VIEWPOINT

CFOS AND THE INTELLIGENT ENTERPRISE

CFOS AND THE INTELLIGENT ENTERPRISE

RICHARD McLEAN

CUSTODIANS FOR A SINGLE SOURCE OF TRUTH

Almost every Chief Financial Officer (CFO) knows the importance of digital transformation today. But to what end are we pursuing digital transformation? Is it simply about using digital technologies to rethink existing business processes and experiences? We think it is beyond that – it is about becoming an intelligent enterprise, and here’s why.

Essentially, the intelligent enterprise rapidly harnesses data to transform business processes and fuel actionable insight, feeding all parts of the business from process automation to innovation, to creating optimal experiences across the entire value chain. It is the next frontier for us to design, manufacture, and deliver products and services that customers demand, enable our total workforce, and drive accelerated growth via automation and innovation.

Put more simply, that means productivity gains, more empowered and engaged employees, greater customer intimacy, and a foundation that allows our businesses to innovate and grow sustainably into the future.

The power of the intelligent enterprise is that it provides businesses with a trusted, single source of truth. With advanced analytics from next-generation technologies including blockchain, machine learning and artificial intelligence (AI), executive teams no longer have to wonder whether the data – used to make vital, business-changing decisions each day – is up-to-date or accurate.

THE CFO’S RESPONSIBILITY: ACCURATE INSIGHT

This is an important concept to digest. Because what it means for CFOs and financial teams today is, it should be a top priority for you to advocate your business’s transformation into an intelligent enterprise.

Why is that so?

Take a look at the abilities of machine learning, a next-generation technology used among intelligent enterprises. The role it plays is not unlike the function of finance leaders. Machine learning takes massive amounts of data, it then uses mathematical algorithms and high-speed computing power to identify patterns about this data that are dependable and accurate. That data can then be used by the technology itself, or a living person, to make a decision that provides the best possible outcome for the business.

I view the role of finance leaders similarly to the function of machine learning. As the CFO of SAP in the Asia Pacific and Japan region, I get the opportunity to watch these finance leaders in action every day. I have seen that they work hard to always be regarded as the bastions and custodians of the single source of truth – just as I will do.

We, as finance leaders, must ensure that we have strong financial controls – and controls around data generally – to make sure we are looking at correct and reliable information. But that’s not all; we also have to find ways of bringing it to other decision makers. That means Finance has the responsibility to provide insight to support accurate decision making across the entire enterprise.

In that regard, it becomes clear – the intelligent enterprise can better enable Finance to perform this job, with technologies that provide unparalleled insight.

To illustrate this, let me share what we are doing at SAP. Today, to a large extent, we have centralised our analytical capabilities in an Enterprise Analytics Group. This was achieved in close collaboration among Finance, IT and other key functions. We now have access to standard reports created using SAP analytics technology and the SAP Cloud Platform. These reports bring together key metrics and data, which help ensure consistency in the way we steer the business. It allows our people – across functions – to collaborate and make decisions faster. Rather than ask IT for support, or find manual ways of doing it ourselves, the reports are readily available. The outcome? A single source of truth for us to immediately act on to better manage the business.

Knowing is not enough, however. Once a CFO realises the benefits of the intelligent enterprise, he/she must take responsibility. CFOs need to understand that we have a duty in providing strategic leadership to advocate for the business’s transformation. Just like any other investment that can increase revenue and profitable growth, the CFO must shepherd the business as best as he/she can to capture the benefits of the intelligent enterprise.

The onus is on us, as custodians of value, and as strategic partners of the business.

A BOOSTED FINANCE FUNCTION

Beyond providing accurate insight, an intelligent enterprise allows the transformational CFO to harness the highest potential from its team. There’s no better way for me to exemplify this than to share some of the top ways we are using technology to get ahead.

  • Automation

Automated workflow is a big part of what we do in Finance. We have a lot of processes that are governed by delegations of authority, which means that different people review and approve tasks in certain orders. When I first joined SAP, we all sat behind our computers working a Global Approval Form system for commercial deal reviews that was neither flexible nor mobile-enabled. Now, we have applications that work on our phones and tablets, notification emails when we own a task, and transparency well in advance into what approvals are coming our way. The whole process is so much more efficient and transparent and gives us the agility to plan ahead and work on the move. It has made a huge difference to our team’s productivity.

