Smart Automation: Impact on your finance organization and how to tap the full potential

Our ICV corporate member, The Hackett Group, has sent to us a new text giving advices how to trap the full potential of the finance organization’s Smart Automation. It was written by  Stefan Thren, Senior Management Consultant Strategy & Business Transformation, and Werner Zeitlberger, Director Strategy & Business Transformation at The Hackett Group. Thank you very much for the input!

Today’s fast-changing business environment creates continuous pressure on finance organizations to achieve new levels of efficiency and effectiveness. At the same time, stakeholder expectations of finance are higher than ever.

One of the main efficiency and effectiveness drivers is Smart Automation – a category of technologies, which includes robotic process automation (RPA), smart data capture, conversational interfaces, cognitive automation and agile orchestration to optimize structured knowledge and interactive work. By adopting Smart Automation, finance organizations are able to reduce staff by 24% and cut costs by 13%.

Within the next one to two years, the technology adoption in the finance organizations will exponentially increase. 67% of finance executives expect their organizations to use RPA enterprise-wide within one to two years (versus only 6% today). 21% of finance executives see their organizations adopting cognitive computing and artificial intelligence within the next two years.

Seeing these developments, one can anticipate a significant impact on the finance performance and skills. According to The Hackett Group’s 2019 Finance Key Issues Study, 86% of finance organizations report a high or very high impact of digital transformation on the finance performance (e.g. cost, quality, cycle time) in the upcoming 2-3 years versus 31% today. Furthermore, this impact will not only be on cost, but also on finance roles and skills profiles (82% in 2-3 years versus 34% today).

Therefore, it is of utmost importance for organizations to become aware of the potential for smart automation within their finance and controlling departments. This can be achieved by using the following six-step approach, which helps these organizations mobilize to deliver better performance by realizing the smart automation potential:

1. Plan for the journey
Smart automation, as part of a digital transformation strategy, needs to align with the overall business strategy. The Hackett Group’s digital transformation framework defines the capabilities that characterize digital operations, including digital business strategy objectives, digital business capabilities and digital IT capabilities.

2. Build the home
A common core organizational unit for smart automation is the center of excellence (CoE). A CoE should be directly responsible for strategy, governance, delivery as well as support of process owners interested in introducing smart automation into their operations. Although smart automation deployment is usually led by the business, IT support is vital to provide guidance, requirements and resource for infrastructure, connectivity and operation management.

3. Skill up
To realize the improvement benefits of smart automation, a workforce skill shift is required in areas such as data science, social media, business acumen, strategic thinking, design thinking, process excellence, customer experience, relationship management, creativity and innovation, and change orientation.

4. Target the value
Smart automation is not only about cost savings, but also about broader value to the business. It ranges from revenue increase, agility improvement or better customer relationships, to free up resources to make better decisions. These targets are much larger than just cost savings and drive a greater return on invest.

5. Draw a map
A clear view of end-to-end processes is critical to identifying smart automation opportunities. To maximize the impact, it is necessary to carefully position smart automation alongside existing plans for ERP, best-of-breed and other major technology initiatives. The Hackett Group also recommends building a heat map that illustrates areas of opportunity to prioritize automation investment and maintain focus on the high-value targets.

6. Acquire or build the tools
While some technologies such as RPA seem to get more mature by the day, the overall environment remains complex with many new but also many familiar names, particularly around cognitive computing. Although well-known players are integrating smart automation capabilities into their existing product enhancements, new revolutionary players are also accelerating innovation and maturity. To be flexible and open to new options, finance organizations must commit to learning step by step and preparing for a new generation of make vs. buy complexity as cognitive computing and other smart automation functionality becomes available as an integrated part of new platforms, products and services.

In a nutshell, implementing smart automation as a part of the digital transformation journey will have a strong impact on finance performance, people and skills profiles in the finance organization. It requires commitment, persistence and development of the right capabilities. Therefore, it is key for finance to follow the six-step approach step by step to achieve success in its digital transformation efforts.

(P.S.: At the ICV regional conference, 15. Controlling Advantage Bonn – CAB 2019 – Nov, 7th in Bonn, another expert of The Hacket Group will share his experiences. Marco Große, Senior Director The Hackett Group, Frankfurt am Main, will speak about “Empirical observations on digitization in Controlling”.)

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