slow down; and putting your head in the sand is a quick way to get buried. The question finance and treasury pro's need to ask is whether they’re prepared to manage proactively or passively react to the inevitable technological progress coming their way.

Identifying the emerging technologies and applications that will affect treasury and finance the most acutely is a smart place to begin. The next step is to prepare and educate professionals, looking specifically at solid plans that can mitigate the biggest challenges, lower costs, increase productivity and generally improve finance and treasury’s efficiency and effectiveness.

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AFP MindShift brings together the innovators and disruptors that will transform the role that technology plays in corporate finance and treasury. Learn more about the AFP MindShift Summit this October in San Diego.