  • Machine learning in the shared services organisation

We are looking at ways to leverage machine learning to further streamline our processes. For example, we have collaborated with IT and Product Development to build and deploy a cash-matching application. That’s going to be the next horizon of automation becoming mainstream in the coming years.

We’re using the application to match our bank receipts to customer invoices. This typically requires an intensive manual effort simply because of the unstructured nature of the data involved in the process. It becomes more complicated when there are partial payments, multiple invoices are issued simultaneously, different currencies are involved, and so on.

We’ve taken a process that was very manual, applied machine intelligence to it, and now have a high success rate on the matches. This kind of automation alleviates a good deal of the workload for simpler tasks, enabling the people in Finance to better use their time.

  • Travel and expense management

Everyone knows the traditional way to process travel and entertainment (T&E) expenses. People make copies of receipts, scan them, package them up, and submit them for reimbursement. The whole process is time consuming and manual and, quite frankly, tedious for everyone involved. To automate travel and expense management, we implemented solutions from SAP Concur and coupled them with some policy changes in the finance organisation. By automating each phase of travel – such as pre-approvals, travel booking, reimbursement, analysis, and expense reporting – the whole process is much more streamlined and efficient.

For example, Concur Expense automatically facilitates compliance by linking to our preferred hotels and airlines, including online travel booking sites. The solution populates expense claims using electronic receipts from those suppliers without requiring employees to capture an image of a receipt or enter expenses manually.

With rigorous T&E processes that are easy to use, our employees are more likely to plan ahead and comply with policy and in so doing, realise the macro- and micro-level benefits that can have a positive impact on business performance. These include macro-level aspects such as improving the effectiveness and productivity of employees, overall employee satisfaction, eliminating paper costs while championing a more sustainable work environment which can all lead to an overall increase in competitiveness. Benefits also extend to micro-level areas, for example, reducing employees’ out of pocket expenses and providing timely reimbursements. 

These projects are not the end goal for us. They’re just a starting point to explore what new technology can do for us across the company. Every routine task that we can automate gives us the ability to scale our operations and keep pace with the growing demands of our business – and that has a significant impact on performance.

NOT JUST ABOUT TECHNOLOGY: TIPS FOR TRANSFORMATION

Of course there’s more to the journey towards becoming an intelligent enterprise than singing the praises of next-generation technologies. Finance leaders and their teams have responsibilities in other areas, including working in tight collaboration with IT.

Importantly, because culture plays such a crucial aspect in transformational efforts, finance leaders must address the cultural shift needed, and that includes assuaging employees’ fears about change. For instance, you can get employees excited about how becoming an intelligent enterprise can enable them to do more meaningful work while reassuring them that it won’t take away their jobs. I recommend the following three tips for finance leaders considering the transformation into an intelligent enterprise.

1) Take ownership

Don’t rely on someone else to run the project. No one else is going to come along and transform your finance organisation or business – not for the better, at least. Your transformation into an intelligent enterprise must begin with business leaders owning the change and advocating your vision of the future. The intelligent enterprise may be powered primarily by technology, but it needs you to win the hearts and minds of your people and prepare them for change. Ultimately, it is the people who have to adopt the innovation and crystallise the value.

2) Build confidence with quick wins

Make a case for the intelligent enterprise by providing employees with something that will inspire confidence in the transformation of their business. This can be as simple as design thinking exercises that give them the opportunity to think about what they need in their day-to-day activities. What would their work look like in a perfect world? What if they weren’t constrained by the current legacy system? Let them discover that the intelligent enterprise might provide just that.

3) Create a culture of learning and innovation

Once employees are thinking outside the box about what might improve their daily work, encourage and foster that innovation even further. From there, employees’ ideas may extend beyond their own jobs. This is the perfect opportunity to turn them into advocates for change and growth across the business – and it’s the perfect frame of mind for a thriving intelligent enterprise. Reward this type of thinking, and it will reward your business in return.

THE NEXT STEP

The intelligent enterprise sets the stage for us to make employees our value contributors, customers our advocates, and suppliers our business partners – all connected to a higher purpose of making the world run better and improving people’s lives.

As the custodian of the single source of truth and a strategic partner for the business, CFOs are well positioned to help the organisation take this next step.


Richard McLean is Regional CFO, SAP Asia Pacific Japan. For a detailed report on the evolving role of CFOs, please refer to “The Road to Smarter Finance: How APAC CFOs Lead The Way” at the SAP website.