Leveraging technology for efficiency, agility and operational excellence




Sharing thoughts, swapping ideas and brainstorming on this, CFOs and finance heads from a diverse and leading group of companies, shared invaluable insights at the Financial Express Leadership Dialogue.The elements of efficiency, operational excellence and agility are core to any business function and in times when every root and branch of an organisation has to be aligned to ensure stellar outcomes, leveraging technology becomes crucial. Sharing thoughts, swapping ideas and brainstorming on this, CFOs and finance heads from a diverse and leading group of companies, shared invaluable insights at the Financial Express Leadership Dialogue, held in association with Oracle.

While all seemed aligned on the need to incorporate technology and that being the only way ahead to ensure scale and future readiness of businesses, there was emphasis on questioning the status quo and a shift towards quantifying the benefits. It was felt that most of the aspects dealing with costs and efficiency and involving either managing or accounting were largely about processes. While some costs are clearly visible there were others that were invisible (this is essentially the cost of a process) and therefore evaluation of these costs becomes crucial. The way some were trying to deal with this was by looking at the processes, the value-chain mapping and then closely examining those elements that need to be done away with to make the process simpler and more favourable for the business. The end results being not just reduced costs but also better outcomes with critical data for decision-making becoming


 




Not the time for Silos
Data and processes need to talk to each other for that alone. This is where it was becoming crucial on how each business is trying to approach technology. While thanks to technological intervention, there are different solutions possible for each business function but these, it was felt by all the speakers, need to be integrated and would generate sub-optimal results when implemented in isolation.

Touchless and real-time
Increasingly, many seem to be focussed on making everything touchless (implying reduced manual work), touchless reporting and real-time. Many of the finance leaders saw most of their time spent on digital roadmap, compliance and digital transformation.

Digital transformation
When deciding on which technology to invest in, most were of the view that it does not help to acquire a new technology and then try and fit a legacy process onto it. Instead, it was better to undertake a digital transformation first. Most also looked at the benefits of shared service model and felt it helped streamline a lot of processes apart from helping in acquisitions and in making integrations seamless.

Gaining insights
Most of the practitioners, who also happen to be genuine practitioners from the field, saw mining of data today more to gain insights than to just reduce cycle-time or cost reduction.

Proactive risk management

Many also felt the need for proactive risk management. Especially, in the cast of high-velocity businesses where there was also the element of scale – for example, e-commerce. Since, in some cases, it involved dealing with millions of people or lakhs of buyers, it was crucial to have early warning signals and a better ability to ‘know your fraudster,’ as it were. Some even referred to solution lying in removing the need to vendor reconciliation (an unavoidable issue for many), abnormality review apart from the need to upskill talent within the organisation.

In times of volatility and need for agility, an important takeaway for some was the realisation that when deciding on investments into new technology, it was important to look at needs five years from now rather than merely trying to deal with a current problem. Most seemed aligned also on the thought that focus must be to look for solutions that support business agility. Off course, one link node across the thoughts shared by all the speakers was the need to ensure that data was clean with each data set talking to the other.

Transitioning from a legacy system to a modern and agile finance platform
One of the biggest challenges for a CFO is overseeing the transition from a legacy finance system to a modern and agile financial system. This is especially a challenge for older companies, where the legacy finance system is the backbone of the organisation, but can struggle to cope in a rapidly evolving digital ecosystem. Old finance systems tend to be rigid and can hamper innovation, limiting the ability of the company to scale and allow for data-driven decision-making.

At a recent gathering of CFOs and financial heads of a diverse group of companies at the Financial Express Finance Leadership Dialogue in association with Oracle, the CFOs outlined the challenges with legacy systems and what they expect from a modern finance platform, and how the transition has been for them.

Challenges of legacy systems
One of the key points discussed was how one can ensure compatibility of older systems with modern financial systems, and how to handle the change management. This is especially so in the case of mergers and acquisitions, where scalability becomes an issue. How does one get a Tally user to graduate to an Oracle system, for example?

Matching data points or metadata can also be challenging as the legacy data is often not in a compatible format. Migrating the data can be a challenge and often the full potential of a modern financial system is not utilised. “It’s like taking a Ferrari and using it like a Maruti,” they pointed out. When a modern system is implemented, it can be customised, and that is where users demand more. Often there is resistance to change in legacy finance companies and training is needed.

Modern finance platforms are designed to streamline financial processes, improve data visibility, and enhance decision-making. This a good opportunity to leverage the need for training do a bit of housekeeping – get rid of data you don’t need.

Simplifying data reporting
Modern finance platforms can simplify financial data reporting for CFOs. By automating data collection and analysis, these platforms can provide real-time insights into key financial metrics, giving a CFO a bird’s eye view of processes, and enabling them to make more informed decisions.

An even bigger benefit is the ability to move from an on-premise model to a cloud-based finance platform. This can lead to significant cost savings as cloud-based solutions don’t need significant hardware or infrastructure costs. They are also easily scalable and can help optimise resources. While security is a concern, moving to a reputed cloud infrastructure could be better for organisations. “One moves from a capex model to an opex model,” they concur.

Generative AI for more flexibility
With the advent of Generative AI, financial operations can be automated much more especially for routine tasks, reducing data-entry errors. It can also work with the data to do predictive analytics and forecasting, making the CFO’s life easier, and allowing them to focus on decision-making based on the modelling. One can move from a feedback mechanism to a feed-forward mechanism.

One of the biggest advantages of a modern finance platform is helping with the transition process during mergers and acquisitions. Financial data can be easily consolidated and integrated from multiple sources, and a standardised process can be introduced across the organisation. Modern financial platforms can easily reconcile data by automating and using
algorithms to match transactions or identify any discrepancies during an M&A. It can also reduce the time period for an M&A and help in significant cost savings. Most at the roundtable agreed that in a digital age, agility is key, and transitioning from a legacy system to a modern financial system can give businesses significant advantages.

Harnessing Advanced Analytics for Strategic Financial Insights
In today’s fast-paced business landscape, the role of analytics in finance has never been more crucial. At the FE Finance Leadership Dialogue, a CFO roundtable focused on ‘Harnessing Advanced Analytics for Strategic Financial Insights,’ bringing together experts who highlighted how advanced analytics can transform financial operations, enhance decision-making, and drive overall business success.

The roundtable discussion focused on using advanced analytics in finance to gain strategic insights. Experts highlighted how data analysis can improve business operations, budgeting, forecasting, and decision-making. They emphasised the importance of AI, data integration, and unified platforms to enhance efficiency and address challenges in financial reporting.

Analytics in Business Operations
The discussion commenced with a compelling overview of the importance of analytics in business operations. Most CFOs highlighted the importance of leveraging large volumes of data to extract meaningful insights and establish key performance indicators (KPIs).

Unlike traditional transactional reporting, which offers a snapshot of past performance, advanced analytics provides a forward-looking perspective essential for the CFOs. For instance, analytics can streamline processes such as procure-to-pay cycles and reduce the average time to close financial periods, ultimately enhancing operational efficiency.

Further, by examining transaction histories, organisations can pinpoint areas needing improvement, such as identifying suppliers or customers with delayed payments and facilitating informed decision-making.

Insights from Data Analysis
The roundtable underscored that the insights gleaned from data analysis are invaluable for strategic financial management. The application of analytics in budgeting, forecasting, and accounts payable processes, particularly in improving days sales outstanding (DSO) and business process outsourcing (BPO) metrics was highlighted.

The emphasis on analytics not only enhances financial accuracy but also empowers finance teams to make data-driven decisions that positively impact the bottom line. This reflects a growing trend where organisations are moving toward centralised models to enhance consistency and efficiency in financial reporting.

High-Performance Computing and Analytics

The integration of high-performance computing in analytics was another pivotal point discussed by CFOs. The recent disruptions in global supply chains due to events like the COVID-19 pandemic and the Ukraine war necessitated a more strategic approach to inventory management. Analytics tools are instrumental in forecasting demand, managing inventory
levels, and hedging against price fluctuations, which are essential for maintaining operational resilience and reducing costs.

Retail and E-commerce Analytics
In the retail sector, the establishment of central analytics teams dedicated to revenue and inventory forecasting was highlighted. The shift toward AI-based analytics allows for real-time insights, enabling organisations to respond proactively rather than reactively. This is particularly important in managing risks and ensuring that financial reporting is based on accurate, structured data. The challenge of integrating data from disparate systems remains, underscoring the need for accurate data as the foundation for meaningful insights.

Talent Management and Predictive Analysis
Talent management was another area highlighted by CFOs, who discussed the use of predictive analysis to align talent with customer needs. This approach facilitates the building of long-term relationships with clients while ensuring productivity and efficiency. The conversation emphasised a paradigm shift from traditional finance insights to broader business insights, illustrating how predictive analysis is increasingly vital in the services industry.

Master Data Management and Data Integration Challenges
Data consolidation and master data management emerged as critical challenges that organisations face before deploying analytics effectively. The necessity of creating an enterprise-wide master data system to support accurate analytics and informed decision-making was discussed. This requires mapping data from various systems to establish a unified view, which is essential for extracting actionable insights.

Many CFOs echoed these concerns by stressing the importance of finding solutions to integration challenges rather than merely preparing data for reporting. Accurate data is crucial for financial decision-making, and resolving these challenges is a priority for finance leaders.

AI Integration in Financial Processes
The discussion also touched on the transformative potential of artificial intelligence (AI) in financial processes. Some CFOs shared how recent advancements in AI have allowed for 60% of invoices to move to the approvers’ level without human intervention. This automation streamlines workflows and enhances efficiency, which is further complemented by AI-driven
tools for vendor management and payroll processing, as noted by other speakers.

The Importance of Unified Data Solutions
However, the complexity of financial reporting remains a significant hurdle. The need for unified reporting solutions that can simplify processes like cash flow management was highlighted, reinforcing the idea that technology should serve practical business needs rather than merely showcasing advanced capabilities.

The need for unified data solutions was emphasised throughout the discussions. The concept of a single platform was championed as a means to integrate data from various sources, facilitating streamlined reporting and operational efficiencies. By reducing the need for complex migrations and stabilisations, organisations can save on hiring and training costs while enabling finance teams to focus on strategic analysis rather than administrative tasks.

Conclusion
In conclusion, the roundtable reinforced the notion that advanced analytics is not just a luxury but a necessity for modern finance functions. By embracing analytics, organisations can unlock strategic insights that lead to improved decision-making, operational efficiencies, and enhanced financial performance. As the financial landscape continues to evolve, those who leverage data-driven insights will be best positioned to navigate challenges and seize opportunities in the market.


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